Individuals to get back part of VAT
Azerbaijan’s tax legislation is undergoing serious changes in 2019.
As a result, individuals in Azerbaijan will be able to get back a part of the value added tax (VAT) during purchases in retail and catering networks after development of a corresponding mechanism, the Ministry of Taxes told Trend.
The amendments provide for refunds of 15 percent (in non-cash payments) or 10 percent (in cash payments) of VAT to customers during purchases in retail and catering networks.
However, the actual implementation of the amendments will be possible only after a procedure for returning VAT is developed.
Presently, the VAT rate in Azerbaijan is 18 percent. That is, after the development of a mechanism, individuals, from each 100 manats spent in retail chains and catering, will get back 2.7 manats for non-cash payments and 1.8 manats for cash payments.
Since January 1, 2019, amendments to the Tax Code have entered into force in Azerbaijan.
The priority areas include implementation of reforms related to the incomes of employees. These reforms will comprise benefits for employees of the private sector, but those who don’t work in the oil and gas sector, as well as regulating the ratio of payments for state social insurance between an employee and an employer.
The Azerbaijani government expects that the planned reforms will help reduce the tax burden, the burden of deductions for compulsory social insurance and reduce informal employment.
New amendments mainly aimed at entrepreneurship development in Azerbaijan, and envisage not to increase the burden of the taxation base, but to increase the taxation of those operating in the "shadow".
Benefits will be valid only for entrepreneurs engaged in retail trade. They will be exempt from income tax in the amount of 25 percent of the volume of non-cash sales within three years.
According to the amendments to tax legislation, startups in Azerbaijan will be exempt from profit tax and income tax for three years starting from January 1, 2019.
In addition, employees in Azerbaijan’s private sector who are not involved in the oil and gas sector will be exempt from income tax for a period of seven years, according to the amendments.
Presently, the income tax rate is 14 percent from income of up to 2,500 manats ($ 1 471) per month. Above this amount, the tax rate is 25 percent plus 350 manats ($ 205).
If an employee has two or more jobs, the income tax from each job will be calculated separately.
It should be noted that the number of mobile tax inspections in Azerbaijan in 2018 has dropped three times compared to last year. A moratorium on business inspections is in effect in Azerbaijan until January 2021, but they do not apply to tax audits of companies with annual turnover exceeding 120,000 manats ($ 70 609).
Recently, having ranked 28th, Azerbaijan has significantly improved its position in 'Paying Taxes 2019' rating.