Coefficients for Housing Construction Taxation in Azerbaijan Not Yet Approved

Business Materials 11 April 2007 20:15 (UTC +04:00)

Azerbaijan, Baku / Trend , corr. I. Khalilova/ Akif Musayev, Cheif of the Central Department for Tax Policy and Strategic Researches of the Azerbaijan Tax Ministry, said today that the Azerbaijani Government keeps on discussing the introduction of coefficients within the new system of taxation of companies, which are engaged in housing construction in the country. According to the official, various alternatives are being put forward, however, there has been no full determination yet.

Such coefficients like AZN 50, AZN 70, AZN 80, and AZN 120 are among those ones which are currently under consideration. Mr. Musayev also considers that the amount of coefficients will depend on the location of an accomodation.

The system of taxation of an accomodation has been changed since January 1, 2007. Prior to moving ammedments to the Tax Code, construction companies working in the country were payers of property and profits taxes, but starting from 2007, these companies have will be turned to a simplified system of taxation. The construction companies are to pay AZN 10 per one square meter, and coefficients will be introduced depending on the location of the dwellings.

This system of payment for construction companies has been introduced for a period of two years, with 12.5% out of the total payments each quarter. The total volume of payments to be divided by eight equal parts with the period of payment of two years is expected to be finalized.

State Cabinet Ministers will also approve the indicator of minimal turnover. Taking into account this indicator, the construction companies will pay VAT. "Though those who pay the simplified tax are not subjected to VAT, but housing construction will be an exception in this respect," stressed the Chief of the Central Department for Tax Policy and Strategic Researches of the Tax Ministry.

Changing the system of taxation of housing construction will not lead to an increase in the tax burden. At the same time, it is applied to those constructions, where foundation is to be laid starting from January1, 2007.