Azerbaijani expert: Changes in Tax Code - only reason for tax cuts

Azerbaijani expert: Changes in Tax Code - only reason for tax cuts

BAKU, Azerbaijan, Nov. 22

By Eldar Janashvili – Trend:

The only reason for decreasing life insurance fees is the changes in the Azerbaijani Tax Code, Trend reports referring to Director of the Department at Pasha Life insurance company Tofig Aliyev.

"There was a decrease in life insurance fees from January through September 2019 compared to the same period of 2018,” the director said. “The fees amounted to 265 million manat ($156 million) in 2018. This figure was 22 percent less, that is, it was 204 million manat ($120 million) from January through September 2019.”

“Survival benefit insurance fees reached 194 million manat ($114 million) in 2018, while this year - 126 million manat ($74 million),” Aliyev said. “The only reason for the reduction in fees is the changes in the Tax Code and the Law on Social Insurance made in January 2019."

“One of the key changes in the law is that presently, insurers can not transfer more than 45 percent of salary for this type of insurance,” the director added.

"This means that if I received a salary worth 1,000 manat ($589) and transferred everything for life insurance in 2018, this year this amount cannot be more than 450 manat ($265)," Aliyev said. “The clients were still interested in this product, and low-quality life insurance services were not rendered by the insurance companies.”

“The reason for the decrease in the collection of fees by the insurance companies in 2019 was connected with the changes in the Tax Code and the Law on Social Insurance,” the expert reiterated.

Despite the reduction in the volume of life insurance fees, Aliyev stressed that the growth will be observed in some certain types of insurance.

"There is an increase in fees from 2.6 million manat ($1.5 million) to 3.4 million manat ($2 million) in insurance against disability as in other voluntary and compulsory types of insurance,” the director said. “We expect traditional annual growth in 2020.”

“The insurance against accidents at work last year amounted to 27.9 million manat ($16.4 million), while payments - 2.3 million manat ($1.4 million),” Aliyev added. “This year, an increase in insurance against accidents at work amounted to 36 million manat ($21 million), while payments - two million manat ($1.2 million).”

“From the point of view of fees, the life insurance greatly decreased,” the director added. “The difference in each compulsory type of insurance is not fully felt. The growth of compulsory insurance against accidents at work and occupational diseases is associated with an increase in the minimum wage up to 250 manat ($147).”

(1 USD = 1.7 AZN on Nov. 22)

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Follow the author on Twitter: @eldarjanashvili

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