BAKU, Azerbaijan, November 14. Concessions for tax debts and a new limit on transfers from the State Oil Fund of Azerbaijan (SOFAZ) to the state budget can be imposed since 2027.
According to the opinion presented by the Chamber of Accounts regarding the draft state budget for 2027 and fiscal policies for the medium term, starting from 2027, it’s envisaged that transfers from SOFAZ to the state budget will be gradually reduced, with these transfers being aligned with the income generated from the management of the fund’s assets. At the same time, consideration is being given to simplifying the deferral mechanism for economically active taxpayers who face difficulties in settling their tax liabilities, as well as to the possibility of introducing concessions regarding financial sanctions.
The opinion remarked that in the fiscal policy covering the years 2027–2030, the gradual reduction of transfers from SOFAZ to the state budget has been identified as a key priority. The objective is to bring the volume of these transfers in line with the income generated from the management of the Fund’s assets.
The Chamber of Accounts noted that this approach is significant for reducing the state budget's dependence on oil revenues and strengthening fiscal sustainability. In its previous opinions, the chamber had also recommended establishing a direct limit on the volume of transfers from SOFAZ to the budget.
The document also addressed the improvement of the mechanism for managing tax liabilities. Specifically, it proposes simplifying the procedure for granting deferrals for the installment payment of tax debts, as well as considering the possibility of offering concessions on financial penalties and interest for taxpayers who face payment difficulties but continue their economic activities.
According to the chamber’s assessment, the accumulation of tax arrears represents a fiscal risk. Financial penalties and interest account for approximately one-third of these debts. Therefore, the implementation of mechanisms to facilitate debt repayment could help increase state budget revenues while preserving the solvency of taxpayers.
The opinion also highlighted, for the first time, the disclosure of specific targets for revenue policy over the medium term. Under these targets, the level of tax and customs concessions, relative to the Gross Domestic Product (GDP) of the non-oil and gas sector, is intended to be maintained within a range of 7.4% to 8%.
Furthermore, the objective is to keep the variance between the projected non-oil and gas revenues and the actual budget execution within a margin of ±5%. According to the Chamber of Accounts, these indicators are significant for evaluating the outcomes of revenue policy and enhancing the quality of budget forecasting.
At the same time, the chamber considered it appropriate to establish similar quantitative targets for expenditure policy. The opinion noted that, although the main directions of budget expenditure policy have been defined, the absence of specific quantitative metrics and measurable outcome indicators for these areas makes it difficult to evaluate their implementation.
According to the chamber, establishing measurable targets for expenditures, much like those for revenue policy, could strengthen oversight regarding the efficiency of budget fund utilization and enable a more objective assessment of the outcomes of fiscal policy.
