Azerbaijan, Baku, May 10 / Trend , N.Ismaylova /
Changes in the rates of value added tax (VAT) in Azerbaijan in 2010 will give "absolutely nothing", but under the amendments to the Tax Code, there are proposals to reduce the interest rate on profit tax, Finance Minister of Azerbaijan Samir Sharifov said on May 10.
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. Draft amendments to the tax legislation have been submitted to the Presidential Administration of the country, and the final version will be known after it is sent to Parliament.
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.
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).
Official rate on May 10 is 0.8035 AZN/USD.
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