Release of Insurance Companies from Income Tax is Azerbaijan’s Anti Crisis Measure:  Insurance Control Department Chief

Business Materials 28 October 2008 18:56 (UTC +04:00)

Azerbaijan, Baku, 28 October / Trend , corr. U.Ismayilova /Release of a part of incomes from tax, which is directed to increase the authorized capital for insurance, re-insurance companies and banks in Azerbaijan may be understand as anti crisis measure of the Government, Namik Khalilov, the Chief of the Insurance Control Department of Azerbaijan's Foreign Ministry, said.

"This measure will allow to participants of the financial market to cut risk of direct or indirect influence of the world financial crisis on their activity through increasing capitalization rate," Khalilov said.

The world financial crisis does not have a direct influence on the activity of insurance companies in the country, as they do not take part in operations in stock exchanges, but only indirect influence is possible.

The financial crisis, according to Khalilov, first of all, may be sensible in re-insurance of large risks in foreign companies, which may face bankruptcy.

Theoretically insurance companies may loose their money, which were invested in banks. "However, the Government has enough financial resources to support participants of the financial market from the critical situation.  In its turn the acceptance of the Bill to release part of income from tax is directed to increase resistibility of the financial sector in the country to the negative influence of the world financial crisis," Khalilov said.

Last week the Parliamentary Commission on Economy Policy discussed the proposals on release of Azerbaijani banks, insurance and re-insurance companies from 1 January 2009, from tax paying on the share of incomes, which has been directed to raise capitalization rate. The key goal of the bill is to accelerate the financial development rate, raise quality of services in banks and insurance sector, and stimulate the raise of companies' capitalization rate.

The income tax is 22% in Azerbaijan. There are 45 banks, 28 insurance and one re-insurance company in Azerbaijan.

Azerbaijani Finance Ministry reported that companies gathered premiums in the amount of AZN 148.7mln with AZN 40.4mln payments from January to September.

The correspondent can be contacted at: [email protected]