“Application of “principle of individual approach” to taxpayers from different sectors with different turnover enables to render more efficient service to such taxpayers, minimize tax control measures, and fulfil taxpayer-related activities by a single tax authority, through “one stop shop”. When treating large companies and special regime taxpayers, the Ministry of Taxes will pursue a policy that builds upon extensive analysis and risk assessment. Overarching priority will be given to assessment of available risks and introduction of e-audit. Risks of tax evasion by such taxpayers will be assessed on individual and thorough basis, predictions will be made through economic analysis, whereas tax control measures, including field tax inspections will be carried out more comprehensively. Middle-income local businesses and disciplined taxpayers will be communicated under the principle of transparent partnership. The cases of tax evasion will be identified in consideration of features related to the field of activity and such taxpayers will be subjected to optimum measures of tax control”, the minister said.
The minister noted that totally new approaches will be applied with respect to small businesses: “As prescribed in the “Strategic Roadmap on production of consumer goods in Azerbaijan at the level of small and medium-sized enterprises”, in order to improve the business climate in Azerbaijan, the main focus will be put on small and medium enterprises (SMEs) during the tax reforms. The Ministry of Taxes will determine optimum tax rates and carry out consultations with business associations and public organizations for supporting dynamic development of SMEs, and the tax policy will cover the issues of wages, as well as incentivise SMEs to legalize their turnover. As regards small businesses, all communication will be established on the feedback principle, targeting increase in the level of voluntary compliance by raising efficiency in data transmission, accountability and range of services, as well as reducing tax and administrative burdens on businesses.
The Ministry of Taxes will make changes to reporting and submission systems of tax returns, thus tax return and statement forms intended for SMEs will be simplified: “One of the key objectives before the tax authorities, nowadays, is to give comprehensive support to low-risk taxpayers and minimize tax risks under the partnership agreements; hence the reporting by large companies and special regime taxpayers will be improved in the manner allowing due analysis. This very approach has been applied at local tax authorities, therefore separate departments dealing with small businesses, as well as taxpayer service and transparent partnership units have also been established at local tax authorities. Major concerns of entrepreneurs, such as tax inspections, especially the off-site tax inspections, problems related to prompt control measures, including incessant calls by tax officials, frequent restrictions on bank accounts and etc. have been eliminated. It is worth mentioning, that new administrative approach monitors the impracticability of inspection in the absence of tax authorities’ analysis and due justification. Risk assessment system will automatically process, analyse and group taxpayers based on risk criteria, whereas tax liabilities and tax capacity will be assessed according to risk modules. Overall, local authorities will not implement measures of tax control on their own decisions. Restrictions on low-risk taxpayers’ accounts and limitations on leaving the country will be lessened, whereas inspections at SMEs will be developed; first and foremost, use of ratio-based inspections at SMEs will be extended; number of inspections will be optimized; quantity of on-site inspections at SMEs will diminish; the method of electronic inspections will apply; as well as real-time tax control will improve and gain efficiency under new regulations. It should be noted that innovative technologies in the field of ICT accelerated the VAT refund process per se. The performance of the Call Centre of the Ministry of Tax which has been functioning as of 2011 under approved European standards (certified by "Austrian Standards plus") will be further improved, whereas all responses provided by the Call Centre are legally binding”, he added.
The minister also stressed that all these changes, in accordance with current structuring of the economy, serve to focusing basic fiscal burden on large taxpayers, and further stimulating the performance of SMEs by reducing tax and administrative burdens in the near future: “Sustainability of tax reforms will further increase competitiveness of the SMEs, in particular, positively impact permanence of newly-built enterprises, stimulate opening of representative offices of foreign companies, and create more favourable conditions for investments in the non-oil sector”.