State Customs Committee and Ministry of Taxes to Unite

Baku / 10.01.18 / Turan: The Ministry of Taxes and the State Customs Committee can unite within a single agency, Turan was informed by competent sources.

According to available information, a single fiscal body will soon be created by integration of the State Customs Service and the Ministry of Taxes, which will allow the state to obtain a completely stable income through the administration of this service. The aim of this maneuver is to eliminate duplication and achieve a powerful synergetic effect that enhances the effectiveness of management.

Opinions about how the new approach will affect today's realities and prospects for the development of the country's fiscal sphere was shared with Turan by the expert in the banking sector Akram Hasanov and the economist Natig Jafarli.

Akram Hasanov:

The decision to create a single fiscal body through the combination of tax and customs is justified, besides, there are many examples of successful operation in this area in the world, but there were also results opposite to the expected ones. In the world practice, there were already cases of integration of agencies in a cumbersome and clumsy structure from the operational point of view, with an imperfect distribution of powers, when individual departments received functions that were not their own. Therefore, decision-making often lasted unnecessarily long, and even demanded a revision.

There were positive results of the merger: joint tax and customs checks of payers, a common understanding of the norms of legislation, the establishment of a full exchange of information between the two services. In Azerbaijan, staff decides a lot, since state structures are created under the post, and not vice versa. I believe that the new fiscal body will be headed by the newly appointed Minister of Taxes Mikail Jabbarov. He was actually appointed not to hold the second roles. It is no coincidence that a new adviser to the Minister is Khagani Abdullayev, who, by the way, is a former deputy chairman of the Central Bank, who left office last fall.

Abdullayev left himself, which is unexpected for Azerbaijan. Incidentally, this is one of the rare macroeconomists and economic analysts who understand the economy and at the same time a decent person who has a special feature to analyze the economy more widely than is required by the Ministry of Taxes. With the withdrawal of Abdullayev from the Central Bank, even then, there were speculations about possible changes in the fiscal sphere, since Jabbarov's powers could not be limited to this department alone. In addition, the need to merge the customs and the Ministry of Taxes has been said for several years. As for Aydin Aliyev, this is a more technical figure, i.e. it is clear that it is not really he who manages the customs.

By abstracting from the staff, the integration of the two fiscal departments is an objective step, since their functional essence coincides in the area of ​​state revenues, administration methodology and other areas of activity, and their separation is not appropriate here. For example, VAT on international transactions is held by customs, although this is a tax, not a customs duty. There is close cooperation between the two agencies. It is also important to unite the agencies in terms of business interests, since it is a question of a single window. Business is languishing under the pressure of two fiscal departments. For example, earlier there were problems with deliveries of undeclared products. E.g., the customs gave the go-ahead for illegal importation, and the Tax Ministry one made claims. This is only a separate example of the inexpediency of separating these structures. Finally, it is expensive to maintain two departments for the state, since this is an extra burden for the budget.

Questions echo in the plane of serious problems with the financial policy body. The matter is that in all industrially developed countries the financial policy is carried out by profile department. Of course, a different approach is possible here, in the world practice, the functions of tax and customs services are integrated into the Ministry of Finance or these structures operate separately in the vast majority of countries, but the Ministry of Finance carries out tax and customs policy. In this case, the functions of services are limited to state fees. In our country, a single body of state financial policy is also required. Fiscal bodies may or may not be subordinated to this specialized agency, but a specialized government structure should deal with financial policy.

But we have full disunity here. In the end, no one is responsible for anything. The Ministry of Finance declares that it is not responsible for the tax, customs and banking spheres. It is necessary not only to unite the fiscal bodies, but to transfer the tax and customs services to the Finance Ministry. But this is the business of the future. To date, we need a single fiscal structure and the body responsible for the financial policy represented by the Ministry of Finance. Coming back to the staff issues, as I said, Jabbarov will keep the policy in the field of taxes and customs. But this is wrong, since the tax and customs services should deal with their direct duties - state fees. It is important to understand that the current Minister of Finance Samir Sharifov is also an independent and strong figure, and therefore it is too early to talk about the merger of the fiscal and financial departments. This is possible in the future.

The idea of ​​merging the two departments is not new, but it was believed that there would be too much for the former Minister of Taxes. The appearance of a new, sufficiently strong figure creates the prerequisites for a new management structure.

Natig Jafarli:

The need to merge customs and tax services into a single fiscal department is reflected in the Republican Alternative (REAL) movement program of 2013. The unification of these departments is an objective necessity, since a separate state structure represented by the State Customs Committee is inexpedient. Budget revenues on the tax and customs lines must go in one direction under a single boss. In general, if desired, this approach will allow for a more flexible tax and customs policy in the interests of business.

Now the interests of ministries and departments are facing when making decisions in favor of business. This issue is of concern to the business community since the country's independence, since customs and tax services are a stumbling block to the development of entrepreneurship. Their consolidation will help the effectiveness of management, because some non-governmental and government agencies ineffectively solve problems. The creation of a single agency will facilitate the dialogue between business and government.

Another positive point of combining fiscal authorities is saving, as a separate customs committee costs the state budget dearly. The merger of agencies will result in reductions in customs authorities, and the effectiveness of staff will increase. It would be nice to unite the bodies in the structure of the Ministry of Finance, but with the current system of power, which is characterized by weak control over the executive, the creation of such a ministry is fraught with problems for business. Endowed with breadth of authority, it risks becoming a state monster, which, in the end, will crush the beginnings of entrepreneurship. If, in the long term, transparency and public control over the authorities are achieved, the merger of the three departments will be a natural step.

Fazil Mammadov's departure was expected. Too many questions and reproaches from business circles have been observed recently in the address of the Ministry of Taxes. The last straw was the prosecution of the agency Turan. The appointment of Mikail Jabbarov to this post was also logical and expected, since the former Minister of Education is more suited to the economic bloc. His appointment has not yet caused any major changes, because little time has passed. I would like the new head of the ministry to publicly tell us about his plans. Unfortunately, in our country there is no dialogue between the society and the authorities. Unlike the world practice, we do not have such a culture.

In general, the creation of a single fiscal body should be accompanied by legislative reforms, since the current legislation is absurd. We need a new coherent, concise and capacious Tax Code. It is necessary to depart from the Soviet-style attitude to tax policy. It requires clarity of rights and obligations of the parties - business and the state. In a word, tax reforms are impossible without a clear Tax Code. On the other hand, you must finally make a decision about the income declaration. Officials in particular and the entire working population as a whole must annually file a tax return. This will increase the transparency of management and increase budget revenues. Finally, fiscal authorities cannot be punitive. Business should not be afraid, but cooperate with them. All these are the most important aspects, without which real transformations are impossible. -0-