Number of payroll card holders increases in Azerbaijani private sector
Baku, Azerbaijan, Aug. 13
The work directed at increasing the transparency of labor relations holds a special place among the tax reforms aimed at reducing the scale of the "shadow economy" in Azerbaijan, the Azerbaijani Ministry of Taxes told Trend.
The exemption of part of the salary up to 8,000 manats of individuals of the private non-oil sector from a profit tax already gives important fiscal results since the beginning of this year.
These benefits first had a great impact on an increase in the income of the employees hired in the private non-oil sector, which makes up a significant part of the employment in the country.
Thus, as a result of applying tax benefits, the amount of funds left at the disposal of employees of this category amounted to 150 million manats. This figure is expected to increase up to 300 million manats till the end of the year. These funds were transferred to the state budget as a tax in previous years.
More than 77,000 new labor contracts were registered in the non-oil sector in January-June 2019, which accounts for 75 percent of all concluded labor contracts (more than 101,000) in the country thanks to the application of benefits and as a result of fiscal incentives created for transparency.
The number of labor contracts in the trade sector increased by 20,200 (a total increase of 26.3 percent), services sector - by 14,600 (a total increase of 18.9 percent), in industry - by 14,400 (a total increase of 18.7 percent) and in construction - by 8,900 (a total increase of 11.6 percent) in the non-state sector during the reporting period.
Thus, the conclusion of labor contracts was mainly observed in the economic sphere. Earlier, labor contracts were not concluded in this sphere.
At the same time, the number of payroll card holders hired by non-governmental organizations has increased by 18 percent since the beginning of the year.
As a result of all these processes, the volume of the wage fund of the private non-oil sector increased by 22.8 percent in January-June 2019 compared to the reporting period of 2018 excluding an increase in salaries by 21.4 percent this year.
The amount of the wage fund increased by 2.5 percent compared to the income of the population in such conditions.
In general, the forecast for payments on social insurance and unemployment insurance to the State Social Protection Fund for this year has increased by 365 million manats.
The tax losses in the amount of 300 million manats, as a result of the applied benefits, are planned to be reimbursed by increasing payments on social insurance and unemployment insurance.