Baku, Azerbaijan, Jan.15
By Azad Hasanli - Trend:
The Central Bank and the Ministry of Taxes of Azerbaijan has created a working group to define a methodology of calculation of taxes on dividends on deposits, the banking circles told Trend Jan.14.
A part of the interest income up to 500 AZN per year, which is received on deposit in a bank, is exempt from income tax, according to the amendments to the Tax Code of Azerbaijan adopted by the parliament at the end of 2014. The tax rate on this income is 10 percent.
Tax on dividends affect depositors interests, accrued since 2015.
Since 1999, a moratorium on the imposition of income tax on citizens' income received on deposits in banks and other credit institutions was in force in Azerbaijan. However, the moratorium expired at the end of 2014, and it was decided not to renew it.
Currently, uncertainty remains regarding the mechanism for tax calculating according to the period of income: dividends may be obtained throughout the year or at the end of the calendar year in accordance with the agreement between the bank and the customer.
In addition, due to amendments to the Tax Code, the banks intend to make changes in the software related to record-keeping. A new feature of tax withholding will also be needed to introduce.
Currently, representatives of banks find it difficult to answer, what the results of the new amendments may lead to, but there is a risk that this will lead to an outflow of customers, especially when it comes to large investors. Therefore, some banks now think through options for compensation of tax on dividends on deposits.
For example, NIKOIL BANK considers the mechanism of partial compensation of tax on dividends on deposits. However, the chairman of the bank Vasily Khamaza said that due to changes in the Tax Code, the outflow of deposits from the bank is not observed.
At the same time, the Director of the Department of Finance of Expressbank Anar Hajizadeh said that tax on dividends is unlikely to lead to an outflow of customers. "There may be some discontent among the contributors, but a large outflow shouldn't be expected," he told Trend. "After all, where should people keep their money (the matter rests in the big depositors)? They either have to invest it in a business or to continue to keep it in the banks and pay the tax."
Hajizadeh said that this tax is a usual experience in many countries, including neighboring Russia and Turkey.
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