Azernews.Az

By Sara Israfilbayova

The Azerbaijani government plans to introduce tax incentives for retail trade and catering facilities.

Benefits do not provide for lowering tax rates, but will affect the size of the taxable base, that is, the turnover of companies involved in taxation, a source in the government told Trend.

"Tax benefits are planned to be introduced for retail and catering facilities that provide for the stimulation of cashless settlements, namely for operations carried out through POS terminals and bank cards. The tax rates will remain the same, but there will be introduced benefits for the turnover of companies in non-cash form," the source said.

The taxable base can be reduced by a maximum of 20 percent. If these changes are accepted, non-cash turnover of retail and catering facilities will be partially exempted from taxation. In turn, introduction of such benefits will allow companies to reduce their costs and, thus, reduce the cost of services and products.

In recent years, various legislative acts have been adopted in Azerbaijan to stimulate non-cash settlements. So, since 2017, cash calculations by large entrepreneurs operating in the areas of trade and public catering are limited to 30,000 manats ($17,600) a month. Such restrictions affect entrepreneurs with a monthly turnover of 200,000 manats ($117,600). The restriction for other taxpayers is 15,000 manats ($8,800) per month.

In addition, since this year all salaries in the country are paid only in non-cash form, and legal entities and individual entrepreneurs are forced to pay a fine of one per cent for cashing funds.

The Ministry of Taxes reported that relevant measures taken in this regard enabled to decrease the cash turnover in the sphere of purchases of goods and services by 62.6 percent in January-August of 2017, as compared to the same period of the previous year.

The law “On non-cash payments” was adopted in order to strengthen accounting in the financial system, through the development of non-cash payments.

The law envisages a limit for cashing operations. Banks and postal operators will charge a simplified tax (1 percent of the sum) to cash means kept in bank accounts of legal entities and private entrepreneurs.

The volume of non-cash payments in 2016 stood at 856 million manats ($503.3 million), recording an increase of 122 million manats ($71.7) or 16.6 percent.

The Central Bank of Azerbaijan (CBA) and MasterCard have launched Cashless Azerbaijan project, which includes 3 stages, in February 2017.

The first stage is measuring the country's cash economy, the second is defining a strategy for non-cash payments, and the third stage is preparing a detailed plan of actions.

The first stage of the project was presented on July 20, with an objective to diagnose the factors that cause a high level of cash in the economy, measure the volume of the cash economy, reduce the volume of cash payments and develop cashless payments.

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