Tax system needs to be further upgraded

/By AzerNews/

By Nigar Orujova

Further development of Azerbaijan’s tax system and new initiatives were mulled in Baku, as the fifth annual tax conference focusing on development and performance of the tax system took place on January 18.

Addressing the event, the head of the Tax Policy and Strategic Research Administration of the Taxes Ministry, Natig Shirinov, informed the participants about the changes that have recently been made to the Tax Code.

These changes are primarily aimed at reducing tax rates and simplifying tax administration, he said, adding that no changes or growth of tax payments on excisable goods imported to Azerbaijan is expected in the Tax Code.

“We have switched from interest rates to fixed rates in the taxation of excise goods since January 2015. Thus, despite the rise in prices for these goods due the manat devaluation, the amount of tax payments remains the same,” Shirinov noted.

For example, if earlier tax for the tobacco sale was in the amount of 12.5 percent of revenue, now the tax rate does not depend on the size of the income received by the taxpayer.

The participants also spoke about possible incentives to increase the volume of non-cash payments in Azerbaijan.

There should be a difference between cash and cashless payments, said Nuran Karimov, a partner of Deloitte, a multinational professional services firm, in Azerbaijan.

“In addition, there are restrictions on cash transactions in many countries. For instance, it is impossible to buy a car for cash in many countries. We need to establish specific transaction where a mandatory payment will be made only in non-cash,” he noted.

Karimov went on to add that there is also a need to impose restrictions on withdrawals from the bank account. “It is also possible to set a limit on withdrawals from the account of one person during the day.”

Taking into account that non-cash payments are first beneficial to banks, they have to accommodate and reduce the size of the commission.

Noting the relevance of non-cash payments in Azerbaijan, Karimov stressed the need to address a number of issues at the same time.

“As long as people will not be confident in the security of non-cash payments, this form of payment will not be widespread because cybercrime is a problem all over the world, and Azerbaijan is no exception,” he noted.

The conference further discussed issues of tax obligations of the U.S. companies.

The Tax Conference organized by the Taxes Ministry in conjunction with AmCham, further mulled the issues of tax administration and its improvement, future tax reforms and appropriate tax model, increasing transparency in the tax system, etc.

The conference was attended by MPs, representatives of the Presidential Administration, the Cabinet of Ministers, the U.S. Embassy, Taxes Ministry, entrepreneurs, etc.