In­di­vid­u­als to get back part of VAT

Azer News - - Nation - By Narmina Mam­madova

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.

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