Changes to accounting law to help access foreign markets

The amendments to the Law on Accounting in Azerbaijan will help facilitate the country’s access to foreign financial markets and accelerate the development of the country’s capital market.

The statement came from adviser to the Minister of Taxes of Azerbaijan for Macroeconomic and Economic Analysis Khagani Abdullayev at a forum titled “Application of New Accounting Standards in Azerbaijan: Problems and Prospects” on October 2.

In turn, Naveed Naqvi, the Country Manager for the World Bank Azerbaijan Office, noted that the changes to the law are a step in the right direction, adding that the new transparency mechanisms give confidence to foreign investors allow businessmen to make more informed decisions.

The amendments to the Law on Accounting, adopted on May 4 at a plenary session of the Parliament of Azerbaijan, provide for the mandatory presence of professional chief accountants in enterprises where the controlling stake belongs to the state, except for those enterprises whose securities are traded in the stock exchange, as well as in other socially significant structures, large business entities, organizations and public legal entities that publish annual financial or consolidated reports.

The accountants must undergo appropriate licensing according to the amendments.

The amendments also provide for the termination of the rules of simplified accounting in small and medium-sized businesses, the abolition of articles on the establishment of the advisory board for accounting and regulation of its activities, in connection with the renunciation of the provisions on application of the national accounting standards.

The changes also imply the transition of accounting entities in the country to international accounting standards.

Addressing the event, Deputy Director General of the Tax Policy and Strategic Research Department of the Ministry of Taxes of Azerbaijan Nijat Imanov stressed that Azerbaijan plans to amend the tax legislation providing for the introduction of benefits for bona fide taxpayers.

“There is a difference between the taxpayers conducting transparent accounting and, the taxpayer, on the contrary, not doing so. The identification of this difference and the introduction of benefits for bona fide taxpayers will have a beneficial effect on the level of trust between the tax authorities and entrepreneurs,” Imanov said.

Touching upon the changes in the tax legislation, Imanov also said the projects have been prepared in this regard in order to further stimulate non-cash payments in the country.

Earlier it was reported that the new amendments to the tax legislation can be adopted in Azerbaijan before the end of the year.

The changes are aimed among other things at reducing the tax burden, simplifying tax administration, and suppressing tax evasions.

One of the proposals is the introduction of a single rate of tax on incomes of individuals. The authors of the bill have focused on reducing the tax burden in this area. At present, the income tax in Azerbaijan amounts to 14 percent, and another 26 percent (22 percent for the employer and 3 percent for the employee) fall to the share of social contributions to the State Social Protection Fund.