Azerbaijan enters new post-oil era - Taxes Ministry
By Aynur Karimova
Azerbaijan has entered a new post-oil era, which is proved by the fact that only 21.5 percent of the total volume of tax receipts of the state budget fall to share of the oil sector.
Deputy Minister of Taxes, Sahib Alakbarov announced about this while talking to media on April 6.
He said in the first quarter of 2016, the tax revenues of the budget from the non-oil sector comprised 78.5 percent of the total transfers from the Taxes Ministry.
The government of Azerbaijan has set a goal to form economic growth through the non-oil sector in the period up to 2020-2030.
The state takes measures to broaden the state support for production of non-oil products, creation of new enterprises and reconstruction of the existing ones.
Particular attention will be paid to the establishment of the enterprises for processing natural resources and agricultural products. In 2016, the timely and full redistribution of tax revenues from medium and large enterprises will be ensured in order to increase revenues from the non-oil sector.
Economists believe that Azerbaijan will be able to achieve the increase of the share of the non-oil sector in the country's GDP in a short term.
Alakbarov went on to add that the volume of tax liabilities in Azerbaijan declined by more than 30 percent in the first quarter of 2016.
"If the amount of the tax liability was 2.4 billion manats ($1.58 billion) in early 2016, this figure exceeded 1.6 billion manats ($1.055 billion) as of April 1. Tax liabilities of the state-owned enterprises accounted for 22 percent of the total liability," he noted.
Over the past 10 years, Azerbaijan's budget revenues transferred from the Taxes Ministry increased by 2.6 times, including from the non-oil sector - by 4.9 times.
In 2015, the Taxes Ministry ensured the execution of the tax revenue collection forecast at 100.1 percent. Some 7.118 billion manats ($4.69 billion) was transferred to the state budget or by 4.5 million manats ($2.97 million) or 0.1 percent more than in 2014.
Under the law "On state budget for 2016", which was approved by President Ilham Aliyev last December, the budget revenues for 2016 are projected at 14.566 billion manats ($9.6 billion), including centralized revenues - around 13.8 billion manats ($9.1 billion), local revenues - around 766.346 million manats ($505.34 million).
Alakbarov went on to stress that tax evasion is one of the main problems of the tax system and the major part of the tax evasion in Azerbaijan falls on the trade sector.
"This is the problem of the tax culture of population. Facts of tax evasion are reveled in almost 99 percent of tax audits. Basically, the same situation is fixed in the trade, and construction sectors, as well as in the field of public catering," he said.
Alakbarov further added that the Taxes Ministry offers to reduce the rate of value added tax for non-cash transactions from the current 18 percent to 9 percent.
He believes that this will help to stimulate non-cash payments in the country.
Speaking about the tax benefits applied in the agricultural sector, Alakbarov said that since the beginning of application of tax benefits in this sector, their aggregate value amounted to 3 billion manats ($1.98 billion).
The official recalled that during the global crisis, tax rates are rising, while in Azerbaijan, new privileges were introduced. In particular, since January 15, 2016, an enterprise engaged in the import and sale of grain, including in the production and sale of flour, have been exempted from VAT.
In Azerbaijan, the agricultural sector is exempt from all taxes, except land tax.
Tax privileges for producers of agricultural goods are applied in Azerbaijan since 2001. Last time the tax benefits were extended to individuals and legal entities engaged in production (including industrial production) of agricultural goods in 2014 for five years.
Doing business
The deputy minister also spoke about foreign companies doing business in the country.
Alakbarov said that in the first two months of 2016, some 114 foreign companies were registered in Azerbaijan.
“Unlike previous years, foreign companies are mostly represented in the non-oil sector of Azerbaijan's economy,” he emphasized.
Azerbaijan has become one of the most attractive countries for foreign investments with its fast economic growth, a favorable geographic location, rich natural resources, and highly skilled workforce.
With its favorable location at the crossroads of East and West and promising opportunities, Azerbaijan remains an alluring destination for foreign investors who desire to establish their companies in the country.
To ease doing business, the Azerbaijani government has signed numerous agreements to encourage foreign investments and to put in place legislation facilitating the establishment of companies, while limiting corporate taxes and enacting laws to protect foreign investments.
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Aynur Karimova is AzerNews’ staff journalist, follow her on Twitter: @Aynur_Karimova
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