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Azerbaijan proposed to exempt from VAT sale of collateral by banks

Business Materials 7 April 2014 16:04 (UTC +04:00)

Baku, Azerbaijan, April 7
By Emin Aliyev - Trend:

American Chamber of Commerce in Azerbaijan (AmCham) considers it appropriate to exempt value added tax from collateral sold by the country's banks on corresponding auctions. This is stated in a package of proposals for the development of the business climate in Azerbaijan in 2014, published annually by the Chamber.

"In accordance with Article 13.2.14.1 of the Tax Code of Azerbaijan, submission or return of collateral for loans considered financial services exempted from VAT. Losses that banks suffer on unreturned loans are compensated through collateral for these loans. In accordance with the Code, banks can realize the collateral to a third party through auctions, and, if the property has been sold, then this sale is not considered as financial service and is subjected to VAT, " the document said.

The specified procedure increases expenses of VAT for banks, according to the document. This tax rate is 18 percent in Azerbaijan.

"Furthermore, it can have a negative impact on the flow of cash in banks. Based on the above said, the Chamber proposes to exempt the sale of collateral from VAT in bank auctions," AmCham noted.

Translated by S.I.
Edited by C.N.

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