Minister of Economics on Revising Approaches to Economic Development, Privatization, Levying a Number of Taxes

Mikail Jabbarov, as the new head of the enlarged economic department of Azerbaijan, held his first press conference on this post on January 16, making a number of interesting statements.

Recall that he became the Minister of Economy in October 2019, with the tax authorities and the supervision of privatization of state property transferred to this structure.

MACROECONOMICS

Touching upon issues of economic development, Jabbarov emphasized the successes in the development of the non-oil sector, which were also achieved thanks to a significant increase in investment in fixed assets in the non-oil sector.

So, in 2016, the share of such investments in the total volume of investments in Azerbaijan amounted to 45.2%, in 2017 - 51.3%, in 2018 - 65.2%, and in 2019 - 69.7%. Growth is planned for 2020.

“Our strategic goals for 2020 and subsequent years are to accelerate the development of the processing industry in the non-oil sector, to ensure the dominant role of private investment in the economy, to increase the export of non-oil products and services ... In particular, we think that in 2020 we forecast GDP growth (3% versus 2.2% in 2019) is possible due to growth in agriculture and the processing sector, in which there were good progress in 2019,” the Minister said.

According to him, the intended goals will be facilitated by the plans of the government and the CBA to ensure the provision of affordable bank loans and a number of tax benefits to the business.

Regarding the export of non-oil products, the minister said that in 2019 this figure reached $ 1.954 billion (growth rate of 15.7%) compared to $ 1.689 billion in 2018 (an increase of 9.8%). In 2017, the export of Azerbaijani non-oil products brought $ 1.538 billion, and in 2016 $ 1.237 billion (a decrease of 21.78%).

TAXES

“Thanks to the development of the non-oil sector, this segment of the economy began to give more taxes. So, in 2019, 5.432 billion manat was collected from the non-oil sector (the plan was implemented by 109.1%, the share in the total amount of taxes to the state budget was 70.8%), which became the highest level in the country since 2005 (in In 2005, this sector gave 885.6 million manat in taxes),” Jabbarov said in the speech.

In 2019, revenues from the non-oil sector for VAT increased last year by 16.4%, for excise tax - 4.7 times (mainly for excise taxes on alcohol and tobacco products), for income tax - by 12.6%

Revenues in the regions increased by 11.9% and amounted to 795.4 million manat," the Minister added.

The number of active taxpayers in Azerbaijan as of January 1, 2020 exceeds 496 thousand (12.3% more than in 2018).

At the same time, the number of active VAT payers for the year increased by 37.5% and reached 24.822 thousand.

He emphasized that in 2019 about 99 thousand labor contracts were signed in the non-oil sector (an increase of 18.3%).

“As a result of the reform of labor relations, there was a positive dynamics in the income from social insurance and unemployment insurance. So, social insurance revenues last year grew by 26%, unemployment insurance - by 39.1%. As a result, the share of transfers from the state budget to the revenues of the State Social Protection Fund (SSPF) is gradually decreasing, which should be reduced to 29.6% in 2020,” said Jabbarov.

According to him, “as a result of tax reforms carried out in the country, the volume of the “shadow economy” is gradually declining.

In 2020, tax reforms in the country will continue.

So, at present, the technical conditions for VAT refund are being agreed upon, and this mechanism will be used from February 1, 2020.

The point is that when the citizens of Azerbaijan pay in trade and public catering facilities, then 10% will be returned with cash payments, and 15% with cashless payments.

Positive for the economy of Azerbaijan in 2020 will be the exemption from VAT for the four-year period of the sale of meat of animal and bird origin, which should stimulate the development of livestock farms.

SPECIAL ECONOMIC ZONES AND PARKS

Note that from 7 to 10 years the term of tax and customs benefits for residents of industrial parks and technology parks is increasing. That, they are exempted from paying income tax, land tax, property tax, and from paying customs duties when importing machinery, plants and technological equipment for a period of 10 years from the date of registration.

Similar amendments to the Tax Code also apply to management companies and operators of industrial parks and industrial parks, which are exempt from paying income tax on the part of the proceeds allocated by them for the construction and maintenance of infrastructure of parks.

The Minister of Economy said that in 2020, work will begin to create infrastructure in the special economic zone (SEZ) in the village of Alat.

“The manager of the SEZ has already been determined, and the State Investment Program for the current year provides funds for the above purposes,” said Jabbarov.

PRIVATIZATION

"The Ministry of Economy of Azerbaijan intends to reconsider the approach to the privatization of state property, which has already been put up for sale," the department’s head Mikail Jabbarov said at the press conference.

“This is an important process, and we will deal with it in the first place. In addition, we consider it necessary to verify the effectiveness of those enterprises that were created after the announcement of large-scale privatization programs of state property. This is a long process, and it will require a lot of work from us,” said the Minister.

It is curious that in the fall of 2019, the Ministry of Economy sent an offer to RV Investment regarding the repurchase of a stake in the first “gold contract” of Azerbaijan, but negotiations have not yet yielded results.

A statement by the new head of the Ministry of Economy on revising approaches to privatization will “tickle the nerves” to all owners of factories and other enterprises that previously invested in these facilities, and also transferred the required competition funds to the state budget.

Rustam Shahbazov, Deputy Chairman of the Committee on Property Issues, who participated in the meeting, said that as part of this work, in April, in particular, there will be a check of 163,000 real estate in Baku and 74,000 in the regions for legality of activity.

Apparently, the new Minister of Economics took a “sharp start”. The main thing is that the reforms that are positive for Azerbaijan "reach the finish line," that is, they are implemented.--0--