Tax burden of private sector in Azerbaijan exceeds 10% in 2005

Business Materials 1 June 2006 12:36 (UTC +04:00)

According to Ministry of Taxes, the tax burden of the private sector made up 10.7% in 2005, whereas the special weight of this sector in the GDP reached 77%. The Ministry told Trend the opposite tendency was observed in the public sector. The share of gross product produced by the public sector comprises 23%, while special weight of income taxes in the GDP was 27%.

According to taxpayers, the level of remittances by the private sector is a bit less than the potential, as the major part of gross domestic product is produced namely by the private sector. The current state of tax payments in this sector testifies for considerable number of facts of evasion from tax payments. The results of mobile tax check ups in 2004 and 2005 also testify for it. In 2004 a total of 4256 taxpayers underwent inspection and only 99 (2.3% of the total) turned out exact followers of the tax legislation, whereas last year only 2.1% of taxpayers which were checked did not violate the Tax Code.

The second reason for low tax burden of the private sector was the high number of enterprises that artificially work in loss. In 2005 the profit taxpayers numbered 9043 legal entities, while only 5358 (59.3%) ended the year with profit. In 2004 only 65.7% of the said enterprises presented declaration on their incomes.

In 2004 only 76% of the legal entities involved in the private sector operated, while in 2005 it was 80.3%.