Azerbaijan Customs Makes Entrepreneurs Unarmed before Tax Authorities

Employees of returns and collection of tax debts of the Baku Tax Department have identified a debt of a small object for wholesale of wallpaper in the Narimanov district at 3 million 871 thousand 101.14 manat. A few days ago they made an inventory of the property in the amount of 233.7 thousand manat.

According to economists, this is a direct result of the illegal phenomena on Azerbaijan Customs, from which businesses and entrepreneurs suffer and are defenseless before the tax authority.

The economist Nazim Mammadov told Turan that in the Azerbaijan Customs there occur dirty tricks that economic agents cannot oppose. Some of the imported goods are not recorded and the registration is made at low prices. At the same time the VAT paid by the owner is issued to some fake companies and subsequently misappropriated. The seller selling the goods in the trading network cannot compensate for the VAT paid. "In the tax audit the company cannot prove the fact of payment of VAT on goods they sold, and in the course of checks they have to pay VAT for a second time," said the expert.

To eliminate such phenomena, as a result of which a conscientious businessman looks a subject of tax offenses, Nazim Mammadov proposes to carry out structural reforms to liquidate the State Customs Committee and transfer its functions to the Ministry of Taxes. He considers it appropriate to optimize the tax on individuals and the payment of social security, eliminating the parallel State Social Protection Fund. "The low level of culture of voluntary tax payment also comes from high tax rates for individuals (at least 14%) and the payment of social security (25%). In Georgia, for example, the combined rate of social tax is 20%," stressed Nazim Mammadov.

At the same time Mammadov believes that the tax audits are not professional enough. "At my request, as the holder of 30% shares of Auto-Garant, a field tax audit is conducted. The inspectors have been presented documents proving the facts of income generation several times higher than presented by the officials of the company. However, according to Mammadov, the tax audit is conducted one-sidedly, since, in practice, employers find "common ground" with the tax authorities, from which the state budget suffers.

According to the State Customs Committee, the recorded import of wallpaper into Azerbaijan in 2014 amounted $ 5 million 290.1 thousand. ----08B