Before coming to
the latest amendments can you give us a brief overview
of the major tax
During the soviet period all the economic system
was planned. As there was no market economy there
were not taxes, no entrepreneurship. But after
the late president Heydar Aliyev determined the
economic development directions the economic reforms
were launched and formation of the market economy
and entrepreneurship began. All the process led
to the formation of the market economy and it
nececcitated to create the national tax system.
And the reforms in the agrarian sector is already
completed. 99% of the enterprises of the sector
have been privatized. The trade has been privatized
by 98%. The first stage of the privatization program
was completed and the second stage has been launched.
SMEs have been fully privatized. We already have
the local entrepreneurs. It was very important
to have a legislative base in the tax system as
it is in all the sectors of economy. But the government
considered the improvement of the tax legislature
as an integral part of the improvement of the
tax system itself. The government determined the
main strategies for the consolidation of the tax
system. Since 1997 by the order of the president
a relevant commission was set up and it began
to work out the Tax Code of Azerbaijan. The code
passed in the parliament in June 2000 and it was
signed by the president. It came to force in January,
2001. A number of decrees, orders have been issued
on the basis of the Tax Code. Foreign experts
have also been involved in working out of the
Tax Code. The experts from the
IMF, WB and a number of the audit and consulting
companies have been involved in it. And I think
that presently we a Tax Code in Azerbaijan that
corresponds to the international standards.
What are the main items of the Tax Code? And what
is envisaged in it for the foreign investors?
The Tax Code contains items that are really of
great importance for the local entrepreneurs and
foreign investors. According to the Tax Code the
number of the taxes have been reduced from 16
to 9. It is very important that the taxes are
clearly clarified, and the highest level of them
is fixed. The most important is that due to the
Tax Code the level of the taxes may only decrease
but not increase. But the Tax Code and tax legislature
is not the only basis for the development of the
tax system in the country.
What measures do you take to inform people
about the tax system and in this way contribute
to the development of the system?
The second direction for the devlopment of the
tax system is the training. As before there was
no market economy, no entrepreneurship there is
a great necessity to inform and educate the local
entrepreneurs about the tax legislature. That's
why there are two directions of the trainings.
First is the training of the tax-payers and the
second the training of the tax service employees.
We conduct consistent work on it.
We also have an agreement with the Ministry of
Education on conducting lessons about taxes at
the secondary schools. We published books for
the secondary schools.
Beginning December, 2003 we have opened a free
line for the tax-payers with the number 195. The
tax employees answer the questions of the tax-payers
during 24 hours a day. The question and answer
is in 3 languages.
The Ministry of Taxes has opened its web-site.
And it issues its magazine and newspaper in order
to inform the tax-payers about the ongoing changes
in the tax system. Our newspaper is issued weekly
and the magazine once a month. We conduct special
services for the tax-payers. The tax-servicers
meet the tax-payers and answer their questions.
The purpose is the increase the level of tax responsibilitty
and tax education of the people.
|
We also put posters and boards in the different
parts of the city advertising and emphasizing
the importance of the tax system and tax payment.
All the taken measures yield positive results.
As to the second direction of the trainings we
have established the Tax Educational Center.
We have also established tax and tax levying chair
at the Azerbaijan State Economics University.
We also started preparing specialists for the
tax system.
The third direction of the tax system improvement
is the tax control system. Presently we have operative
tax control, documented inspection control of
the tax system and the camera control system.
The more people know about taxes, the more taxes
are paid the less we have the tax control. We'll
shift from the operative control system to the
general control system.
Can please tell us what are the main structural
changes you have made in the tax system?
More than 60 regional tax offices have been closed
and 13 regional tax offices have been established.
The number of the tax employees have been 40%
reduced. The main goal is to prepare and submit
the tax reports without the direct contact with
the tax-payers.
I want to mention that though 60 regional tax
offices have been closed, the tax payment in 2003
in comparison with 2002 increased by 717 bn manats.
It makes up about $170. On one hand it is the
indicator of the economic growth, on the other
hand it is the effective work of the Tax Ministry.
In comparison with the previous years it is 21%
increase. If we take into account the GDP increase
by 9-10% and the inflation rate of 2%, 21% increase
is a big indicator.
Do you provide specific incentives to the foreign
investors that make investments in the country
economy?
Such kind of incentives are only provided in
the oil sector. The oil contracts are regulated
on the basis of the quite different laws.
We have made some incentives for the agricultural
sector as well.The debts of the privatized enterprises
to the state enterprises and the government have
been completely removed. When the state enterprise
is privatized their debts are fully abolished.
The agricultural enterprises are exempted from
all taxes excluding land taxes. Azerbaijan is
an agrarian country. There is a great potential
for the foreign investment in this sector.
We also know that the IMF put some pressure
to remove the tax differenciation between the
regions. Do you think it is going to hinder the
government program on the development of the regions?
We agreed with the IMF on it. We really applied
the income taxes differenciation system of the
regions for a year. But as a result of the monitoring
it became clear that it is of no use for the development
of the regions. Complex measures should be taken.
The results showed that the the system we applied
in the regions was not efficient and that's why
we agreed on it with the IMF.
Do you think that the tax system is going
to be stable or changes are expected to do in
future?
Not fundamental but technical changes may be
made to the Tax Code. It shows that every item
of the law works and there is no need for the
fundamental changes. For ex: there can be misunderstanding
only on the technical of the code by the tax payer
or the tax servicer. Buon the whole the Tax Code
is very effective.
|
V.I.P. INTERVIEWS
