Alekper Mammedov: Time span between approval and application of changes in the Tax Codex has to be enhanced
A number of seminars for entrepreneurs to address the problem of application of changes and amendments to the Tax Code were held by the National Confederation of Entrepreneurs (Employers) (NCEA) jointly with the Ministry of Taxation in January-February 2006.
New suggestions have appeared in the course of the discussions of changes into the Tax codex, and they will be used by NCEA in changing and supplementing the draft taxation legislature for 2007, NCEA head, Alekper Mammedov told Trend.
Entrepreneurs are not satisfied today with the exclusion of the accelerated amortization from the draft legislation that complicates the conditions of business. Since the Tax codex came into power in 2001, all means invested into the production are excluded from the revenue that can be subject to taxation. This regulation
was substituted with the accelerated amortization last years, however, from this year on this article was excluded from the codex at all, which leads to the increase of the taxation base and complicates the conditions of business. Additional problems appear when VAT is transferred via the bank system, which is rather time consuming. From the temporary point of view, businessmen also encounter problems when they present declarations to tax authorities. However, Mammedov added that as soon the system will get more digitalized the declaration submission process will get easier.
It could be the most appropriate to use the Russian practice of leaving a half a year time span between the adoption and application of new supplements into the taxation laws. Changes to taxation in Russia were adopted in December 2005 and were put into action in January 2006. Government has already defined the discussion of the given problem in parliament at the next meeting.
NCEA is also planning to introduce changes into the taxation rate to alleviate the tax burden. Confederation plans to decrease VAT from 18% to 14% and income tax from 22% to 18-20%. Obligatory employers rate on social insurance is expected to be decreased from 22% to 14% in general, and from 3% to 2%. Confederation head regards these changes as legitimate ones, as the social rate all over the world never exceeds 14%.