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Azerbaijan's capital Baku hosted the third national tax forum titled "Tax system of Azerbaijan: realities and perspectives" on February 6-7.

Addressing the event Azerbaijan's Taxes Minister Fazil Mammadov said the ministry will continue measures for strengthening the stimulating role of the tax system to increase the efficiency of the business environment.

He noted modern global challenges demand the tax bodies to carry out more active policy.

"President Ilham Aliyev declared 2014 the industry year. From this point of view, significant improvement is expected in the development of this field. Establishment of technology parks considered the main driving force of the innovation economy, which will play a major role in the formation of new spheres of the national economy. Also enhancement of its competitiveness, will lead to significant changes in the economic system. The individuals and entities operating in the technology parks are exempt from taxes for seven years, and the operators and managers of these organizations for an unlimited term with aim to promote activities of technology parks," Mammadov said.

He went on to note that one of the major tasks standing behind the country in the coming years is to reduce the dependence of the country's economy on the oil sector, as well as to ensure the development of the non-oil sector.

The minister also said currently, the tax system of Azerbaijan is able to offer taxpayers the majority of services used in the world.

"We are trying to build a system in which the taxpayer will be able to fulfill all tax obligations and not have to come to the tax body," Mammadov said.

"Currently, the Ministry offers over 50 electronic services to the population. This is the biggest collection of such services among all agencies," the minister noted.

"The Ministry has begun a dialogue with taxpayers on the new basis - partnership agreements with entrepreneurs. Also, this is a new and more responsible approach to the usage of new mechanisms of tax control," Mammadov said.

The Minister expressed confidence that all participants will benefit from this partnership in the future.

According to him, the ministry is planning to create new tools directed at strengthening tax surveillance in a number of spheres.

"The mechanism of electronic audit will be launched in the medium term; we started the implementation of the pilot project in 2013. The work on regulation of transfer prices and surveillance mechanisms in the sphere of electronic trade will be continued," the minister added.

Speaking at the event, Deputy Economy and Industry Minister Sevinj Hasanova said the implementation of the Trans-Adriatic (TAP) and Trans-Anatolian (TANAP) gas pipeline projects will make a great contribution to ensuring the region's energy security and that of Europe.

"The implementation of these large energy projects will contribute to the development of the economy of Azerbaijan and the countries through which these pipelines will run," she added.

The deputy minister noted the adoption of the final investment decision on the second phase of development of the Shah Deniz gas condensate field in the Azerbaijani sector of the Caspian Sea, laid foundations for its future large scale development.

She went on to say that the tax policy in Azerbaijan is aimed at the use of targeted and effective benefits and privileges.

"The international financial institutions recommend Azerbaijan either reduces or absolutely eliminates the practice of using tax benefits. At the same time, many experts point out their benefits and privileges, but only if they are used wisely and thoughtfully," Hasanova explained.

Such benefits help Azerbaijan to form a favorable investment environment, she said.

"Tax benefits have demonstrated their effectiveness. It is of particular concern in the benefits for such spheres as agriculture, exemption of dividends on the bank deposits of individuals and securities, banks income and insurance and re-insurance companies from taxation," Hasanova said.

"The use of benefits and privileges has been included in the priorities of the country's tax policy reflected in the development concept of Azerbaijan until 2020," deputy minister noted.

To achieve the goals envisaged in the concept, the budget revenues through the Ministry of Taxes should increase by 10-15 percent per year, Hasanova said.

These revenues have increased by 25 percent per year in recent years and there was a 13.8-percent increase in 2013.

Head of the Parliamentary Economic Policy Committee Ziyad Samadzade said in his remarks the weighted tax policy, and the economic policy pursued by Azerbaijan has allowed the country to successfully meet global challenges.

"The tax policy is the integral part of any country's activity and it is an objective necessity.

"The formation of a tax system in Azerbaijan was carried out in hard times. Now it is all over and thanks to the economic strategy founded by national leader Heydar Aliyev, today Azerbaijan is one of the most dynamically developing countries," the MP said.

"One of the main directions of the active tax policy is the support given to the private sector and increase of income by growing the number of tax payers," Samadzade said.

"For example, recently under the country's president's decree, kindergartens were exempt from income tax for 10 years. This shows that the private sector should pay attention to this sphere. The shortage of preschools has been observed in Azerbaijan for decades and the stimulation of the private sector can resolve this problem. Similar measures of stimulation should be taken in other spheres too," Samadzade added.

In his speech, UN Resident Coordinator in Azerbaijan Antonius Broek also said fiscal policy carried out in Azerbaijan may become an effective tool to achieve the diversification of the country's economy.

He noted one of the main goals for Azerbaijan is to diversify the economy of the country, which can be achieved thanks to the development of small and medium entrepreneurship. The important role in this issue is assigned to the tax system.

"Electronization of the country's tax system has made its contribution to the system's development, and conduction of the next tax forum promotes its further successful progress," Broek said.

Speaking at the event head of the World Bank Baku office Larisa Leshchenko highly appreciated Azerbaijan's successes in the tax administration, in particular applying the information technologies in the tax sphere.

She noted this progress makes a significant contribution to the diversification of Azerbaijan's economy.

"Meanwhile, there is a need to improve the skills of specialists in tax sphere, in particular in the regulation of transfer prices. Azerbaijan intends to take serious steps in this issue," she stressed.

"Today Azerbaijan provides tax benefits for various sectors of the economy. This, on the one hand, is very useful for activities of the companies, in particular in terms of improving their financial condition. However, on the other hand, lack of preferences would facilitate the formation of the loan history of these companies, and encourage them to seek new sources of funding," she noted.

She urged the country's oil companies to join the Extractive Industries Transparency Initiative (EITI), which has proven its efficiency.

The forum was followed by a briefing where Taxes Minister Mammadov said a tax amnesty will be held to pass on to the general income declaration in Azerbaijan.

"Azerbaijan is to introduce a common tax return," he said. "This is a very big project and requires preparation of many procedures. In particular, one cannot pass on to the common income declaration without an amnesty system. Our country is post-Soviet. It will be necessary to hold an amnesty for the full legalization of proceeds. Other operations will be performed and a decision will be made. Preparations are underway."

He also said illegal entrepreneurship has significantly decreased in Azerbaijan.

"Years ago the ministry's department of tax crimes was used to consider hundreds of related cases, but the average number has been reduced to 10 in recent years," the minister said.

"The ministry revealed about 9,000 cases of doing business without registration," he said.

"All these cases are related to small entrepreneurs," Mammadov added.

The minister went on to note that Azerbaijan's all regional centers and cities will be provided with POS-terminals by the end of the year.