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Taxation in construction, trade to be simplified

5 October 2015 13:38 (UTC+04:00)
Taxation in construction, trade to be simplified

By Gulgiz Dadashova

The Azerbaijani government plans to simplify the taxation in construction, catering and trade sectors, which will give an additional boost to the development of entrepreneurship and eventually lead to an increase in revenues to the state budget.

While discussing the 2016 draft state budget on October 2, Finance Minister Samir Sharifov made this statement at a joint meeting of the Azerbaijani parliamentary committees on economic policy, social policy, agrarian policy, natural resources, power engineering, ecology, and security issues.

The minister said the tax and customs privileges for a number of sectors would also be reviewed, and in some cases cut for the next year and from 2017 to 2019.

"Since early 2015, global financial markets have been unstable, and we are seeing falling commodity prices. This has led to a reduction in revenue, the weakening of the national currency, the growth of the budget deficits and problems in the balance of payments in countries exporting raw materials,” he explained the reasons for the changes.

The minister then presented the budget forecasts for next year, which were formed taking into account an oil price of $ 50 per barrel.

The minister said the 2016 draft budget was developed considering the instability in the world economy.

Azerbaijan's state budget revenues for 2016 are projected at 14.566 billion manats ($13,922 billion), which is 25.2 percent of GDP, while expenditures are expected to reach 16.264 billion manats ($15,545 billion) (28.2 percent). The budget deficit for 2016 is forecasted at 1,698 million manats ($1,623 billion ), or 2.9 percent of the total GDP of 57.7 billion manats ($55.15 billion).

Budget revenues for 2016 compared to the expected rate for 2015 will be reduced by 25.1 percent, and the actual index will decline by 20.84 percent compared to 2014. States budget expenditures taking into account expectations will be reduced by 22.9 percent, and by 13.07 percent compared to that of 2014.

The share of the oil sector in budget revenues is expected to decrease to 53.5 percent compared to the expected 65.3 percent of 2015, and the documented share of 66 percent in 2014.

Revenues from the Taxes Ministry are expected to reach 6.602 billion manats (with a decrease of 7.2 percent compared to the expected rate for 2015), the State Customs Committee - 1.59 billion manats (unchanged), the State Oil Fund - six billion manats (42.2 percent reduction), the State Committee on Property Issues - seven million manats (unchanged), budget revenues of the budget organizations - 305 million manats (an increase of 1.7 percent), other income - 62 million manats (an increase of 51.2 percent).

Revenues of the consolidated budget for 2016 are forecasted at 16,720 billion manats ($15.98 billion ), and expenses at 19, 906 billion manats ($19,026 billion). Rate of the manat against the US dollar in the state budget for next year is set at 1.05 manat.

The decrease in transfers from the SOFAZ, as well as an increase in the share of non-oil revenues of the state budget is a priority in the budget and fiscal policy for the coming years, Sharifov said.

The minister also revealed that Azerbaijan’s real economic growth is expected to reach 3.3 percent in 2015 and total GDP volume would be 57.2 billion manats ($54.67 billion).

He said that expectations fall 1.1 percentage points short of the original forecast for 2015, adding that the decline in GDP growth rates would continue until 2019.

The real growth of Azerbaijan's economy was projected at 4.4 percent in 2015, while the GDP volume is expected to be roughly 59.8 billion manats ($57.15 billion).

According to government forecasts, GDP growth rates will hit 1.8 percent in 2016, while the total volume of value will reach ($55.15 billion).

Non-oil sector growth is projected at 3.4 percent in 2016, while value added in the oil sector will decrease by 1.7 percent.

Azerbaijan is the second-largest oil producer in the former Soviet Union region after Russia and Kazakhstan. Oil and gas make up 95 percent of Azerbaijan’s exports, over 65 percent of its state revenues, and 40 percent of its GDP.


Follow Gulgiz Dadashova on Twitter: @GulgizD

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