BAKU, Azerbaijan, May 7
By Eldar Janashvili – Trend:
The beginning of 2020 stayed in people’s memory by President of Azerbaijan Ilham Aliyev’s speech on February 3 at the conference dedicated to the results of the first year of the implementation of the State Program on Socio-Economic Development of the Azerbaijani districts in 2019-2023.
In his speech, the president unequivocally stated that in order to bring the national economy to a new high qualitative level, it is necessary, first of all, to increase the effectiveness of the fight against the shadow economy by making changes in the Tax Code in favor of the taxpayers.
A week later, during the press-conference entitled “Tax Reforms: From Shadows to the Light”, Azerbaijani Minister of Economy Mikayil Jabbarov stressed that the measures were taken recently in terms of building transparent business relations within the state-business scheme.
“The government has laid the foundation for a new transformation of such relations and introduced soft tax control,” Jabbarov added.
Referring to the business activity and business flexibility, the minister emphasized that a big number of small and medium-sized enterprises in the country create a solid foundation for employment and sustainable economy, showing again the importance of bringing the economy into a sphere of high transparency, Trend previously reported.
"In general, the positive approach of the business community to the format of new relations once again proves the correctness of the policy which is being pursued while their transparency has not alternative," Jabbarov added.
“The changes in the tax system that have come into force this year will allow citizens to return 30 percent of the paid amount for the first acquired real estate, and citizens will be obliged to register the goods purchased from individuals not registered in the tax bodies,” Azerbaijani Deputy Minister of Taxes Ilkin Valiyev said at the abovementioned event.
Valiyev also hinted at the upcoming changes to the country's Tax Code.
Three days after the press-conference, the Azerbaijani Ministry of Finance created the "Centralized Electronic Register" on tax and customs benefits and a week later, the State Tax Service under the Azerbaijani Ministry of Economy re-determined the criteria for the facilities on which POS-terminals will be installed, making a decision to install them in the wedding houses.
In accordance with the amendments made to the Tax Code since January 1, 2020, financial sanctions in the amount of 1,000 manat ($588) are applied for the first time, 3,000 manat ($1,764) for the second time and 6,000 manat ($3,529) for the third and more times in case of refusing from accepting cashless payments at the facilities in which the POS terminal has been installed and at the facilities in which the installation of POS terminals is mandatory.
Meanwhile, coronavirus penetrated into Azerbaijan, affecting the national economy and its penetration required to find new solutions to smooth out the effects of the impending global crisis.
The scale of the pandemic in the world and its impact on all the processes of the society have required such a special attention that a new eighteenth chapter on temporary tax regime, which is applied in connection with a big change in economic conditions as a result of the spread of the coronavirus pandemic, was added later to the Tax Code.
Even at the beginning of the spread of coronavirus in the country on March 12, the Cabinet of Ministers decided to approve the criteria on tax exemption for institutions, departments and organizations operating in the field of science, education, health, sports and culture.
In accordance with the decision, criteria on tax exemption for institutions, departments and organizations operating in the field of science, education, health, sports and culture were approved in accordance with Article 106.1.18 of the Azerbaijani Tax Code.
In an interview with reporters on March 23, Jabbarov stressed that in connection with the coronavirus pandemic, the companies operating in 12 spheres that are subjects to great negative impact, such as tourism, hospitality, food supply, entertainment, transportation, shopping centers and others, will be provided with benefits.
"In the current conditions, the intensive work is underway to determine the spheres most affected by the coronavirus pandemic, including the main spheres that shape the economic growth and employment, to strengthen the country's economic and financial stability and outline the support measures that may be implemented by the state," the minister said.
A week later, the deadline for paying taxes and filing declarations were extended in Azerbaijan till April 6, then till April 21 and finally till May 31.
The process of filing a single declaration on taxes, social and health insurance has been launched in Azerbaijan since April.
The forms related to "Tax declaration withheld at the source of payment in connection with hired work", "Quarterly report on mandatory state social insurance", "Quarterly report on unemployment insurance" and "Quarterly report on compulsory health insurance" were approved and united upon the Ministry of Taxes’ corresponding order to create a new unified form – “Declaration (report) on taxes withheld at the source of payment in connection with hired work, compulsory state social insurance, unemployment insurance and compulsory medical insurance”.
Moreover, in accordance with the Law of the Republic of Azerbaijan on Amending the Law on Health Insurance dated March 30, 2020 #32-VIQD, the deadline for calculating and submitting reports on the payment of mandatory health insurance was extended until April 1, 2021 for categories that include the hired workers, servicemen, those appointed to the positions by the Azerbaijani parliament or by a body chosen by the relevant executive body, working people getting salaries, individuals registered as taxpayers, individuals carrying out activity on the basis of civil law contracts, and the individuals involved in the import and production of fuel products.
Then, a grand package of amendments to the Tax Code, which envisaged a wide range of tax benefits and tax holidays for business entities working in the spheres affected by the pandemic was submitted to the Azerbaijani parliament on April 22 and later adopted.
Thus, the package envisaged tax incentives in the amount of 75 percent of the received profit and a 50-percent discount on the amount of simplified tax and the tax rate on the rent of real estate.
The measures of reducing the social burden of a number of workers involved in the services sector and agriculture were also taken.
“The total cost of the package amounted to about 114 million manat [$67 million],” Azerbaijani First Deputy Minister of Taxes Sahir Mammadkhanov said.
During the first week, 22,976 taxpayers appealed for state support to pay a certain part of the salaries of employees, 73,760 private (micro) entrepreneurs appealed for financial support; in total, 96,736 taxpayers, involved in the spheres affected by the pandemic, appealed for state support.
The appeals received from 19,061 entrepreneurs to pay part of salaries to 178,587 employees were considered, approved and sent to the Ministry of Finance for the transfer of the assigned funds to the taxpayers’ bank accounts.
The State Treasury Agency of the Ministry of Finance transferred the funds in the amount of 38.5 million manat ($22.6 million) to 17,568 taxpayers for paying the salaries to 168,778 hired workers on April 27.
Eldar Janashvili, Department of Economy at Trend News Agency