New proposals on decrease of tax rates prepared in Azerbaijan

Azerbaijan-Turkey Business Association (ATIB) has prepared proposals on amendments in Azerbaijan’s economic legislation, especially Tax Code. Proposals consider decrease of rates on some tax types.

So, ATIB thinks that sanctions considering responsibility for violation of tax legislation in Tax and Criminal Codes are very severe. That is, at present, according to current legislation, criminal case maybe launched in case if tax in amount of AZN 2000 and more (maximum penalty on this article is 7-years imprisonment). ATIB offers to rise it to AZN 20 000.

Moreover, ATIB experts consider that when tax organs send written notice to relevant bank for the purpose of determination of tax liabilities of taxpayer, the fixed period for it is short and cause dissatisfaction of taxpayers.

Remind that, according to articles #76.2 and 76.3 of the Tax Code, after relevant bank receive notice from tax organs related to client, it must inform the client about the information shown in the notice within 5 days. 15 days later of sending this information, if the court does not consider this petition, the relevant bank send the information about legal entity and private entrepreneur’s accounts or operations to tax organ. ATIB offers to substitute the period in these articles from 5 to 7 days, from 7 to 15 days.

By the way, ATIB says that after the information on court considering of this issue is sent to bank, tax organs make additional orders to accounts on that argument. And it inflicts harm on taxpayer. The organization offers forbiddance of such orders.

ATIB’s most interesting proposals are related to tax reduction. The organization offers VAT rates to be decreased from 18% to 15% and apply of VAT in different rates. ATIB experts offer that, VAT rates must depend on importance of spheres which it applied in and apply in 1% for preliminary goods and services for need, 8% in important goods and services, 15% in non-important luxury gods and services.

Besides, it was offered to reduce the allotment part of employers of social insurance allotment from 22% to 15%.

ATIB also offers to reduce income taxes of individuals. This includes reduction of maximum rate from 30% to 25%, and increase of limit where it was applied in from AZN 2000 to AZN 3000. According to offers, no tax must be applied for the part of average salary until AZN 200, tax for AZN 200-3000 must be 14%, for over AZN 3000 – AZN 392 and 25% of salary over AZN 3000.

Besides, it was also offered to increase the maximum turnover for simplified tax from AZN 90,000 to AZN 150,000 for individuals, from AZN 150,000 to AZN 250,000 for legal entities. And ATIB offers to deduct the available part of expenses of employees’ meal, health, apartment, and other social expenses from incomes. According to these proposals, not over 10% part of tax payers’ income must be deducted from incomes.


/APA/