Revision of the countryвЂ™s tax legislation is needed for attracting new private foreign investors, the consultant of the Tax Ministry within the EU TACIS project В"Updating of the Tax SystemвЂќ William Cooper was quoted as saying. В"There is potential in Azerbaijan to become Dubai of the former Soviet UnionвЂќ, the tax expert thinks.
Acceptable conditions for engaging both foreign and local investments in the non-oil sector are needed to establish. Besides, there is a demand in the country in the import of the experience and the latest technologies. For that purpose he offers to cancel the profit distribution system and introduce base incentives. One should not fear the impact on the tax receipts, as, having refused from lower revenues, one can provide receiving larger profits.
Besides, oil contracts are to be harmonized with the Tax Code provisions.
According to Cooper, the Tax Code does not meet the international and European standards on the issue of transfer prices. The Russian experience had been used by establishing this system, as it would have been more expedient to use new price standards of OECD and France. The consultant recommends also to create opportunities for holding auditing of transfer prices.
According to the head of the Chief Department on Tax Policy and Strategic Researches Akif Musayev, the problem of transfer prices exists in the tax system of all countries. It is related to the activities of the transnational companies. Their subsidiaries operate all over the world, their expenses and revenues are managed by the head offices. Taking an opportunity of this, big transnational companies undertake steps for tax evasion, manipulating costs and revenues legally.
As for the improvement of the tax legislation, it is the permanent process, Musayev thinks. He admits, there are shortcomings today in the Tax Code, which will also take place in the future due to the constant development of the countryвЂ™s economy and the tax legislation requires permanent updating.