Deputy Minister: Azerbaijan’s tax legislation must comply with new stage of economic development

Business Materials 25 January 2011 19:03

Azerbaijan, Baku, Jan. 25 / Trend N.Ismayilova /

In 2011, it is expected to apply a number of significant amendments to the Azerbaijani Tax Code, Deputy Taxes Minister Natig Amirov said on Tuesday at a press conference on results of 2010 and plans for 2011.

"Due to the fact that Azerbaijan has already passed the transitional period and is now in the list of countries with average income, it requires improvement of tax legislation, which must match and reflect the level of the country's economic development," Amirov said.

Amirov said the Tax Ministry is preparing a series of major changes in the tax laws of the country and after detailed discussions with the government, these changes will be presented to the public.

"These changes and additions will be directed not to tighten the tax rates, but rather to improve the business environment in the country," he said.

Recent amendments to tax rates in Azerbaijan were made in 2010. Since Jan. 1, interest rates on some direct taxes have reduced. The income tax rate was reduced from 22 percent to 20 percent, the maximum income tax for employees fell from 35 percent to 30 percent, and taxes for persons engaged in entrepreneurial activities dropped from 35 percent to 20 percent.

Changes were made to the simplified tax system. Before 2010 the tax under the simplified system was paid by individuals and legal entities whose quarterly turnover did not exceed 22,500 manat. From this year forward, legal entities with an annual turnover of up to 150,000 manat will be subject to a simplified taxation system. Paid pre-school educational institutions were exempted from VAT in 2010.

Submission of invoices in e-form is one of the innovations in the improvement of tax administration. As a result, Azerbaijan became the first country in Eastern Europe and CIS, applying e- invoices. VAT rate, in spite of suggestions for its reduction by one percent this year, is expected to be kept unchanged at 18 percent.

About 46 amendments to the Tax Code have been made in 2010 - enhancing taxpayer rights and interests (19), improving tax administration (16), implementing tax controls (7) and establishing editorial changes (4).

The official exchange rate is 0.7974 manat to $1 Jan. 25.