What changes await Azerbaijani taxpayers in 2019?

What changes await Azerbaijani taxpayers in 2019?

Baku, Azerbaijan, Oct. 27

By Azad Hasanli - Trend:

Azerbaijan’s tax legislation may undergo serious changes in 2019.

This is reflected in the budget package for the next year, which has been submitted to Azerbaijan’s parliament.

The priority areas will include implementation of reforms related to the incomes of employees. These reforms will comprise benefits for employees of the private sector, but those who don’t work in the oil and gas sector, as well as regulating the ratio of payments for state social insurance between an employee and an employer.

The Azerbaijani government expects that the planned reforms will help reduce the tax burden, the burden of deductions for compulsory social insurance and reduce informal employment.

New benefits for the private sector

One of the most significant changes will be related to the income tax payment system - the government plans to exempt from this tax employees in the private sector who are not involved in the oil and gas sector.

Thus, starting from January 1, 2019, for a period of seven years, it is planned to provide 100 percent benefits (in other words, to exempt from paying tax) regarding income tax from an employee’s salary. This applies to salaries worth up to 8,000 manats. If the salary exceeds 8,000 manats, the income tax exemption will be 44 percent.

Presently, the income tax rate is 14 percent from income of up to 2,500 manats per month. If the income is above this amount, the income tax rate is 25 percent.

The non-taxable amount also increases from 173 to 200 manats. Unlike the previous amendment, this will apply to all sectors, including the oil and gas.

In 2018, the government predicts income tax revenues of the state budget at 1.196 billion manats, which is about 15.1 percent of all tax revenues. The new changes, according to government estimates, may lead to a certain reduction in income tax revenues. Thus, in the draft state budget for 2019, revenues of this type are expected at 880 million manats. Nevertheless, the government believes that in future budget revenues from income tax will increase thanks to a reduction in the share of the "shadow economy", transparency in issuance of salaries, stimulation of the economic activity and modernization of tax administration.

Differentiation of social insurance rates

According to the draft, another very significant change in the legislation concerns compulsory social insurance contributions. Thus, if the employee’s salary is 200 manats, the social insurance contributions will remain at the current level: the employee pays 3 percent of the salary, and the employer pays 22 percent.

If the employee’s salary exceeds 200 manats, it is proposed to apply another deduction principle: the employee pays 6 manats and 10 percent of the amount exceeding 200 manats, and the employer pays 44 manats and 15 percent of the amount exceeding 200 manats.

These changes also affect those working in the private sector and not engaged in the oil and gas sector. At the same time, the Ministry of Taxes will control social security payments and unemployment insurance. The Law on Compulsory Insurance against Unemployment in Azerbaijan entered into force on January 1, 2018.

Benefits stimulating non-cash payments

The government intends to provide entrepreneurs with temporary benefits to increase the share of non-cash payments (through POS terminals). At the same time, individuals are planned to be provided with certain benefits, in particular, while making cashless payments, a part of the value added tax will be returned to consumers.

Unification of simplified tax and extension of benefits for farmers

The benefits for agricultural producers are planned to be extended for five more years for the development of the non-oil sector and business support.

Along with this, differentiation in the simplified system of taxation will be eliminated. The simplified tax, which currently amounts to 4 percent for taxpayers operating in Baku, and 2 percent for taxpayers in the regions, is planned to be unified and a single rate of 2 percent will be established throughout the country.

Naturally, this will affect the revenues coming in the state budget under the simplified taxation system. Thus, the revenues from this type of tax have been projected at 322 million manats for 2019, which is 15.3 percent less than the revenue forecast for 2018.

Expansion of taxable base

The government also intends to gradually expand the share of turnover burdened with value added tax, and to reduce tax incentives for VAT payers.

At the same time, it is planned to tighten control over the production, import and sale of excisable goods. In particular, the new generation cash registers will be installed in this sector, and in general, it is planned to introduce a unified automated information system that will help control all processes related to excisable goods.

As a result, the revenues coming in the state budget from excise tax have been projected at 602 million manats in 2019, which is 8.7 percent more than the figure forecast for the current year.

