The tax burden on Azerbaijan non-oil sector should be reduced
Azerbaijan, Baku, Nov 23 /corr Trend A.Axundov/
It is now necessary to reduce the tax burden on the non-oil sector of Azerbaijan, said Elman Rustamov chairman of the Central Bank in Parliament during the discussion of the draft state budget for 2012 and the next three years.
"The population of Azerbaijan exceeds nine million. To build a large economy at the expense of domestic demand in such a population is impossible.
"Strong economies of countries developed in the last 20 years are mainly Asian and export-oriented. In this case, the tax burden issue became relevant. The tax burden in Azerbaijan should be competitive to allow it access to the world markets. In fact it should be lower than in countries from where capital comes for the growth of foreign investment in Azerbaijan" Mr Rustamov said.
According to the World Bank, Kazakhstan stands at 38th place in the world's tax burden list. Georgia is 10th and Azerbaijan is at 95th place.
"In this connection Azerbaijan should reduce the tax burden of its non-oil sector in the medium term" Mr Rustamov said.
According to the Ministry of Taxes of Azerbaijan, the tax burden in the country in 2009 was 11.6 per cent in 2010 - 10.3 per cent and for January-August 2011 - 11.9 per cent.
According to Mr Rustamov, a differentiated system of taxation and taxes implemented in Norway and taxation in the non-oil sector is lower than in the oil sector.
"It is a very interesting experience and we have to consider it," He went on. "It is necessary for the tax burden to be shifted from production to consumption.
"It is one of the main trends of tax reforms in the world today. For example in Turkey, which has become one of the fastest growing economies in the world, there is a very high tax burden on jewellery, cars and so on."
According to Mr Rustamov, Azerbaijan should have a tax system which will guide people to saving and investment, not to consumption.
"On the contrary, we should encourage production that creates jobs and increases the export potential. It should also be done also by tax policies," Mr Rustamov said. According to the bank chairman the level of social taxes in the country remains high.
"Social taxes in Azerbaijan are at 22 per cent and in Kazakhstan on 11 per cent. Social taxes must also be competitive to promote production," he concluded.