Azerbaijan, Baku, May 4 / Trend , I.Khalilova/
The Azerbaijani government's economic bloc has completed discussions on a package of amendments and additions to the Tax Code, which will be applied in 2010, ministers held a meeting on this issue last week, the country's government said.
"The document will be submitted to the parliament for consideration by May 15," the government said.
The process of developing draft amendments to the Tax Code was delayed because of differences in the finance and tax ministries' proposals. The Finance Ministry supported to cut rates on direct taxes - besides the profit tax , it proposed to cut a maximum rate of income tax, which currently is 35 percent.
Since 2008, amount of profit on income tax is 2,000 manat, and the Ministry of Finance proposed to reduce the rate to 20 percent.
But the Taxes Ministry's draft amendments to tax legislation do not change the income tax rate. The Taxes Ministry suggests in its alternative version to cut tax rates by 2 percent - up to 20 percent and value added tax - by 1 percent - up to 17 percent.
The Finance Ministry believes the budget will lose 140 million manat by reducing the VAT rate to 1 percent, while the reduction of income tax rates, even at 15 per cent will cause losses worth 50 million manat. The budget will lose from reducing the VAT rate, since these taxes' base is broader than income tax, which mainly foreign companies.
pay at the maximum rate.
"We do not consider necessary to reduce the VAT rate, as well as indirect tax and is taken from taxpayers' turnover, but we support the change in the tax rate on profits, while reducing the rates of direct taxes have a significant impact on the development of local production," the Finance Ministry's official said earlier.
A new version of the Tax Code will be applied in 2010. For the first time this year, amendments to tax legislation will be adopted separately from the public budget in the first half. This will facilitate the review and approval of budget forecasts and enable taxpayers in advance to familiarize with the changes in tax legislation.
Recent changes in tax rates occurred in Azerbaijan in 2006, and rates of profit tax were cut from 24 percent to 22 percent. Moreover, individuals' income up to 2,000 manat (earlier over 600 manat) is subjected to withholding tax at a rate of 14 percent, and more than 280 manat + 2000 manats taxation is made at a rate of 35 percent in 2008.
This plank of annual income, which is subject to a rate of 14 percent, is 24,000 manats, and on 35 percent - over 3,360 manats + 24,000 manats.
Budget Revenue approved at the level of 12.177 trillion manat (including centralized revenues - 11.698 trillion manat, local - 0.479 billion manat), or 27.9 percent of GDP, expenses - 12.355 trillion manat (centralized expenditures - 11.095 trillion manat, local - 1.259 billion manats), or 28.3 percent of GDP.
The Ministry of Taxes will provide 5.75 billion manats budget revenue (with an increase to 6.9 percent compared to 2008 year). Tax revenues from the oil sector are planned in the amount of 2.68 billion manat (decrease compared to 2008 year by 7.6 percent), non-oil - 3.07 billion manat (at the growth of 23.8 percent).
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