Azerbaijani Finances Ministry for cut in direct tax rates

"At present amendments to the Tax Code are under discussion and cut in tax rates remains an only uncoordinated issue. By May 15 draft changes and amendments will be submitted to the parliament," Alizade said.

The Finance Ministry supports essential cut in income tax rate and is ?alculating efficiency and losses of every cut percent, Alizade said.

Since 2008 the sum taxed by maximal rate of 35 percent is 2,000 manats.

Alizade said currently increase of the income ceiling is not under discussion, whist it is only dealt with cut in rates.

Draft changes to the lax legislation developed by the Taxes Ministry do not envisage changing income tax rate. It is planned to reduce profit tax rates 2% and value added tax 1%. As the result rate of profit tax will reduce 20% but value added tax 17%.

"We do see not a need to cut value added tax rate, because it is an indirect tax and is collected from taxpayer's circulation. We support change of profit tax rate, as cut in direct tax rate assumes essential significance for the developing local production," Alizade said.

A new version of the Tax Code will be possible to introduce from 2010. First in 2009, supplements to the tax legislation will be adopted apart form the public budget. This will enable to consider and approve budget forecasts, as well as allow tax payers to get familiarize with changes to the tax legislation beforehand.

The last changes in tax rates in Azerbaijan were made in 2006 and tax profit rates reduced from 24% to 22%. Sum of profit on income tax imposed by maximal rate 35% increased from 600 manat to 2,000 manat (since 2008).

Sum over 280 manats+2,000 manats are taxed by 35 percent.

In this case annual income ceiling to be taxed by 14 percent is 24,000 manats, whilst the sum over 3,360+24,000 is taxed by 35 percent.

/Trend Capital/