They even did not have time to launch a mechanism on presentation of declaration by the state officers of declarations when the Ministry of Taxes has set up the designing a document on application of incomes declaration system for the people of Azerbaijan. It will be possible in 2007. the Ministry said that in two years the Ministry of Taxes will be technically ready to the application of the system on declaring the community incomes and expenses. Such a declaration system is expected to come to force in 2006 in regards to all fields, while from 2007 it might concern all groups of people.
The key objective of the use of such system is to ensure the transparency in community incomes and expenses, as well as public budget revenues (especially, unconsidered incomes of entrepreneurs) and prevention of inexpedient use of public funds. In condition of development of private ownership gradation of citizens incomes increases more and more. High incomes of some citizens pass by the fiscal system, while technical capacities of tax bodies are insufficient to trace them for taxation Imperfect tax legislation does not enable fully prevent a principle of fair taxation, which negatively affects the tax discipline in whole. There is mass concealment of private incomes and property from taxation, mass outflow of capital, which ranges from $850m to $3bn. As of different estimations, as a result of mass declination from ax payment the government annually losses big funds which are liable to payment of obligatory fees. According to the Ministry of Finances, the losses only on VAT are estimated to billion dollars.
Besides, a definite law-income stratum of population also remains in loss. Today there are 210,000 beneficiaries of state allowances. There are people which do not them at all and its would be more expedient to give them to those who really needs.
What does the declaration imply? Declaration is a document which is presented to the tax bodies in the time and order set by the legislation. It contains a statement by a taxpayer on its annual incomes, while in case of entrepreneur activities on monthly incomes. It should also contain the expenses.
The Ministry of Taxes will not need additional expenses for the application of the system, Natik Amirov, the Deity Minister of Taxes. However, is stressed the necessity of appropriate political resolution by the countrys leadership, as well as adoption of relevant laws, for application of this system..
The Law on Corruption has been applied in the country since the beginning of last year and as the government said then to apply it is necessary to use administrative, but also legislative methods. The state policy aims establishing economic conditions which pushes out any chance for corruption. On 15 August 2005 President Aliyev signed decree on ratification of the Rule on presentation of financial declarations to state officers, which earlier adopted by the parliament. Under the decree, the high ranking state officers are to submit annually from 1 through 30 January a declaration on the incomes and property to the State Commission on fighting corruption. They are the President, Speaker of the parliament and his deputies, prime ministers and his deputies, heads of the Accountancy Chambers, the Constitution Court, the Supreme Court and their deputies, Ombudsman, heads of departments, the Presidents administration, parliaments, the chairman of the National Bank of Azerbaijan. Azerbaijan is not an inventor in this respect, as it is widely applied in many countries.
The term of submission of declaration ranges from 2.5 to 7 months from the end of the year. In some conditions, a taxpayer can receive a prolongation to submit it for 6 months.
The declaration must be signed by a tax-payer. The signature is to be followed by a statement, that the declaration is true, right and complete. A person undersigning the document is responsible for the text of declaration, otherwise he is committed to pay fines for false evidence, which is considered as crime in the United States.
Which punishment measures will applied on people avoiding from submitting a declaration in Azerbaijan is still unknown. Moreover, the law committing the state officers to present declaration does not contain concrete measures of punishment.
What incomes should an ordinary citizen declare? An aggregate tax income of a payer includes wages, incomes from individual entrepreneur activities and securities, some pensions and allowances, paid by pensioners and insurance funds, state allowances excess on the defined sum. The aggregate incomes should take into consideration the funds obtained in money and natural form. Moreover, it not dealt with the real sum, but those calculated period to taxation. It would not be so easy for the Azerbaijani citizens, who have lived with a threat of dispossession of kulak for many years, to reveal the their incomes. Its so peculiar to the mentality of people of Azerbaijan to name the expensive and valuable things as presents from rich relatives.
So, the people of Azerbaijan hardly believe in the efficiency of the application of a system on incomes declaration. Indeed, it is an excellent idea and is used almost in many countries. However, it can be a still-born in Azerbaijan. Now it is necessary to affect on the thoughts of the Azerbaijani citizens and strengthen the sense of responsibility and after to attract to struggle with the declination from taxes.