Opening the online meeting of the Milli Majlis Economic Policy Committee on 27 January, Committee Chairman Tahir Mirkishili mentioned that the agenda dealt with the first reading of the draft amendments to the Tax Code of the Azerbaijan Republic.

The Committee Chairman emphasised that the amendments were mainly intended to extend the current VAT exemption of several goods (works and services). Besides, he said, there were the amendments concerning excisable goods and the relevant rates with the purpose of continuing the implementation of the relevant policy of the State. The maintenance of the food security in the country, the promotion of the animal husbandry and poultry-breeding sectors and the prevention of the problems that the especially hazardous diseases may pose and, last but not least, promoting the jewellery business in the country all necessitate a term-extension to the current VAT exemptions, in the opinion of Mr Mirkishili.

Deputy Head of the State Tax Service Samira Musayeva who was taking part in the online meeting supplied the Committee members with the details of the proposed amendments. She told them that the four-year VAT exemption that wheat, wheat flour and bread imports, sales and production were granted as of 1 January 2017 had expired on 1 January 2021 whereas the tabled draft envisages an extension by another year. At the same time, it is proposed to extend by a year the tax exemption of bran production and sales so as to support animal husbandry and the poultry sector.

Next, Ms Musayeva told the participants of the meeting that, pursuant to the document, the VAT exemption of the assets submitted in bank bankruptcy proceedings and of non-performing (toxic) assets submitted in the manner prescribed by the appropriate state authority in the course of the recovery and resolution proceedings for insolvent banks had expired on 1 January 2020, too. Because recovery, resolution and rehabilitation of banks continue, it is deemed suitable to extend the term of the said tax exemption for a further 2 years. At the same time, it is intended to prolong the VAT exemption of the works and services done and rendered by legal persons under public law under contacts with the organ (body) assigned by the appropriate state executive agency.

The STS Deputy Head went further to detail the exceptions from the tax treatment of the jewellery industry, undertaken to ensure the furtherance of the reforms in it. It was said that the exemption from the excise duties would be made three years longer in order to encourage local businesses make and process jewellery and to prop such ancient applied arts as jewellery and engraving. According to Mrs Musayeva, the liberation of the Kalbajar Province of Azerbaijan with its rich gold deposits after the long period of Armenian captivity is worth bearing in mind because the tax holidays in question will provide for the gold wealth of the recovered province rationally. Mrs Musayeva further stressed that the state economic policy in effect envisaged a gradual increase in the excise rates to make certain that, given the increase’s potential effect on consumers’ purchasing power, there are no negative influences on the operations of business enterprises.

Further, Mrs Musayeva shared with the participants of the meeting the information about the plan to add tobacco goods to the list of excisable commodities, saying that the pertaining excise rise had brought about a drop from 10,618,080 tobacco goods units consumed in January-October 2017 to 8,538,977 ones in the corresponding period of last year. At the same time, the tax-payers producing and importing tobacco goods paid AZN 87,909,200 in taxes in 2017 and as much as AZN 473,554,500 during January-November 2020.

This considered, and in view also of the recommendations of the health organisations, it is proposed to add tobacco goods to the list of excisable commodities and to raise the rates of excise duties levied on tobacco production and importation with a view to cutting the consumption down. This will apply to pipe tobacco and other smoking tobaccos, chewing tobacco, snuff, the hookah tobaccos of all sorts and the other tobacco goods consumed by heating (and emission of vapour).

The Committee members Ziyad Samadzade, Ali Masimli, Vugar Bayramov, Anar Mammadov, Mahir Abbaszade and Igbal Mammadov commented on the proposed amendments.

Committee Chairman Tahir Mirkishili, Deputy Head of the STS Samira Musayeva, Head of the Chief Tax Policy Department of the STS Nijat Imanov and a department head from the Ministry of Economy Elvin Jamalov answered the MPs’ questions.

It was recommended after the extensive deliberations that the Bill be tabled at a plenary session of the Milli Majlis in the first reading.

The other Committee members, namely, Agalar Valiyev, Mashhur Mammadov, Rufat Guliyev and Mazahir Efendiyev, were taking part in the meeting as well.

The Press and Public Relations Department
The Milli Majlis