Azerbaijan offers differentiation of VAT rates
Azerbaijan, Baku, July 30 / Trend I. Khalilova /
The Azerbaijani Ministry of Taxes for the first time suggests the introduction of differential rates of value added tax (VAT). Deputy Minister of Taxes Natiq Amirov said that although Azerbaijan is not ready yet to pass fully to the use of differentiated VAT rates, however, the possibility of discussing this proposal is considered now.
"We think it reasonable to reduce the VAT rate for retail trade while making payments through cards. There is the idea of reducing the VAT rate by half, up to nine percent to encourage people and entrepreneurs to conduct cashless transactions," Amirov said.
Certain calculations must be made. We think about promoting cashless payment. Therefore, a large package of activities has been prepared.
MilliKart executive director Jalal Orujev said that some measures are required to develop cashless payments.
"Attempts were made to discuss these proposals. Serious analytical work must be conducted to assess the economic benefits of such tax cuts," Orujev said.
Tax authorities must calculate how merchants increased their turnover by reducing the tax burden in absolute terms and how it will affect the increase in tax revenues as a whole. At the same time one can apply tough penalties to the merchants in the event of their refusal from using POS-terminals, as it is done in some countries.
Some countries have "hot lines" through which one can complain in case of failure of cards. In this case, the bank- acquirer takes certain actions, although the only lever of pressure is a POS-terminal, which it can take from a merchant, if it does not use it. In this direction, state agencies have more leverage. They can impose penalties, as it happens while calculating in foreign currency. Merchants try to avoid violations of tax laws due to these fines.
Today, a single rate VAT at 18 percent is used in Azerbaijan.