Changing Azerbaijan’s tax legislation aimed at stimulating business climate development (Exclusive)
Baku, Azerbaijan, Nov. 2
By Matanat Nasibova - Trend:
Amendments to Azerbaijan’s tax legislation, which should come into force in 2019, are aimed at ensuring transparency in the work of each of the taxpayers, as well as at creating optimal conditions for the development of business climate, Deputy Minister for Taxes Sahib Alakbarov told Trend Nov. 2.
“The amendments envisaged in the tax sphere are of a multi-vector nature,” he said. “They are primarily aimed at ensuring transparency and accounting for taxpayers.”
The deputy minister noted that among the Azerbaijani taxpayers there are a lot of those who completely evade paying taxes.
“Most entrepreneurs try to hide their incomes, capital turnover, and this mainly concerns people who manage trade and service facilities,” he said. “There are a lot of entrepreneurs who completely hide their capital turnover and refuse to pay taxes, and there is a category of people who partially pay taxes. Therefore, to solve this problem, we are reviewing our tax policy, and we intend to tighten measures against delinquent taxpayers.”
He noted that such measures are necessary because those regularly fulfill their tax obligations suffer due to delinquent businessmen.
He noted that the planned changes in the tax sphere, along with toughening measures against taxpayers who evade paying taxes, also provide for a number of positive aspects.
“First, we propose to reduce the number of inspections in business objects,” he noted. “It is also proposed to amend the terms of tax payment for entrepreneurs engaged in business in Baku. In accordance with the tax rules, fiscal payments under the simplified tax system are 4 percent in Baku and only 2 percent in Azerbaijani districts. There are proposals to equalize these conditions, so that businessmen would pay taxes at a rate of 2 percent both in Baku and in the districts.”
The deputy minister noted that this proposal will be considered in the Azerbaijani parliament in the near future.
“We envisage a number of other benefits aimed at improving business and business climate in Azerbaijan, and we expect that the implementation of these measures will provide a positive result both for the state and for taxpayers themselves,” the deputy minister said.
The package of amendments to the tax legislation, which, together with the budget package, has been submitted to Azerbaijan’s parliament, provides for a number of benefits for taxpayers.
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.
Other changes include an increase in non-taxable income from 173 manats to 200 manats, differentiation of social insurance rates, various benefits for stimulating non-cash income, unification of simplified tax, extension of benefits for farmers etc..