In a recent article for the Intra-European Organisation of Tax Administrations (IOTA), Azeri Minister of Taxes Fazil Mammadov analyzed the new challenges faced by Azerbaijan’s Tax Service due to sluggish global growth and its negative impact on resource economies. He depicted Azerbaijan’s response in terms of developing a sustainable national economy.

According to Minister Mammadov, new trends in the national economy and the need to build a knowledge-based modern economy have set a new agenda for tax authorities. This agenda requires enhancing the regulatory role of tax policy; creating an affordable, transparent and attractive tax environment; upgrading the tax administration; improving entrepreneurial services; and establishing a modern corporate governance system.

He also reviewed several 2016 highlights in Azerbaijan, including:

Enactment of major tax reforms, including the “Risk Management” system, increasing the scope of e-audit for large taxpayers, expanding e-services provided to taxpayers, and regulating all forms of tax inspections.

A rating of “largely compliant” by the OECD Global Forum on Transparency and Exchange of Information for Tax Purposes.

Completion of the preparatory work on individual and innovative technology-based services for disciplined taxpayers based on the “Green Corridor” principle.

Amendment of the Tax Code to provide for advance tax ruling; a system of “voluntary tax disclosure” that protects taxpayers' rights; application of transfer pricing oversight and CFC rules; and development of tax mechanisms on e-commerce based largely on the EU model.

The 2017 priorities include transforming the Tax Service into a taxpayer-oriented administration based on the “individual approach” principle (linked to taxpayer categories to ensure proper distribution of fiscal and administrative burdens) and ongoing efforts to strengthen partnership and cooperation with business entities. For example, when treating large companies and special regime taxpayers, the Ministry will undertake individual business analysis and risk assessment before proceeding to inspection.

Concurrently, the Tax Service will attach high priority to capacity-building and engagement with international expertise.

Minister Mammadov’s full article is available on IOTA’s website.