Amendments to Tax Code Relatively Equalize Opportunities of Leasing Companies with Banks

On January 1, amendments to the Tax Code of Azerbaijan will come into force, according to which VAT on the import of leasing objects is abolished. This will allow the specialized companies (they are now 23 in the local market) to reduce the cost of services nominally by 18% and increase competitiveness.

According to the head of the Association of Leasing Companies, General Director of Joint Leasing Elchin Ahmedov, today, because of the value-added tax, leasing transactions for the purchase of goods abroad cannot compete with bank lending. Since the new year, our segment will rival any other financial and credit institutions.

"For this reason, the main clients of leasing companies are individuals, as for most wealthy entities it is not profitable to work in this sector because of VAT and it is easier to purchase equipment and other potential targets of leasing abroad directly," he explained the situation to Turan.

According to him, for the improvement of legal acts and other regulatory documents joint efforts of the parliamentary, government and non-government agencies are required. We need to create a clear framework within which the whole process will be settled, so that there is a list of objects of leasing, subject to VAT exemption, and, in general, the relationship of market participants is clarified.

The current capacity of the leasing market across the country is estimated at about $ 600-700 million. Leasing relations are governed by the Civil and Tax Codes of AR. --- 17D-