Household Deposits Can Be Brought to Tax

1 January 2015 there is a deadline for tax breaks for investors, operating since 1999. The country's parliament has not extended the exemption from 10% tax on bank deposits.

Economists estimate that the move could bring the state budget 60 million manat.

Expert Samir Aliyev considers it inappropriate to use tax in the current economic situation and proposes to extend the "vacation" for at least another year.

According to him, the removal of exemptions on income from bank deposits can lead to destabilization of the structure of deposits. Some experts believe that small investors can withdraw their savings from bank accounts, which will adversely affect the financial performance of commercial banks. Many investors are trying to save only their savings against inflation, and bringing the income tax on them to 10% will minimize such opportunities.

"The government declares about the desire to develop non-oil economy in the face of private enterprise and the need to finance the real sector through banks. With his decree on the application of the state budget for 2015, President Ilham Aliyev instructed the Central Bank to take measures to reduce the difference between the discount rate and the interest on bank loans. Upcoming plans for the abolition of tax breaks on bank deposits can only prevent this idea, as there is a threat to reduce the amount of cheap resources in the form of deposits," the expert said.

The total amount of bank deposits of the population is 6.65 billion manat, more than half (3.42 billion manat) of which is invested at a rate below 9% per annum. --08D-