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Simplified taxation a boon for Azerbaijani construction sector

22 October 2015 16:50 (UTC+04:00)
Simplified taxation a boon for Azerbaijani construction sector

By Vusala Abbasova

The Azerbaijani government has decided to make revolutionary changes in the country’s tax legislation, simplifying the property tax procedures for entrepreneurs.

The move supports doing business in the country and introduces new privileges for entrepreneurs.

The relevant amendments made to the tax code will come into the force on January 1, 2016.

The amended legislation releases individuals and legal entities, who deal with housing, from a range of taxes. The entities will pay a single tax known as "simplified taxation" for buildings, which are under construction, and VAT for buildings, which are put into operation.

Legal entities involved in housing construction will pay only a simplified tax and are hence fully exempt from paying VAT and profit tax, while individual entrepreneurs will be free from income tax, Taxes Minister Fazil Mammadov said.

People involved in housing construction will pay the simplified tax in amount of 45 manats ($43) per square meter of taxable items.

Also, special taxes will be applied depending on the location of the taxable item in the country, Mammadov said.

If taxpayers do not utilize the simplified taxation procedures, they will be registered as VAT payers. They will have to pay profit taxes for commissioned residual and non-residual areas at the end of the year, he added.

The amendments release the individuals and legal entities from tax payments until they begin selling apartments. That is expected to positively impact the construction sector and to stimulate business development in the country, Mammadov said.

Over the recent years, the construction sector of Azerbaijan has prospered quite well, greatly promoting the non-oil sector of economy.

Azerbaijan is moving to become a modernized and developed country, while maintaining its national peculiarity, which combines Eastern charm and European culture in architecture.

Azerbaijan has seen a sharp progress in its construction sector, which was demonstrated within the organization of the First European Games in Baku on June 12-28, 2015.

As part of the event, Azerbaijan has built a lot of large-scale buildings, the construction of which was based on the joint activity with the local and foreign experts.

This event showed the country's readiness to hold such large-scale events in the future, Dovletkhan Dovletkhanov, the Deputy Chairman of the State Committee for Urban Planning and Architecture, said at the opening ceremony of the 21st BakuBuild Azerbaijan International Construction Exhibition, on October 21.

Azerbaijan has great capabilities in the construction sector, creating an opportunity to expand its competitiveness, with a view to diversify the economy and develop the non-oil sector, protect investor rights, and create a favorable business and investment environment.

The country's construction sector entered into a new stage of development by adopting international experience in this sphere.

A large number of new design solutions and construction materials and equipment for the implementation of the large-scale projects were used.

As a result of measures taken within the development of the construction sector, a great number of residential houses are being built, which are becoming valuable architectural monuments.

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