Azerbaijan examines revision of direct taxes’ rates
Azerbaijan, Baku, Feb. 9 / Trend A.Akhundov /
State budget revenues in Azerbaijan increased by over 75,000 times and expenditure by 83,000 times over the past twenty years, head of department of taxes policy and revenues of the Azerbaijani Finance Ministry Jamil Alizadeh said during his speech at "Azerbaijan's tax system: realities and prospects" forum on Thursday.
"The average annual growth of budgetary figures was 40.4 percent, expenditures - 40.1 percent," Mr Alizadeh said.
He said tax revenues to the state budget increased by 20.8 times in 2011 compared to 1995 and in the non-oil sector - 15.9 times.
The average share of tax revenues in the budget income fluctuated during this period in the range of 70-80 per cent.
Interest rates of income tax reduced from 35 to 20 per cent during 20 years, VAT - from 28 to 18 per cent, income tax on individuals - from 55 to 30 percent.
However, reduce of the tax burden on these types led to the development of various sectors of the economy and, ultimately, created favorable conditions for the growth of budget revenues," the Finance Ministry's representative said.
The share of land tax in budget revenues fell from 4.4 percent in 1995 to 2.5 percent. However, the potential in this area is big, and its efficient use and increase in investment in this area will increase the share of land tax in the budget revenues.
Tax rates available in Azerbaijan, use of tax concessions, tax administration amid crisis processes taking place in the world since 2007, have shown that fiscal policy in Azerbaijan was carried out reasonable and balanced.
The result was lack of need to raise rates for major taxes - corporate tax, VAT and income tax. It has been also observed in other countries. Raising these rates is not expected. There are numerous appeals about the revision of tax rates on property, land, business tax, as well as a gradual reduction in the top income tax rate. These proposals are being considered," Mr Alizadeh said.
He said the main task in regard to taxes on land and property is expansion of taxable base through adjusting their prices in accordance with real market prices.
This alongside with increase in proceeds to the state budget will make it possible define the real potential of the municipal budgets and give them opportunity to carry out independent activities. Reforms on reducing top rate of income tax should be coordinated with changes in the system of social insurance charges.