Tax Privileges to be Expand for Agro-Industrial Complexes in Azerbaijan

Business Materials 30 April 2008 17:26 (UTC +04:00)

Azerbaijan, Baku, 30 April /corr. Trend I.Khalilova / Discussions already commenced in the Government of Azerbaijan with regards to the prolongation of the tax privileges for the agricultural producers in the Country and freeing of several kinds of agricultural products from the value added tax (VAT), said Azerbaijan's Deputy Minister of Finance, Azer Bayramov.  

In 2008 the period comes to the end for the moratorium on the tax payment by the agricultural producers who were released from all kinds of taxes (excluding land tax) for a period of five years.  

"Concrete period of providing next privileges is not discussed, but it may comprise three or five years," Bayramov said.

In addition, privileges will be provided for the imported agricultural products. According to the Tax Code, the privileges should be temporary. Last year the Government released the grain import from VAT for a period of one year and this year intends to extent this period for one more year. According to the Deputy Minister, in addition, the possibility is being considered to postpone the VAT for import of flour and rice.   

According to the structure of import of flour and rice in 2006-2007, the Government will lose nearly AZN 1mln for providing privileges for the import of flour and rice.

The Government provides subsidies for the agro-industrial complexes through postponing taxation in order to ensure food security in Azerbaijan. However, the project of changes to 2008 Public budget does not envisage increasing the subsidies for purchasing fuel and fertilizers. According to Bayramov, this figure will be maintained at the previous amount - AZN 80mln. Because the same amount which was allocated last year was not fully spent. However, proposals are being considered to provide subsidies to the veterinarians.  

The Ministry of Agriculture presented suggestions to the Government with regards to increase of the amount of the subsidies for the agrarian sector nearly up to AZN 100mln. It is linked with the change in the mechanism of distributing the subsidies due to increase of its amount from AZN 40 to AZN 50 per hectare. It happened due to 50% increase in the seed production.

If the quota for the seeds made up 8,000 tons, this year the figure will increase up to 16,000 tons, according to the Ministry of Agriculture.

In addition, additional subsidies were suggested to be provided for the production of materials for sowing. The farmers made an appeal to allocate additional funds due to increase of seed production by more than 50%. 

In 2007 the Public budget of Azerbaijan allocated AZN 68.9mln to subside the agricultural sector in order to compensate 50% of the expenses on fuel and fertilizers purchased by the farmers. Some 596 806 physical entities and 12 legal entities obtained this financial assistance.    

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