Azerbaijan, Baku, 28 April / Trend corr I. Khalilova/ The Azerbaijani Government is going to submit to Parliament the draft changes and supplements in the Tax Code for 2009 by 15 May, in order pass it in the first half of the year, the Finance Ministry reported on 28 April.
"That will simplify consideration and approval of budget forecast, as well as will enable tax-payers to get acquainted with the changes in the Tax Code beforehand," a source at the Ministry said.
The Finance Ministry is going to submit its variant of draft changes by the end of the week for consideration. The Ministry of Finance and the Ministry of Taxes suggest along with improvement of Tax Code to consider in next year the rates of profit tax and the value added tax (VAT). The profit tax is expected to be reduced from current 22% to 20% and VAT from 18% to 17%.
"Indeed, reduction of the profit tax rate will depend on the calculations regarding this process's effect on public budget revenues," the source said.
VAT was planned to be reduced at the beginning of 2008, but later it was decided to improve administration on the tax and to introduce single treasury account in which, from the beginning of this year, revenues from VAT deposit account have been saved up. The drop in rate of this tax will depend on the efficiency of introduction of the unified treasury accounts in the upcoming years.
The Ministry of Finance and Ministry of Taxes of Azerbaijan have expressed their satisfaction with the results of the work of this system; therefore, it has been proposed to decrease VAT rates by 1% from 2009.
According to study conducted by the Ministry of Taxes, the optimal VAT rate totals to 14-15% under the current tax climate in Azerbaijani economy.
The proposals of the tax organizations on the other types of taxes do not include drop in the rate of taxes, but the Ministry of Finance does not rule out changes to the rate of income tax. At present, the rate of income tax is the highest (35%) which totals to AZN 2,000 and the lowest is 14%. Earlier it was planned to increase the sum up to AZN 2,000 from 2009 and AZN 2,500 from 2010, on a condition that this tendency will be observed and other measures will be taken in the field of social insurance.
The last change in tax rates in Azerbaijan took place in 2006 and the rates of tax on profit were decreased from 24% to 22% and the rate of income tax (35%) was increased from AZN 600 to AZN 2,000 (from 2008).
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