IMF: No need for new taxes in Azerbaijan
There is no need to introduce new taxes or increasing tax rates in Azerbaijan, Mohammed El Qorchi, IMF mission chief for Azerbaijan, said in an exclusive interview with Trend.
He said that the set of taxes and tax rates in Azerbaijan are generally in line with emerging market norms.
“The main issue is that the non-oil fiscal balance contains a large deficit which needs to be reduced over time,” El Qorchi added.
“Good tax policy stresses the use of only 1 or 2 VAT rates with a few exemptions,” El Qorchi said. “However, in Azerbaijan there has tended to be a high number of exemptions and somewhat weak tax administration. This is reflected in relatively low tax yield efficiency ratings—meaning the tax revenue intake is lower than expected given economic activity and the set of existing rates.”
“In this context, the Azerbaijani authorities aim to raise the non-oil tax revenues by broadening the tax base through fostering new businesses, simplifying the tax system, and encouraging compliance via accessible e-services,” he added. “Expenditure pressures will also need to be reduced.”
El Qorchi added that a tax system that promotes small and medium enterprises has to be transparent with minimum business interference.
“In this regard, the country’s authorities have made great progress,” he said.
“Formal labor contracts are registered in a database shared across government agencies,” he said. “Business and individuals can now pay taxes and custom duties via e-services. Azerbaijan’s Ease of Paying Taxes indicator has increased from 103rd in 2011 to 34th in 2016 based on the World Bank’s Doing Business Survey.”
Azerbaijan’s Taxes Ministry transferred 4.35 billion manats to the state budget in January-August 2016, which is by 0.3 percent more than the forecast.
According to the data, Azerbaijan’s state budget revenues reached 8.281.5 billion manat in January-August 2016 or by 22.4 percent less compared to the same period of 2015, while expenses – 9.348.5 billion manat or by 13.4 percent less compared to the same period of 2015.
The state budget deficit was estimated at 1.067 million manat or 2.8 percent of GDP.
Revenues of Azerbaijan’s state budget have been approved in the amount of 16.822 billion manats, expenses – 18.495 billion manats for 2016.
Revenues from the country’s Taxes Ministry to the state budget are expected in the amount of 7.01 billion manats or 41.7 percent of total budget revenues in 2016. Budget forecasts are formed on the basis of oil prices at $25 a barrel.
Bulgaria plans to expand co-op with Azerbaijan
Bulgarian government plans to significantly expand cooperation with Azerbaijan in several spheres, Azerbaijan’s ambassador to Bulgaria Nargiz Gurbanova said.
The ambassador pointed out that Bulgaria intends to boost the cooperation with Azerbaijan in such spheres as energy, trade, tourism, ICT, banking sphere, transportation, health care, education, social protection issues and so on.
It is planned to discuss the possibilities of cooperation in these spheres during the fourth meeting of Azerbaijan-Bulgaria intergovernmental commission on trade, economic, scientific and technical cooperation to be held in Baku Sept.27-30, added the diplomat.
She said that the meeting comes after eight years of hiatus. Gurbanova said that the reason of such a long break in the commission’s work has been the unstable political situation in Bulgaria.
A government delegation led by Bulgaria’s ministers of economy and energy Bozhidar Lukarski and Temenuzhka Petkova, who are the co-chairs of the commission from Bulgaria will take part in the meeting.
“The delegation will include around 40 representatives of government structures, as well as about 50 representatives of 37 big Bulgarian companies,” said the ambassador. “This is the most substantial delegation which has visited other countries since early 2016.”
“As for the concrete projects for bilateral cooperation, I believe that during the business forum to be held as part of the intergovernmental commission’s meeting, the representatives of business circles from the two countries will put forward their proposals which can be reviewed,” said Gurbanova.
The diplomat noted that currently, there are several projects, including the establishment of cooperation between industrial parks of Azerbaijan and the relevant structures of Bulgaria.
Bulgaria also shows great interest in benefiting from the opportunities of Azerbaijan’s Azerspace 1 satellite, added Gurbanova.
Gurbanova added that Azerbaijan will be able to provide one third of Bulgaria’s energy needs from 2020 and it will be a great impetus for the development of the country’s economy.
“The two countries are also interested in mutual investments in the tourism sector, as well as increasing the number of tourists,” she said.
“The cooperation in the agricultural sector is very important for both Azerbaijan and Bulgaria,” Gurbanova said.
