Our Analytics 5 august — 12:01

President expects 700-800 million manats over plan: What says minister of taxes? (Our comment)

243

BY MAMMAD EFENDIYEV, ECONOMICS SECTION

During the meeting related to the socio-economic sphere, President Ilham Aliyev announced the figure related to budget revenues. Thus, through the Ministry of Taxes and the Customs Committee, the state budget for the past six months received funds in the amount of more than 440 million manats in excess of the budgeted figure.

'I believe that by the end of the year we will follow this path. Now it is difficult to give a forecast, but I think that around 700-800 million manats is expected over the plan,' said the head of state.

What can Minister of Taxes Mikayil Jabbarov, who is directly responsible for collecting taxes and budget revenues, say about this? According to him, for six months, the Ministry of Taxes provided current revenues to the consolidated budget, which amounted to 4 billion 954 million manats. Of these, 3 billion 633 million manats are tax and state duties, and 1 billion 321 million manats are contributions for compulsory social insurance and unemployment insurance. The tasks actually assigned to the ministry were fulfilled by 108.8% for taxes, 112.5% and 116% for compulsory social insurance and unemployment insurance, respectively. The State Customs Committee also secured the fulfilment of the semi-annual forecast of 108%. The minister is confident that these rates will be maintained.

In his opinion, the basis of these results is made by three main factors. These are, first of all, tax policy, administration and reforms carried out under the leadership of the head of state. Close cooperation, joint work with the relevant structures of a single team, and the exchange of information are also important. In addition, success would not have been possible without changing the very nature of relations with taxpayers and, of course, without fighting the shadow economy, including the withdrawal from the shadow of turnover and jobs.

At the same time the minister decided to draw attention to certain trends of particular interest. In particular, the share of the non-oil sector in tax revenues reached 70.1%. This is significantly higher compared to 65.8% in 2018. In general, the growth rate of revenues in the non-oil sector amounted to 14.3%, which exceeds the growth rate of the relevant sector of the economy. As a result, Taxes Ministry has already fulfilled 51.1% of the annual forecast. In addition, the share of the private sector in the non-oil sector itself is very high. Specifically, the private sector provided 77% of tax revenues of the entire non-oil sector. The numbers are impressive, but tax reforms are just beginning.

Of course, the increase in the share of the non-oil sector in tax revenues is a welcome fact. But these reforms led to another outcome, about which one must speak. Thus, as a result of tax reforms, a significant increase in the number of labour contracts was noted. In just 6 months, 101 thousand new employment contracts were registered, including 77 thousand in the private non-oil sector. And this is a direct result of the reform on tax breaks carried out at the direction of the head of state.

By the way, only as a result of tax breaks, at the disposal of the citizens of Azerbaijan for six months there remained funds, calculated in a round sum of 150 million manats. Imagine, in previous years, this amount was paid by us in the form of taxes. And this process continues. We can already say with confidence that in July this process continued at the same pace. An increase in the number of active objects is observed at 14%, and an increase in the number of payers of value added tax is 40%. This means that the expectations of the head of state on budget revenues in excess of the plan in the amount of 700-800 million manat are quite realistic.

And all this is happening against the background of a reduction in tax control measures. Thus, the number of field tax audits decreased 2.7 times compared to 2018, and compared to 2017 - 6 times. It is gratifying to note that the Ministry of Taxes is trying to track the private sector under the influence of the economy, tax policy and administration in general. And if earlier the private sector simply suffered from growing audits and overstated fees of the Ministry of Taxes, today the reduction of tax control measures leads not only to additional revenues to the state budget, but also to increase in the profitability of private entrepreneurs.

During the year, the residual amounts on the private sector accounts in the banking system in Azerbaijani manats increased by 49%, and from the beginning of this year - by 20%. That is, the growth rate is maintained. And that in its turn gives reason to believe that this is an indicator of the transition of business from cash to cashless transactions and the growth of confidence in the country's economy.

Latest news