Income Tax in Azerbaijan May be Changed in Parallel with Social Insurance Payments
Azerbaijan, Baku / Trend corr I. Khalilova / Azerbaijani Taxes Ministry does not consider it expedient to change income tax rate and the rate of the natural persons' taxable incomes in 2008.
Privileges not always give positive results, and if other social measures are not undertaken simultaneously, they may have negative effect, Azerbaijani Deputy Taxes Minister Natig Amirov said at the meeting of the parliamentary commission on economic cooperation when discussing changes and supplements in the Tax Code.
"Cut in income tax rate will hardly lead to legalization of wages, because this rate is established with consideration of social insurance payments. Therefore, if changes are not made in social payment, entrepreneurs will not legalize wages," Amirov said. A change in social payment rate is also connected with other social issues, such as insurance, he noted.
Researches revealed that the optimal income in Azerbaijan taxed 14% is currently AZN 1,500 [currently monthly income varying between AZN 50 and 1,000 is taxed 14%, and the monthly income exceeding AZN 1,000 is taxed 35%]. "We can increase the tax rate to that level in 2008, to AZN 2,000 in 2009, and to AZN 2,500 in 2010 providing that the tendency will be continued in parallel with other social arrangements," the Deputy Minister said.
Along with the changes in income tax rate, MPs suggested to increase the untaxed income from current AZN 50 to AZN 70.