AZERBAIJANI MINISTRY OF TAXES ABOUT TO START NATION-WIDE SUBMISSION OF INCOME STATEMENTS

 

"The Caspian Integration Business Club (CIBC) cooperates in the integration of relations between various governmental bodies and entrepreneurs up to the partnership level", said today (July 18) Fazil Mammadov, Minister of Taxes of the Republic of Azerbaijan. He also said CIBC was one of the largest organizations bringing businesspeople together.

 Fazil Mammadov provided details on the activities of the Ministry of Taxes and spoke about future prospects of the body.

 The Minister said government pays special attention to the entrepreneurship development policy in Azerbaijan, each year funds are allotted from the state budget for development of business, a direct evidence of support President Ilham Aliyev provides to the private sector.

 Speaking at the sitting, Mr. Mammadov said one of the primary objectives of the government is transition to nation-wide income statements. He said this process calls for a major preparatory work, making amendments to the present regulatory and passing new acts, including "Amnesty of Incomes" in order to legalize real assets within the country's economy. In this respect Azerbaijani es is about to complete preparatory works for transition to nation-wide submission of income statements. He said the preparatory process is technically complete, which is evidenced by revisions and amendments to the Tax Code of Azerbaijan concerning electronic submission of declarations. "The legal aspect of the process is being handled now. However, in 2008 it will be not possible to perform this transition as both the ministry and taxpayers shall get ready for it", said Mr. Mammadov.

 Speaking on the growth of tax delinquency, Mr. Mammadov said the governmental agencies are the main ones who do not pay taxes. According to him, legal entities are more accurate in paying taxes than governmental bodies. It is remarkable, said Minister, that governmental agencies hope to cover tax delinquency through possible restructuring. "Twice the government wrote off their tax delinquencies. However, now the latter shall finally get used to market conditions and get rid of tax delinquency restructuring practice. This will not happen for sure in 3-5 years", said Mr. Mammadov.

 Minister said tax delinquency issue shall be solved as soon as non-payments cease among large legal entities.

 Fazil Mammadov said the last examination of excise duty stamps is not a temporary campaign. "The Ministry of Taxes was assigned to exercise full control in this respect and we are confident we can handle this", said the Minister.

 «This program is getting more and more serious, we are raiding across sales points and warehouses and confiscate goods with incompliant labeling», said Mr. Mammadov.

 Alongside, the Ministry has been checking cash registers for more than half a year. "All cash operations in Azerbaijan shall be performed through cash registers and all alcoholic beverages and tobacco production shall be labeled using excise duty stamps as defined by present regulatory", said the Minister.

 "Today Azerbaijan is progressing rapidly, the process of capital accumulation in business-sphere initiated, and the relevant regulatory shall work like in other civil states», Mr. Mammadov went on.

 He also dwelt upon the issue of replacement of value added tax (VAT) with some other tax. Minister said such a replacement is not reasonable. Mr. Mammadov said no country in the world had ever cancelled VAT. Speaking on this issue, Minister clarified the registration as VAT payer. "From the beginning of 2007 we cancelled 6,000 taxpayer registrations due to non-payment of tax or performance of suspicious operations, so we call taxpayers to pay taxes in a sustainable manner to reinforce the country's state budget", said the Minister.

 Today some countries in the Eastern Europe and the CIS also face the problem with collection of VAT, but Azerbaijan is modernizing this process. Mr. Mammadov said 95% of cases worked by Tax Crime Department with the Ministry of Taxes are those linked to non-payment of VAT.

 "The maximum state policy today is to minimize tax exemptions and subside, from state budget, spheres that need support", said Minister.

 He said Azerbaijan's present Tax Code is quite liberal as it does not let Ministry of Taxes apply tough measures for non-payment of taxes. Fazil Mammadov opined that prosecution of people defaulting in payments in arrears shall be toughened. According to the present Tax Code, debtors shall be brought to accountability not by the Ministry, but the courts. Minister also did not rule out the discussion of this issue during the fall session of the parliament.

 "New revisions to the Tax Code of Azerbaijan ensure more responsible approach to tax payment, which is a good measure to combat VAT evasion", Mr. Mammadov went on. "New revisions were made as some firms normally declare tax debts but do not have any owner or are registered in refugees' names. Moreover, millions of tax debts are not attributed to owners", said the Minister.

 Natig Amirov, Deputy Minister of Taxes, answered the questions pertaining to the Ministry's transition to international standards. He said from 2001 the Ministry passed to international standards of tax collection.

"In the nearest future tax officials and businesspeople are going to establish a joint board involving the heads of CIBC and the Ministry of Taxes. Later on this board will be solving the problems arising between businesspeople and tax agency officials", said in his speech Telman Aliyev, President and CEO, CIBC.

 He said among the primary objectives of the Club is establishment of business-government dialog and involving of oil revenues into the non-oil sector of the country.

The CIBC session was continues behind closed doors. CIBC member-companies discussed a number of issues about work of tax agencies. In particular, they spoke of tax rates reduction, creation of control mechanisms that help prevent tax evasion, revision of income tax grid, implementation of e-declarations and so on.

 Fazil Mammadov answered the numerous questions of CIBC member-companies. During the session, Minister of Taxes of the Republic of Azerbaijan Fazil Mammadov was handed the CIBC Honorary Member Certificate.

The companies from Azerbaijan, Georgia, Kazakhstan, Turkey, Russia, Ukraine, Lithuania, Iran and other countries participated in CIBC session.