Also, introduction of changes in the taxes imposed on vehicles of legal entities has been scheduled for the next year. Thus, it is expected that the legal entities will pay tax for motor vehicles being on their balance sheets. Currently, this tax applies only to vehicles of individuals.


Follow the author on Twitter: @AzadHasanli

Subscribe to Trend in Google News! Subscribe
Embassy of India in Baku celebrates National Tourism Day as part of 73rd Republic Day of India and 75 years of India’s Independence (PHOTO)
Embassy of India in Baku celebrates National Tourism Day as part of 73rd Republic Day of India and 75 years of India’s Independence (PHOTO)
Russia’s Kamaz-Leasing company opens representative office in Azerbaijan
Russia’s Kamaz-Leasing company opens representative office in Azerbaijan
World Bank Lauds India's Covid Vaccination efforts but says reaching next billion 'could be challenging'
World Bank Lauds India's Covid Vaccination efforts but says reaching next billion 'could be challenging'
Loading Bars
Azerbaijan's servicemen honor memory of martyrs in Dashalty village of liberated Shusha - Trend TV (PHOTO/VIDEO)
Embassy of India in Baku celebrates National Tourism Day as part of 73rd Republic Day of India and 75 years of India’s Independence (PHOTO)
Bridge construction over Astarachay River to be funded by Iran and Azerbaijan - Iranian minister
Iran's foreign trade increases
New bridge construction over Astarachay River to promote freight traffic growth
Hopefully, number of Azerbaijani tourists to India increases - ambassador (PHOTO)
Central Bank of Azerbaijan, SOFAZ hold foreign currency auction
Natural gas, coal prices to remain high in coming months
Foundation stone laid for monument to Uzeyir Hajibeyov in St. Petersburg
Turkmenistan boosts trade with Kazakhstan over 11M2021
Tajikistan ratifies railway transport agreement with Turkmenistan
Price indexes of financial, industrial sectors at Uzbek stock exchange rise
Russia’s Kamaz-Leasing company opens representative office in Azerbaijan
Supply of electricity all across Kazakhstan completely resumed - gov't
Azerbaijan's Azer Turk Bank discloses volume of public deposits for 2021
Azerbaijani commandos hold training exercises (PHOTO/VIDEO)
Uzbekistan sees increase in volume of cotton fiber produced
Azerbaijan shares data on number of vaccinated citizens
Azerbaijan's Alat port receives first container train from Uzbekistan
Iran's minister of industry confirms low quality of domestic cars
Azerbaijan confirms 2,468 more COVID-19 cases, 5,197 recoveries
Foundation of new road bridge across Astarachay River laid between Iran and Azerbaijan (PHOTO)
Big rise in prices negatively affects Kazakh economy - National Bank
World Bank Lauds India's Covid Vaccination efforts but says reaching next billion 'could be challenging'
Azerbaijan names vaccines delivered under COVAX initiative in 2021
Azerbaijan's Central Bank to auction its short-term notes
Uzbekistan restores electricity supply in number of its regions
Missing World War II aircraft found in India after 77 years
Iran approves creation of national cryptocurrency
Navy holds high level meeting on creation of Maritime Theatre Command
Azerbaijan's Azer Turk Bank announces net profit for 2021
Food-processing enterprises may be built on Azerbaijan's liberated lands - deputy minister
Turkey records increase in export of ready-made clothing to Azerbaijan
Turkey’s export of steel to Azerbaijan up
Azerbaijan sees rise in domestic money supply for 2021
India Inc proposes additional 1% CSR levy for booster shots
Azerbaijan to get another batch of Sputnik V vaccine against COVID-19 in 2022
Women interested in creating business on Azerbaijani liberated lands - agency
Construction costs in Georgia's Tbilisi increase
Azerbaijan, WB discuss ways to use wind energy potential of Caspian Sea (PHOTO)
Turkmengaz opens tender to buy plant equipment
Azerbaijan Children Hotline released its report for 2021 (PHOTO)
European Commission to support agriculture reform, transition to green economy in Uzbekistan
