Azerbaijan, Baku, June 25 / Trend I.Khalilova /
It is possible that the draft amendments to Azerbaijan's tax code will be presented to parliament in the autumn session.
Currently approval of the draft amendments and additions continues at the level of representatives of ministries of finance and taxes, the government told Trend on Monday.
Tax legislation in Azerbaijan is constantly being improved and since 2008, amendments to the tax code are taken separately from the state budget which facilitates the process of review and approval of budget forecasts.
It also allows taxpayers to become acquainted in advance with the expected changes. Despite the fact that before May 15 draft amendments to tax legislation were to be presented to parliament, due to the divergence of views on a number of proposed changes discussion at the expert level is still on-going.
"Issues of expansion of the deposit account for VAT, transfer pricing taxation and partnership agreements remain at the stage of endorsement," a government spokesperson said.
Since January 1, 2008, Azerbaijan has used a single treasury deposit account for VAT, through which all taxpayers carry out operations on value added tax. At present a deposit account is applied to the payment of VAT on an accrual basis (revenues accounted for five days). At the same time it is planned to apply it on a cash basis method meaning income (expense) is recognised on the day of receipt (debit) funds, the government said.
On this issue, there are still differences of opinions. Some experts believe that the use of deposit accounts in respect of the cash method of payment of VAT will complicate tax audits.
Azerbaijan also plans to introduce transfer prices under the Tax Code. The subject under discussion is the question of the introduction of the base price used for taxation of transfer prices.
Transfer prices are formed in the transactions between the subsidiaries of large companies and lead to an artificial increase in costs. It turned into a negative trend for tax evasion. Azerbaijan studies the experience of different countries in this area to improve the legislation.
"In particular, it is the experience of Russia which in 2012 began the use of transfer pricing, but the best option is Kazakhstan's experience in this field. Our experts also became familiar with the experience of European countries," the source said.
Under the draft amendments and additions to the tax code it aims to lower the maximum income tax rate from 30 per cent to 25 per cent and raise the maximum monthly taxable income bracket from 2000 manat, acting at this level from 2008 to 2500 manat.
At the same time the annual income bar to be taxed at 14 per cent, is proposed to be increased from current 24,000 to 30,000 manat. Some changes are also offered on income tax benefits.
Changes in interest rates on other types of taxes are not provided.
In the case of adoption of the draft amendments to the tax laws their entry into the tax system is expected from January 1, 2013.
Azerbaijan's tax code has been valid from January 2001.
The official exchange rate is 0.7857 AZN to $1 on June 25.