Over the past few years one of the most successfully developing segments of the Azerbaijani fiscal market is the financial leasing. If several years ago we considered only the opportunities for intensifying the development of the market, today one can assert on existence of dynamically developing market of leasing services. Though in 2003 the general portfolio of leasing companies comprised $2.5m, in January to September 2005 it made up $25m. Thus, within 2 years assets of the company grew 10 times, which can be estimated as a blast in rise.
Along with the rise of portfolio, the number of the leasing companies and their operations also increase. If in March 2004 there were only 3 leasing companies in the country, late this September the number of leasing companies rose to 15, including 7 new companies. He leasing companies are Ata Lizinq, AzЙ™rilizinq, AG Lizinq, SLS AzЙ™rlizinq, Debut Bank, Gunaylizinq, Parex Lizinq, Uni Lizinq, Mugan Lizinq, AZ Lizinq, Bank Respublika, Bank of Baku, Cred Agro, Amrah Bank Рё госкомпания вЂ"AgroLizinq.
The last was established with regard to improve the leasing services in agriculture, which suffers from insufficiency in technique.
If in 2004 the number of leasing operation, implanted by the companies numbered 72, over 9 months of 2005 вЂ" 286.
Catalyst
The participants in the leasing market regard the tax policy by the government as the major factor stimulating the boom in the leasing market of Azerbaijan. From January 2004 the leasing market benefits considerable tax privileges. The major privilege is the inclusion of leasing operations to list of VAT-free operations. Besides, leasing was included in the list of activities, which are subjected to intensified amortization, which means that the leasing companies have a right to write off expenses for amortization expenses. The last step was directed at enhancing the demand for leasing equipment. Starting from 2006 the intensified amortization will be removed in the country. According to specialists of the Taxes Ministry, the goals set for it were mainly achieved and now it is high time when the losses of the budget in this direction are to be replaced by a rise in incomes. However, it does not mean that Azerbaijan will be deprived of one of the important preferences. First, release of leasing operations from
VAT is in force. Secondly, some proposals by the Association of leasing companies, which envisaged changes in the taxation base and tax interests from the source paid while import of equipment for its realization in leasing, were included in the Tax Code of the country. According to Ceyhun Mammadbayli, the chairman of the Association of Leasing Companies, to date tax from the source is 4% of the sum while import of technique from other countries for further leasing. We suggested to accept the margin as a base for taxation. The Association said that the proposal was adopted and the tax from the source will comprise 10% of the margin rate.
Leasing moves towards villages
The last year saw considerable changes to the sectoral structure in leasing deals. If in 2004 leaders on the amount of leasing operations were food and light industry, construction, agriculture and financial sectors, in 2005 the construction, financial and transport sectors ranked in the top.
Exit to transport sector to leading places is explained with a rise of import of transport conveyances to the country, allocated for passenger transportation in the city transport. Unpleasant situation was observed in agriculture, the special weight of leasing operations in this period reduced from 8 to 0.1%. Such sharp fall can be explained with weak financial state of farmers, which reduces demand for leasing equipment. To improve the situation the government established this year state company AgroLizinq, which is specialized import and long-tern leasing of the agriculture technique, the farmers can receive technique through initial payment of 10% of the total cost of technique and putting a security. The rest sum is paid quarterly within 5 years. At present Azerbaijan imported half of the purchased agricultural technique through Aqrolizinq.
Such an aspiration for development of leasing in the country in the perspective will simplify considerably the problems linked the technical and technological supply of the economic growth, which in its turn can significantly improve the quality of the growth. The most important is to achieve the development of leasing market in current paces.