BAKU, Azerbaijan - Economist Natig Jafarli has proposed lowering Azerbaijan’s value-added tax rate from 18% to 12% and raising the mandatory VAT-registration threshold to 1 million manats as part of a broader overhaul of the country’s tax system.
Jafarli said frequent revisions to tax rules make long-term planning more difficult for businesses and can deter investment. His comments followed the Second Azerbaijan International Investment Forum, held in Baku on Sept. 25-26.
He called for a new, shorter Tax Code centered on a turnover-tax model for private businesses. Under his proposal, companies with annual turnover of up to 1 million manats would pay 4% in Baku and the Absheron Peninsula and 2% elsewhere in the country.
Jafarli said sector-specific rates could range from 1% for agriculture to 10% for catering, while VAT would be set at 12%.
Azerbaijan’s current VAT rate is 18%. Businesses generally must register for VAT when taxable turnover exceeds 200,000 manats during any consecutive 12-month period, according to the State Tax Service.
Jafarli estimated that more than 2,000 additions and amendments had been made to the Tax Code over the past six or seven years. That figure is his estimate and has not been independently verified.
He also proposed revising the Customs Code and abolishing certain paid permit and certification bodies. Oversight functions could instead be transferred to a new service under the president, he said, adding that consumer complaints and buyers’ responses could support quality control.
Jafarli called for a broad public discussion of the proposals.
Source: Vesti Baku; Natig Jafarli