Amendments to Tax Code to ensure transparency
Economy20 November 2019, 14:05 645
According to experts, responsible taxpayers will receive more concessions, and the underground economy will shrink
The Azerbaijani parliament held discussions on amendments to the Tax Code. Chairman of the Parliament Committee for Economic Policy, Industry and Entrepreneurship of the Republic of Azerbaijan, Academician Ziyad Samadzade noted that the amendments are of great significance in Azerbaijan’s history in terms of scale and scope. According to him, 162 amendments will be made to the Code, all fundamental goals for Azerbaijan's economic development. After the discussions, the amendments were put up for a vote and adopted in the first reading.
So what is the significance of these amendments to the Code, and will taxpayers be able to adapt to these amendments?
Economist Vugar Bayramov said changes to the Tax Code reflect a number of areas. "First of all, the amendment envisages an extension of the tax period. At the same time, according to the amendment, those who work in industrial parks will also be eligible for tax relief. In this regard, expanding the period and scope of tax benefits is a positive decision. This is also important for entrepreneurs to benefit from tax relief. Entrepreneurs will be able to expand their business by taking advantage of these benefits. This is one of the most important and set priorities. Strengthening tax control is also important. Greater use of cashless payments and post-terminals will expand non-cash transactions. In this context, we will strengthen tax control. All this is especially important in building tax culture. The amendments will allow responsible taxpayers to receive more concessions and government support. The amendments allow individuals and legal entities to benefit from tax concessions. This is also important in terms of tax burden reduction and access to tax services. The new system regarding smart post-terminals, which has been under discussion for some time, is expected to be introduced next year. This will allow our citizens to pay with plastic cards to receive bonuses, thus reducing the size of the underground economy. Amendments to the Code will allow more citizens to use the bonus system and promote the legal economy in practice. I believe taxpayers will easily adapt to these changes. Because most of the amendments regard tax deductions,” he said.
MP Azer Badamov said that the Tax Code undergoes regular changes. "By the end of 2018, about 200 amendments were made to the Code. In 2019, we witnessed the positive outcomes of these changes. Over 10 months, more than 850 million manats were added to the state budget from tax and customs services as a result of structural reforms. We achieved greater success because of transparency. This year, amendments were made to the Code again. The main objective is to eliminate the underground economy and achieve full transparency. Cooperation with entrepreneurs in taxation will reach a new level. These changes will help strengthen control and prevent tax evasion. At the same time, control over the activities of international transnational companies will improve. Thus, contributing to a more complete and accurate tax policy in our country,” he said.
Economist Rashad Hasanov said that the main purpose of the amendments to the Tax Code is to improve the economy and the business environment in Azerbaijan. "Generally, there is a need for further optimizing the environment. However, experience shows that frequent amendments to the Code create problems for entrepreneurs. Massive changes create certain difficulties in business planning over the long term and complicate the formation of administration. However, these changes stem from a certain necessity. Under these circumstances, the Ministry of Taxes evaluates some issues from its perspective and takes fewer proposals from other agencies into account. However, certain amendments are expected to ensure transparency. Limiting the simplified tax system in the construction sector may, in fact, lead to transparency in the various value chains and reduce the scope of informal entrepreneurship. Taxpayers operate under a more primitive form of accountability in a simplified tax system. They are not so keen on providing documents that prove the value of the goods and services they carry out. These changes ultimately provide some basis for proof of expenditure. Proof of these expenses will, in turn, lead to the demand for documents that require the cost of goods and services in this segment. Thus, there will be some transparency in other areas of the construction sector,” he said.
The economist said that some of the amendments regard strengthening the use of post-terminals. "This, in turn, will improve the cashless economy because one of the biggest problems is the lack of post-terminals in the regions. This also leads to limited cashless payment opportunities. In international practice, in some cases, cash turnover is identified as the underground economy. In countries with a cash economy, the size of the secret economy is usually greater. From this point of view, we need measures to improve the environment towards the formalization of the economy. These amendments will improve the infrastructure and provide the precise fulfillment of obligations set in this direction,” he added.