Today.Az » Business » Azerbaijan doubles volume of non-cash transactions
10 November 2019 [10:00] - Today.Az
By Ofeliya Afandiyeva
Azerbaijan is successfully transitioning into non-cash society. This will help reduce shadow economy and increase transparency in finance, head of Azerbaijan’s Center for Analysis of Economic Reforms and Communication Vusal Gasimli said these during the 4th International Banking Forum held in Baku on November 6.
The country doubled the volume of non-cash transaction from 9.2 percent to 19.9 percent in 2019 compared to 2016. The share of non-cash turnover in domestic transactions through debit and credit cards, increased 1.7 times from 26 to 44 percent.
Gasimli said that about 7,200 payment cards, 2.5 ATMs and 65 POS terminals account for every 10,000 people in Azerbaijan. Pensions, scholarships, social benefits, salaries in budget organizations and companies operating in the private sector are issued via cards, he added.
“Measures taken in the direction of creating a cashless society include, in particular, reducing the tax burden on the salaries of private sector employees, reducing the simplified tax rate from four to two percent, exempting 75 percent of the income of small businesses from income (profit) tax in the order prescribed by law, exempting business entities from payment of dividends, stimulation of accounting in electronic form,” Gasimli noted.
These measures also include corresponding changes in the collection of taxes from individuals involved in the non-state sector and not carrying out activities in the oil and gas sector, as well as the preparation of draft laws “On payment services and payment systems”.
Adoption of digital payments will help significantly reduce shadow economy in Azerbaijan, keep records of payments, complete registration of value added in the economy and increase tax revenues, Gasilmi explained. “Doing this will lead to further increase in transparency in trade operations and calculations, in general in the financial system, thereby increasing real GDP in 2020 by 40 million manat ($23.4 million) directly, and by 15 million manat ($8.7 million) indirectly, and this will ensure growth by 55 million manat ($32.2 million),” Gasimli added.
As he explained, digitalization of the mechanism for regulating economic processes will lead to increased efficiency in Azerbaijan’s financial and banking sector and an increase in real GDP by 120 million manat ($70.2 million) directly and about 15 million manat ($8.7 million) indirectly, which will result in growth by 135 million manat ($79 million).
Meanwile, the volume of e-commerce in Azerbaijan increased by 91 percent and amounted to 2.2 billion manat ($1.3 billion) in the first nine months of 2019, First Deputy Chairman of Azerbaijan’s Central Bank (CBA) Alim Guliyev said in the same forum. Noting the rapid development of e-commerce in Azerbaijan, Guliyev added that this growth will accelerate the exemption of e-commerce from VAT, which currently stands at 18 percent.
Speaking in the same forum, director of the information technology department of Azerbaijan’s Central Bank (CBA) Farid Osmanov said that the country will complete the process of introducing a digital identification system based on blockchain technology in Azerbaijan by late 2019. This process will be commissioned in the first quarter of 2020.
Osmanov added that at first there are plans to switch to the remote opening of accounts for legal entities and individuals.
“Other banking services will follow, and at the final stage it is planned to automate the monitoring of funds aimed at financing terrorism and money laundering,” the CBA representative said.
“The direct result of all this will be the transition of the CBA to open banking,” Osmanov noted.