TODAY.AZ / Business

Gov't keen to tax operations with offshore companies

15 December 2016 [14:47] - TODAY.AZ

By Azernews


By Nigar Abbasova

Azerbaijan’s Taxes Minister Fazil Mammadov announced that operations with offshore companies are planned to be a subject of taxation in the country.

Mammadov spoke about the changes to the Tax Code in a meeting of Azerbaijan’s parliamentary committee on economic affairs, industry and entrepreneurship. In tote, some 201 amendments and 115 new articles are proposed to the document.

The minister said that the transfer prices are planned to be applied to operations with companies registered in offshore zones, mentioning that the practice will be used in operations the total amount of which with each offshore company exceeds 500,000 manats ($ 286,123) within a year.

Funds Transfer Pricing is a strategy used to reduce tax liabilities by pricing goods and services within a group structure in a way that it does not reflect the arm’s length transaction.

The minister said that the mechanism will help to identify people, who evade income tax and profit tax through the offshore companies, and to make such operations taxable.

The minister said this practice exists in Latvia, Estonia, Kazakhstan and Georgia.

 “Article 14 of the Tax Code regulates definition of the market value for goods and services, but it does not allow to control a proper distribution of income and expenditures between resident tax payers and those residing outside the country. Therefore, we offer to make certain amendments, which envisage the use of transfer pricing for income of companies registered in offshore zones,” Mammadov clarified.

He underlined that certain recommendations made by the Organization for Economic Co-operation and Development (OECD) and international experts were taken into account while developing the changes to the Tax code.

The proposed changes also envisage that the sale of bad assets of banks will be exempt from VAT for the period of 3 years starting from January 2017.  Mammadov said that the measures will be taken within the process of reconstruction and improvement of insolvent banks operating in the country.

Currently, some 32 banks possess licenses to operate in Azerbaijan.  

 Other changes proposed to the Tax Code include the reduction in the volumes of cash payment, taxation of e-trade, reduction of tax burden, expansion of rights of taxpayers.

URL: http://www.today.az/news/business/156957.html

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