Taxes Ministry Threatens Trade Networks

At today's press conference, the Deputy Minister of Taxes Sahib Alekperov published the results of planned tax audits in major stores. Some of them underestimate their trade dozens of times.  One of them understated the real turnover by 35.4 times, another one - by 19.3 times, and still another one - by 15.4 times.

The Ministry's reaction stems from the fact that exactly a month ago the owners of retail outlets networks (Bizim Market, Fresco, Sebet, Macromart, Araz, Neptune, and Bolmart) met on the basis of a joint complaint with the Minister of Economy Shahin Mustafayev, and offered him to apply a zero rate of value added tax for products such as milk, flour, eggs, meat, fish, rice, oil, fruits, vegetables and baby nutrition. They complained of the impossibility of keeping their staff and the low profitability after the two-time devaluation of the manat (CBA calls it a floating rate).

Alekperov said at today's conference that local and foreign experts believe that the current VAT rate corresponds to economic realities and is even lower than in some countries, accounting for a third of all tax revenues, so the use of preferences in this segment would significantly reduce the revenue part of the budget.

"According to international practice, temporary exemptions on VAT apply to innovative and government-controlled production requiring significant investments, as well as for the development of regions and sectors of the economy. Those who favor populist statements should be aware that tax incentives are applied not at someone else's request, but in accordance with the government's economic policy for a certain period, on the basis of analytical summaries of state agencies, based on specific economic calculation," he said, and completely dismissed the possibility of VAT benefits for retail chains.   --17D-