Tax and administrative burden of taxpayers to be reduced in Azerbaijan

By Trend

The problems caused by the COVID-19 pandemic are being resolved today through the decisions rapidly made by the Azerbaijani government and a flexible response to the raised issues, including support rendered by the government to the business entities working in the spheres affected by the pandemic and providing them with tax benefits and tax holidays, which are another important step of the government in this sphere.

First of all, when developing the package, tax benefits and tax holidays, the government thoroughly took into account the entrepreneurs’ opinions, clearly showing that it intends to solve the problems of entrepreneurs within the partnership.

The second important moment is the coverage of the preferential package. The proposals prepared by the State Tax Service under the Ministry of Economy envisage the necessary amendments not only to the Tax Code, but also to the social insurance legislation.

One of the key points here is the content of the package of proposals, which generally stipulates that the draft documents have a social core, serve to reduce the tax and administrative burden of taxpayers.

It is planned to fully exempt taxpayers involved in the spheres directly affected by the COVID-19 pandemic since January 1, 2020 from property tax and land tax for a period of one year, as well as a number of tax benefits depending on the taxation method they choose.

So, in accordance with the proposals, taxpayers working in the profit / income tax regime are planned to be provided with tax benefits in the amount of 75 percent of revenues.

Taxpayers operating in the field of public catering and passenger transportation, and paying the simplified tax, are provided with a 50 percent discount, for example, the tax rate in public catering decreases from eight percent to four percent.

Moreover, the reduction in the tax and administrative burden of taxpayers also affected the package of benefits.

So, among the proposed benefits are to reduce the tax rate for individuals levied from the source of payment for the rental of real estate from 14 percent to seven percent, exempt from current tax payments for up to one year and issuing of certificates about current tax payments, extend the deadline for paying the last tax for 2019 until September 1, 2020, extend the period for payment of income tax and property tax calculated for the previous year by taxpayers who are not micro-entrepreneurs until September 1, 2020, defer the accrued interest on compulsory state social insurance and unemployment insurance contributions since April 1, 2020 through January 1, 2021, as well as extend the rights of people engaged in VAT registered public catering from April 20 through September 1 to choose a simplified taxation method for 2020.

There is no doubt that the consequences of a pandemic greatly disturb micro-entrepreneurs. However, the taken measures give the ground to say that there are no grounds for micro-entrepreneurs’ concern.

Thus, there is a particularly sensitive approach towards the micro-entrepreneurs in a package of proposals. The package envisages the benefits for all micro-entrepreneurs, regardless of whether the pandemic affected them or not, which is the great help for them. For example, in accordance with the project, it is planned to provide micro-entrepreneurs with a 50 percent discount on simplified tax - from two percent to one percent of the tax rate.

It is also planned to submit the reports on simplified tax, income tax and property tax as of the first and second quarters of 2020 and to use tax holiday for the payment of accrued tax to the budget until September 1, 2020.

It is planned not to include the periods of time during which the relevant activity is fully or partially limited and to postpone the repayment of taxes for further months upon the Cabinet of Ministers’ decision for taxpayers who are individually engaged in receiving a fixed check.

The proposals also contain the answer to the question about the fate of all other entrepreneurs. So, a number of tax benefits and exemptions covers all business entities.

The benefits of this category include unlimited deduction of expenses from income for the necessary preventive measures which are carried out by the taxpayer to prevent epidemics and protect the life and health of the population, as well as the preterm exemption of certain types of food and medical supplies necessary for the population from VAT.

Finally, one of the most relevant benefits is the exemption of medical equipment and medical supplies, as well as certain types of food products, including baby food from VAT for the period required to combat the coronavirus pandemic, which testifies to the social content of the package.