Aze.US
Azerbaijani economist Natig Jafarli has sharply criticized the country’s tax policy and banking practices, arguing that excessive tax pressure and pre-emptive account freezes are pushing citizens and small businesses toward informal financial transactions.
Jafarli said that in cases of suspected illegal transfers, authorities and banks often block accounts before completing an investigation, a sequence he described as inconsistent with legal safeguards that require evidence-based review prior to restrictive measures.
While regulations governing cross-border money transfers exist, he noted that broad enforcement can also affect lawful personal remittances between family members, undermining public confidence in the financial system.
The economist linked the spread of card-to-card payments and other informal mechanisms to what he described as a comparatively high tax burden on small and medium-sized businesses. He contrasted this with Georgia, where businesses with annual turnover below a defined threshold face significantly lower simplified tax rates, reducing incentives to conceal transactions.
In Azerbaijan, he said, businesses that expand beyond certain turnover levels become subject to additional liabilities, including value-added tax, increasing operational pressure and encouraging attempts to bypass formal channels.
Jafarli proposed raising the turnover ceiling for simplified taxation and applying a moderate unified rate, arguing that such changes could reduce incentives for informal payments and improve voluntary compliance.
He also warned about contractual provisions that allow banks to block accounts unilaterally, saying the practice risks heightening social tension if not balanced with stronger procedural protections.
According to Jafarli, continued reliance on restrictive enforcement without structural tax reform may lead to tighter controls on person-to-person transfers and additional penalties, further straining relations between regulators, businesses and the public.