Tax Privileges toward Dividends on Banking Deposits Brought the Significant Growth in Deposit Base in Azerbaijan, Over 6 Years
Starting from January 1, 2007, the term of tax privileges toward percents on deposits paid to the banks and other credit organizations by the population, as well as dividends on investment securities, and returns to percents will expire. According to the Azerbaijan Taxes Ministry, these privileges have existed for about 6 years, Trend reports. For the first time, the moratorium was put into force in 2001 and was considered for 3 years. However, later, the tax privileges were prolonged to another a three-year period.
The tax benefits have stimulated the population's depositing their money to the banking sector. To the end of 2001, the total volume of the banking investments was 393 mln. AZN. That increased by 2,6 times up to 1025.3 mln. AZN till the expiration date of the first term of moratorium. Within the second period of tax privileges, the growth of deposits increased by 1.8 times, and over 9 months of 2006, the total volume of the banking deposits reached 1805.8 mln. AZN.
The Ministry thinks that hopes on presenting additional benefits are unlikely. Budget Package 2007 does not include a draft envisaged prolongation of the term of tax privileges, though the banking circles are supporters of that. Meanwhile, elimination of privileges in some spheres is one of the important directions in the tax-financial policy of Azerbaijan.