Ministry talks tax evasion by some entrepreneurs in Azerbaijan

By  Trend

A number of major companies in Azerbaijan, by separating their business into several small enterprises, evade paying certain taxes, Deputy Minister for Taxes of Azerbaijan Sahib Alakbarov said, Trend reports.

He noted that the reduction in tax rates for a simplified tax, the application of which will start from the beginning of next year, clarified the issue of limiting the coverage of this type of tax, as well as the gradual expansion of funds attracted to VAT.

When applying the simplified tax, it was assumed that this wouldn’t only create more comfortable working conditions for entrepreneurs, but also conditions for the formation of normal tax accounting, he said.

“Presently, 90 percent of taxpayers registered in Azerbaijan are simplified tax payers,” he noted. “At the same time, the proportion of this tax is a little more than five percent, although in many countries this figure is within 40 percent. Recently, some businessmen have started to attempt applying various schemes in order to evade simplified tax.”

He said that some entrepreneurs, in order to pay a tax of 2 percent (simplified tax rate for entrepreneurs in the districts) register their business in the districts, but work in Baku (where the simplified tax rate is 4 percent), thus creating serious difficulties for tax accounting.

The deputy minister added that the necessary changes were made to the Tax Code in order to eliminate such cases.

Alakbarov noted that the simplified tax won’t be abolished, adding that however, there are some areas where entrepreneurs won’t be able to become simplified tax payers.

He said that entrepreneurs engaged in wholesale trade, as well as the sale of golden items, fur and leather products, some other types of activities, won’t be able to pay simplified tax, either.