President of Azerbaijan Ilham Aliyev calls President of Ukraine
SOCAR Turkey talks on integration of innovation solutions at STAR Refinery
Pfizer and BioNTech launch trial of Omicron-targeted COVID vaccine
French Lagazetteaz.fr online newspaper renews interface (PHOTO)
Timing of Azerbaijan-Iran intergovernmental commission's next meeting revealed
Demarcation of Armenia-Azerbaijan border to make sure no armed incidents happen - ex-CSTO Sec-Gen
Head of Development Bank of Kazakhstan dismissed
All Baku-Istanbul and Istanbul-Baku flights of AZAL postponed
J&J expects up to $3.5 bln in COVID vaccine sales this year
Iran to contribute to reconstruction of liberated territories of Azerbaijan - Iranian minister
SOCAR AQS, Iraq's IDC mull opportunities for co-op in drilling
Azerbaijan names timeframe of commissioning new bridge on border with Iran
Iran aiming to boost exports of fish products to South East Asian countries
I do hope that post-war period will open new opportunities for whole region - President Ilham Aliyev
Iranian company may become resident of industrial park in Azerbaijan - deputy PM
Abu Dhabi's Chimera closes second venture capital fund at $10 bln
Confident that Iranian companies will begin to work actively in liberated lands in near future - President Ilham Aliyev
Positive trend noted in enhancement of tax administration in Azerbaijan – minister
Georgia's giant auto dealer expanding South-West, opens branches in Ukraine, UAE
Istanbul's third airport suspends its work until January 26 - Turkish Airlines
Azerbaijan Army’s Engineering Troops continue activities on clearing roads of snow - MoD (VIDEO)
Turkmen tomatoes gaining share in foreign markets
Russia records over 67,800 COVID-19 cases in last 24 hours
Azerbaijan completing work on first "smart village" in Zangilan district
Azerbaijan, Iran may simplify border crossing procedure - minister
Azerbaijan talks results of flour, bread price monitorings
Azerbaijan, Iran sign protocol on construction of new bridge over Astarachay River (PHOTO)
New bridge over Astrachay River on Azerbaijan-Iran border to be built
‘Nar’ takes the title of Azerbaijan champion (PHOTO)
SOCAR Turkey names new target markets for Petkim’s products
Turkey reports rise in leather exports to Azerbaijan for 2021
SOCAR Turkey working on improving STAR-Petkim integration
Kazakhstan Electricity Grid Operating Company turns on all "North-East-South of Kazakhstan" transmission lines
Uzbekistan resumes operation of its airports
Karabakh to become most beautiful region of Azerbaijan soon – deputy PM
President Ilham Aliyev presents Istiglal Order to Chairperson of Organization of Veterans of War, Labor and Armed Forces of Azerbaijan (PHOTO/VIDEO)
Uzbekistan begins to restore electricity supply following power outages
Turkmen agriculture ministry opens tender for supplier selection
Turkey's chemical exports to Azerbaijan increase in 2021
President of Azerbaijan Ilham Aliyev holds videoconference meeting with Iranian minister (PHOTO/VIDEO)
Azerbaijani oil prices decline
Israeli envoy recalls key role of India in WW-I
Kyrgyzstan gradually restoring energy system after power outage in Bishkek
Uzbekistan accredits Russia's Gazprombank
Credit Suisse's problems mount as lender warns on Q4 profit
Israel mulls offering 4th COVID vaccine dose to all adults
Azerbaijan commissions several customs posts in liberated areas
Georgia names main suppliers of coal
Kazakhstan’s Almaty Int’l Airport operating as usual despite power outage in city
Uzbekistan discloses reasons for power outage
Uzbekistan suspends operation of airports due to power outage
Georgia to highly benefit from Turkish medicines – ministry
Azerbaijani First VP Mehriban Aliyeva congratulates Fatma Sattarova on 100th birthday anniversary (PHOTO)
Kazakhstan taking measures to eliminate accident that caused power outage – KEGOC
Russian company acquires stake in Uzbek cement plant
Loan portfolio of banks increases in Azerbaijan
Georgia reports new record high COVID-19 cases
All news