“Among the priorities the diplomat stressed the wine-making, the use of control mechanisms over the quality of agricultural products, participation in agricultural fairs, creating opportunities for companies to participate in such forums, providing support to investors and others,” she said. “All these issues will be thoroughly discussed during a meeting in Baku.”
The diplomat said that the establishment of cooperation between the Azerbaijan Export and Investments Promotion Foundation (AZPROMO) and the Bulgarian Small and Medium Enterprises Promotion Agency (BSMEPA) is also a priority for both sides.
“Azerbaijan and Bulgaria will discuss specific areas of cooperation,” she said. “At the same time, the issues of cooperation between the Azerbaijan and Bulgarian Chambers of Commerce and Industry are to be considered.”
“The agenda of the meeting includes the issue of developing cooperation in the field of education,” she said. “The relations are planned to be expanded between the two countries’ universities. The exchange of students is planned to be ensured. Bulgarian universities are ready to admit Azerbaijani students.”
The diplomat said that to carry out all plans and ideas, the two countries have a solid and broad contractual and legal framework, intended to regulate the legal issues.
More than 50 agreements and treaties covering almost all spheres of bilateral cooperation have been signed between the two countries, she added.
The ambassador said that the diplomatic mission attaches great importance to provide information to business structures and the government of Bulgaria about favorable business atmosphere in Azerbaijan, investment opportunities.
She added that the mission regularly holds meetings both in government structures and private sector, trying to attract attention of the Bulgarian business circles to Azerbaijan.
Possibilities of Azerbaijani goods’ export to the Bulgarian market and further to Europe are being considered at almost all such meetings, said the diplomat.
“There are great prospects for cooperation between the two countries in the pharmacy sphere,” said the ambassador. “In 70s-80s, Bulgaria was traditionally considered one of the major suppliers of pharmaceutical products to the countries of the former Soviet Union, including Azerbaijan.”
“Production in this sphere has been currently established in accordance with international standards, and I think that the Azerbaijani businessmen will be interested in expansion of cooperation with Bulgaria in pharmacy sphere,” she said.
The diplomat called perfume industry of Bulgaria another priority area for cooperation.
The delegation, which will arrive in Azerbaijan to participate in the business forum, includes representatives of perfume companies, which will present their products in Baku, Gurbanova said.
The trade turnover between Azerbaijan and Bulgaria amounted to $16.5 million in January-July 2016, compared to $6.6 million in the same period of 2015, according to Azerbaijan’s State Customs Committee.
Such an increase was achieved due to an increase in import operations by 2.5 times.
Iran urges for triple hike in trade with Azerbaijan
An Iranian senior official has called for increasing the volume of trade turnover with Azerbaijan by at least 300 percent over the next year.
Hossin Esfahbodi, an Iranian deputy minister of industry, mine and trade, said that the volume of trade turnover between the two countries currently stands at about $100 million but it must increase considerably.
Elaborating on existing trade capacities between the two countries, the deputy minister said that the current level of turnover is not satisfactory and it must surpass $300 million over the next year.
Saying that short distance between Iran and Azerbaijan creates a proper opportunity for traders from both countries, the deputy minister called for expansion of cooperation in both, oil and non-oil sectors.
Iran's deputy industry minister for mining and mineral industries, Jafar Sarghini said that cooperation between Azerbaijan and Iran in oil and gas sphere is not satisfactory.
Elaborating on plans regarding the cooperation in steel sector, he said the two countries have already discussed the ways of increasing the level of this cooperation.
He speculated that Iranian private sector may collaborate with Azerbaijani steel companies in the future.
As for the production of cars, he said that besides the joint venture, which will operate in the Neftchala industrial quarter, the new companies will be established for the production of car spare parts.
The car factory jointly founded by Iran and Azerbaijan will launch its first products as of May 2017, Iranian deputy minister said.
Four Iranian car brands – Dena, Runna, Soren and Samand – will be produced at the new plant with a capacity of producing 10,000 cars per year.
The project is estimated to cost $15 million and the Iranian side is expected to provide 25 percent of the total cost.
The officials have announced that 20 percent of the factory’s output will be exported and its products should meet Euro 5 standards.
According to Azerbaijani officials, Iranian companies have already invested $2.6 billion in Azerbaijan’s economy. About $2.5 billion of the total amount has gone to the oil sector.
Trade turnover between Azerbaijan and Iran amounted to $122.08 million in January-August 2016 or by 65 percent more than in the same period of 2015.
Over $30 million accounted for the export of Azerbaijani goods to Iran, according to the State Customs Committee of Azerbaijan.