Baku, Azerbaijan, Oct. 17
By Azad Hasanli – Trend:
The introduction of tax holidays for Azerbaijani banks could stimulate the recovery of the sector, Chairman of the Management Board at Unibank Faig Huseynov believes.
“Undoubtedly, if the government agreed to this step, then I, like my colleagues in the sector, would welcome this decision. It would be an incentive that can help banks strengthen their positions more quickly,” Huseynov told Trend.
Tax holidays have already been introduced for banks in Azerbaijan in 2009. Then, not only banks but also insurance and reinsurance companies were exempted from paying income tax. This was only related to the part of income that was directed to increase capital.
Validity of the tax benefits expired in 2012. The government decided not to renew them, as the assets of Azerbaijan’s banks were growing quite rapidly and the banks often faced with the problem of their placement.
However, the decline in oil prices and the worsening situation in global economy in recent years affected Azerbaijan as well. As a result, the country's banking sector and the whole economy faced a number of problems. Capitalization and profitability of banks declined.
According to Azerbaijan’s Financial Market Supervisory Authority, the total loss of the banking sector amounted to almost 1.7 billion manats in 2016. Starting 2017, banks began to gradually restore their profitability, and as of Sept. 1, the banks’ total profit reached 350.3 million manats.
Bankers believe the introduction of tax holidays could help restore the sector’s capitalization.
(1.7003 manats = $1 on Oct. 17)