Amendments for tax code recommended for parliamentary approval in 2010

Business Materials 10 June 2009 18:24 (UTC +04:00)

Azerbaijan, Baku, June 10 / Trend I. Khalilova /

Parliamentary committee on economic policy recommended project of changes and additions to Tax Code for approval of plenary meeting of Milli Mejlis at the meeting on June 10.

"Successful economic policy conducted in Azerbaijan last years causes necessity to improve tax policy and bring it in accordance with international norms of tax administration," deputy tax minister Natik Amirov said.

Amendments suggested in tax legislation are envisaged in 4 directions, such as increase of rights and protection of tax payers' interests, improvement of tax administration, tax control and edited change.  

Amendments envisage reduction of rates on several kinds of direct taxes as of January 1, 2010. Rate of income tax is planned to reduce from 22 percent to 20 percent. Maximal amount of income tax will be reduced from 35 percent to 30 percent but from 35 percent to 20 percent for physical entities dealing with entrepreneurship without legal entity.

Changes are also envisaged in system of reductive tax. Presently, physical and legal entities whose quarter turnover does not exceed 22,500 manat pay reductive tax. Legal entities with annual turnover up to 150,000 manat will fall under reductive taxation system but physical entities with annual turnover of 90,000 manat.

Changes in this system will allow expanding number of taxpayers falling under this system, as well as pursue object to support development of entrepreneurship in the country, Amirov said. 

According to current tax legislation, legal and physical entities not registered for VAT can pay reductive tax, as well as those physical entities dealing with entrepreneurship without legal entity whose volume of taxable operations hits less than 22,500 manat during previous quarter.  

Paid kindergartens are planned to be free of VAT from 2010. Innovation is also submission of E-invoices within improvement of tax administration. Azerbaijan will be the first country in Eastern Europe and CIS using invoices if these changes are adopted, Amirov said. 

Percent fees are planned to be paid on tax debt during a year from 2010.

Reports on VAT and simplified system were suggested to submit once per year given submission of E-tax declaration in Azerbaijan, deputy minister said. Reduction of tax burden will affect positively on development of entrepreneurship in the country, he said. 

Changes in tax legislation include positive dynamics of development of the country's economy and negative factors, parliamentary committee on economic policy chairman Ziyad Samedzadeh said.

"Simplification of tax system allows forecasting successfully, improving entrepreneurs climate and tax policy given world experience," Samedzadeh said.