The Tax Code of the Republic of Azerbaijan (No.905-IQ of July 11, 2000) outlines the tax system, general principles of taxation, and rules for establishing, paying, and taxing, among other provisions. At present, there is a unified legislative and regulatory framework for taxation, and as a result, the number of regulations and compliance with laws and regulations governing tax relations has decreased; the number of taxes has reduced, which simplifies settlements with the budget of taxpayers; and the tax burden is reduced, which allows the tax system to play a regulatory (stimulating) role.
The most progressive aspect of the Tax Code is the implementation of simplified tax rates. Thus, under Article 218.1.1 of the Tax Code, individuals not registered for VAT purposes whose taxable transactions total AZN 200,000 or less in any month (or months) within a consecutive 12-month period can be payers of the simplified tax. According to Article 219.5 of the Tax Code, a legal entity paying simplified tax is not considered a VAT or profit taxpayer. Similarly, an individual (including one engaged in entrepreneurial activity without establishing a legal entity) is not considered a payer of income tax and VAT. According to article 220.10 of the Tax Code, the monthly fixed amount of the simplified tax for individuals engaged in leading, playing instruments, dancing, singing, comedy and other similar activities at weddings, parties and other events is AZN 20, and for individuals engaged in activities in the field of individual photo, audio-video services (except photo studios) is AZN 15.
Since January 2006, enterprises outside Baku have paid tax at a rate of 2%, while those registered in the capital have paid tax at 4% of their total turnover. Enterprise registration is submitted to the tax department and is usually implemented within three days.
The coverage of electronic services provided to taxpayers is also constantly expanding. In 2006, the Automated Tax Information System (AVIS) was established. In 2007, the Internet Tax Administration (www.e-taxes.gov.az) began exchanging electronic documents with banks, as well as with legal entities and individuals, establishing a system for the electronic submission of tax returns. Furthermore, since January 1, 2010, electronic invoices have been used.
Since tax policy is a crucial tool for attracting finance and investment in culture and is essential for improving the social status and welfare of culture and art workers, there is a need to develop a comprehensive package of cultural legislation further. The Criteria for enterprises, institutions, and organisations operating in the fields of science, education, healthcare, sports, and culture for tax exemption purposes were approved by Decision No. 88 of the Cabinet of Ministers, dated March 12, 2020. Legal entities (enterprises, institutions, and organisations, except commercial legal entities) that organise artistic and cultural events, prepare and distribute published products, and produce films to promote, encourage, and develop Azerbaijani culture and national cultural heritage are exempt from tax. The same applies to those that function as theatres, libraries, or museums.
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