Azerbaijan, Baku, April 17/ Trend I. Khalilova /
The Azerbaijani government plans to extend tax remissions, given to the banks and insurance companies , to stimulate increasing of capitalization.
The banks, insurance and reinsurance companies have been exempted from paying tax on income allocated to capitalization for a period of three years since Jan. 1, 2009 . The validity of these exemptions will expire in 2011.
At present , a draft law , providing for extending these tax benefits for another three years, is under consideration, the government said .
This action is aimed at developing the financial sector, increasing and improving the quality of banking and insurance services, strengthening the solvency of banks, insurance and reinsurance companies and increasing their capitalization.
As a result of these events, the insurance companies and banks s ent 145 million manat to the capitalization of. In 2009, the total authorized capital of Azerbaijani insurance companies increased by 8 percent . The figure hit 89.8 million manat . T he total authorized capital of Azerbaijani banks increased b y 17.6 percent up to 2 . 004 . 98 million manat.
As of 2010, the a ggregate capital of insurance companies , operating in Azerbaijan , amounted to 153.6 million manat, or 48.5 million manat ( 46 percent ) more than in 2009.
The b anks increased the capital by 8,2 percent last year. A s a result , it hit 2 . 169.12 million manat.
About 27 insurance companies (including five with foreign capital ) , a reinsurance company and six brokerage companies (including five with foreign capital ) operated in Azerbaijan by late 2010.
During the reporting period, about 45 banks had license s to conduct banking activities in the country. T wo banks were closed last year. Today, there are 22 banks with foreign capital. T here are two local branches of foreign banks.
The number of the banks ' offices, operating abroad, is eight. There a re five offices, two subsidiaries and one branch. Azerbaijan also has five representative offices of foreign banks.
The Ministry of Finance has determined the schedule to capitalize the insurance companies.
It was amended on Nov. 29, 2010 by softening the requirements for minimum capital of insurance and reinsurance organizations.
The summary table includes the minimum requirements for capitalization in accordance with the new t able:
|
Term of minimal amount of capital reaching the required level |
Minimal sum of capital for insurers |
Minimal sum of capital for re-insurers |
|
Jan.1 , 2011 |
3 million manat |
6 million manat |
|
Jan.1 , 2012 |
4 million manat |
8 million manat |
|
Jan.1 , 2013 |
5 million manat |
10 million manat |
As opposed to insurers, the minimum requirement for banks' capitalization is preserved for several years at 10 million manat. However, the Central Bank signed a framework agreement with each bank to recover losses that occurred as a result of the global financial crisis .