Legitimate Tax or Bribe?

The economic changes that began since the end of last year, the simplification of customs posts and the elimination of monopoly in this system are presented as state support of entrepreneurship. The press service of the State Customs Committee reports a decline of 70% in the office services for the preparation of customs declarations, so today this service is 50 AZN.

How satisfied are entrepreneurs with the changes that have occurred in the last 2 months?

The street named after Z. Ahmedbekov is known in Baku for many shops selling Iranian products. Iranian businessmen working here are in utter confusion. According to them, the devaluation that occurred in the country led to a loss of purchasing power of the population. Moreover, this negative trend was reflected in the population a little too quickly. Over the past two months, the entrepreneurs had to raise prices significantly. Some products have increased by 10%, the others - by 40-50%. The number of customers in this regard has fallen sharply. However, the panic of the sellers is not only connected with the reduction in the purchasing power, but also with the increase in taxes. Businessmen are dissatisfied with rising import tax and VAT.

On the question whether there is a positive change in their work in connection with the customs changes and the elimination of the monopoly, the answer was not pleasing. An elderly businessman who is engaged in trade in Baku for 20 years believes the old customs rules are more profitable to him and his customers. The customs took a bribe of $ 100. "I calmly delivered my goods and was engaged in trade. The buyers were satisfied with the price, and I was satisfied with the turnover. The current legal taxes have reached such a level that the old trick looks better on their background," the businessman said. According to him, 18% VAT and 15% tax on imports are a very heavy burden for the employer. Entrepreneurs say if the President wants to help business, both of these taxes should be reduced.

"What forecast promises entrepreneurs this situation and what steps should the government take? This question was answered by the expert from the Economic Research Center Vahid Maharramov. He said, "if the government tries to fill the budget through such high taxes, it is the wrong move. A tax increase will create the conditions for an inefficient business. As one of the ways, the expert believes the abolition of VAT on goods not produced in the country. According to the expert, this tax reduces the competitiveness of domestic goods. Now entrepreneurs will try to sell not more and cheaper, but less and more expensive, because with such high tax rates no one will be interested in increasing the turnover, he said.

For information: the list of goods exempt from VAT has been changed since January this year, and the number of such goods has declined.