Azerbaijan may exempt protected savings from taxation

Economy Materials 29 August 2023 12:04 (UTC +04:00)
Humay Aghajanova
Humay Aghajanova
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BAKU, Azerbaijan, August 29. Azerbaijan's banks recorded a decrease in monthly volume of population's deposits by 2 times since year-start. The first such case occurred in February 2023, then the deposit amount decreased by 27 million manat ($15 million). This was the first decrease in deposits after August 2021, said Vugar Bayramov, a member of Milli Majlis (Parliament), in his social network account, Trend reports.

According to Bayramov, decrease in deposits of the population in banks was also recorded last month. Thus, as of August 1, 2023, the total amount of deposits decreased by 43 million manat ($25 million) compared to last month and amounted to 12 billion manat ($7 billion).

The taxation of deposit income in banks since February also has an impact on the volume of deposits, he noted.

"It is true that both expenditures and investments in the real sector and seasonal factors have their impact. A wider attraction of savings is also important in terms of financing the real sector and reducing interest rates on loans. In this regard, it is very important to achieve sustainable growth in the savings portfolio.

In this context, it would be more appropriate to amend the "Tax Code" and introduce differentiated tax benefits on deposits. We propose that protected deposits should not be taxed. In this case, deposits up to 100,000 manat ($58,823) can be exempted from 10 percent income tax, which will stimulate the accumulation of deposits.

The dynamics of the recent days once again confirms the necessity of applying differentiated tax incentives to channel passive funds of citizens to the real sector through banks. This will also allow citizens to generate income by turning money kept at home into deposits," the publication says.