Contract workers will pay more taxes - expert

Baku/20.12.18/Turan: The head of the Center for Economic and Social Development Vugar Bayramov, in an interview with the Azerbaijani service of Voice of America, commented on innovations in the Tax Code.

According to him, according to the changes, some citizens will be exempt from income tax payments, but this will not affect workers in the oil and public sectors.

Taxes will be levied only on salaries over 8000 manat. This category will be charged 14% income tax. Until now, a tax of 25% has been withheld from salaries above 2,500 manat.

At the same time, a wide category of workers will be subject to a 10% social tax.

Earlier payments on compulsory social insurance were 25%, of which 22% the employer paid, and 3% the worker, now the ratio is changing. So, from 2019, 10% will be paid by the employee, and 15% by the employer.

A positive point is that social benefits will be accumulated in the employee"s retirement account. However, for those working under the service agreement, taxes will be increased. If so far, a person in this category, who receives for example an income of 1,000 manat, paid a tax of 66 manat (40 manat as a simplified tax (4%) and 26 manat to the social fund); so, now this category of tax will be 50 manat (out of 1000 manat, 750 manat will be exempt from tax, but 20% tax will be withheld from the remaining 250 manat, note. Turan).

The amount of social tax also increased. Under the new service contract, under the new scheme, they will pay about 90 manat in total as a tax and payment on compulsory social insurance, although before 66 manat were paid.

As for legal entities, for simplified tax payers, its rate will decrease from 4 to 2%.

Startups for 3 years will be exempt from income tax. At the same time, the circle of simplified tax payers will be narrowed. Trade will no longer be subject to simplified tax. Catering will pay 8% tax. In addition, excise rates will rise, which will lead to higher prices for a number of goods, including cars, the expert said.

Will innovations be able to reduce the volume of the shadow economy? Responding this question, Bayramov said that the benefits introduced for individuals can help reduce unemployment.

In general, in order to minimize the shadow economy, even greater liberalization of the economy and a complete transfer of relations between tax authorities and taxpayers into electronic form is necessary. It is also necessary to strengthen tax control, but also in electronic form.

Bayramov shares the point of view of experts who consider it expedient to adopt a new Tax Code. For in recent years more than 300 changes have been made to it.

The new code should be more accessible from the point of view of language stylistics, as well as clear fiscal rules. -06D--