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Fighting shadow economy during pandemic

Fighting shadow economy during pandemic

Economy
08 July 2020, 17:15 107
According to experts, the ongoing reforms will have a positive impact on economic development in the post-pandemic
 
President of the Republic of Azerbaijan Ilham Aliyev and First Lady Mehriban Aliyeva attended the inauguration of a modular hospital of the Health Center of the Ministry of Emergency Situations for the treatment of coronavirus patients in Khatai district, Baku on July 6. In his opening speech, the President touched upon several issues.
"Tourism is at zero levels. Although we thought that this year about 3.5 million tourists would visit the country. Since last year it was a record limit of 3 million. This is what we planned for this year, which would mean at least $2 billion in foreign currency entering the country's economy. We were deprived of this as well. In six months, the tax and customs authorities were able to attract AZN 423 million to the state budget in addition to the forecast. AZN 98 million of which was provided by the customs authorities and the rest by tax authorities. At the expense of what? Precisely due to transparency, honesty, and the reduction of the shadow economy. In other words, we carry out these reforms even at the most critical moment and achieve excellent results," the Azerbaijani President said.
Such reforms, carried out even in the most critical moments, are commendable. In particular, this will have a very serious impact on the recovery of the economy in the post-pandemic period. We asked experts for their opinions on the fight against the shadow economy.
According to economist Parviz Heydarov, this trend should have continued in 2020, but, unfortunately, after January-February of this year, for obvious reasons, the country's economy faced a major crisis and it became difficult to implement several plans. "Reforms regarding the shadow economy began last year. This year, despite all the difficulties and the crisis, it continues and is very positive. 2019 was remembered as a year of great reforms and changes for Azerbaijan. Not because salaries, pensions, and social benefits have been increased. Last year, with about 300 amendments to the Tax Code, the tax fiscal policy of the budget was changed. This mechanism introduced a different and new approach to the budget. As a result, more than 1 billion of funds were transferred to the state budget through taxes and customs. There was a significant increase in the percentage of employment contracts, and there was a significant weakening of the shadow economy in the economy. In short, we have witnessed legalization in the economy, which should have continued in 2020. But, unfortunately, after January-February of this year, for obvious reasons, the country's economy faced a major crisis and it became difficult to implement several plans. But it is very positive that some figures for the first half of the year show that despite all the difficulties, I mean the quarantine regime, the crisis, and even the restriction of several businesses, the legalization process, which began last year, continues this year. It is very positive that more funds in addition to the forecast are entering the state budget through taxes and customs,” Heydarov said.
The expert also noted that the figures for the signing and disclosure of employment contracts continue to rise. "I think the process will continue until the year end, which will allow us to emerge from the crisis with fewer losses, as well as to resume social reforms in the post-pandemic period,” he added.
Economist Fikret Yusifov said that the amendments to the tax legislation were made to combat the shadow economy. "It is also aimed at legalizing illegal activities. More serious steps have been taken in this direction since 2019. I think that the approximate 1 billion funds collected last year, and now 493 million manat in addition to the forecast, is the result of the government's successful work to legalize the shadow economy. I think we see the effective results of the steps taken in the current situation. Although our country is currently living in a pandemic period, steps are being taken in this direction. Doing so is important for the future. Because unless this reform is implemented, the country's money will not go to the budget, but the pockets of individuals. The process of transparency is underway in all areas, which allows the necessary funds to be collected in the state budget,” he said.
 
Gunel Azade