Azerbaijan plans changes in social insurance deductions
By Nazrin Gadimova
Azerbaijan will change the structure of deductions for mandatory state social insurance, chairman of the State Social Protection Fund Salim Muslumov said at a press conference dedicated to improving the basic labor pensions on August 28.
The current rate of such deductions is formed from two sources: the deductions made by the employer in the amount of 22 percent of the salary fund of the enterprise, and the deductions worth 3 percent of the employee's wage.
"We do not plan to change the deduction rates for social insurance," Muslumov said. "The changes will be made within the rate. Currently it makes up 25 percent under the "22+3" scheme, while we proposed to change the scheme to "18+7". Thus, it is assumed that the individual part of this rate for employees will increase from 3 to 7 percent, and the employer will pay 18 percent out of the salary fund."
According to Muslumov, a similar process is underway in European countries and the CIS.
"The share of the funds paid out of wages increases and the liability of employers decreases. In European countries the popular scheme "50/50" is being used: if the tariff is set at 20 percent, 10 percent is paid by the employer and the other 10 percent by the employee. Moreover, increasing the share of employees in the rate of social security deductions is provided for in a relevant state program," Muslumov said.
According to him, the structure of the social tax may be changed later this year, and in the event of difficulties this could happen in early 2014.
The State Social Protection Fund is the central executive body administering mandatory state social insurance and labor pensions in Azerbaijan. In its activity the Fund is guided by the Constitution, the laws of the Azerbaijan Republic, decrees and orders of the President, resolutions and orders of the Cabinet of Ministers, as well as international agreements joined by Azerbaijan.