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IMF: Increase in Non-Oil Revenues Important for Azerbaijani Economy |
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Thursday, 19 January 2012Increased non-oil revenues are a key factor in reducing the Azerbaijani economy's on dependence the oil sector, the IMF said after talks with Azerbaijan on Article IV.
The consultations were held from Oct. 20 to Nov. 2 during the visit of an IMF mission to the country headed by Middle East and Central Department Deputy Director Asia Nadeem Ilahi.
"Reviewing the execution and structure of non-oil revenues in Azerbaijan shows that there are opportunities for successful reforms in parallel with bringing the tax system in accordance with the standards in other developing economies," the statement said. "Reforms may include the expansion of the tax base, reduction of the costs of observing the requirements and increase in effectiveness of the tax system."
A range of factors point to the need to increase tax revenues from the non-oil sector in Azerbaijan. Increased non-oil tax revenues could help protect the economy amid oil price volatility. This may lead to the reduction in oil revenues. It will also help to develop long-term stable source of funding for the state with limited oil reserves and a sharp decline in oil production expected after 2018.
The presence of large hydrocarbon revenues creates the opportunity to bring the tax system's structure in line with successful practice.
Global experience shows that tax incentives are more successful when they are well planned and fulfilled, and they are not caused by severe short-term fiscal crisis. Thus, when the state uses a convenient financial situation, it can modernize the tax system in line with early IMF recommendations by expanding the tax base and reducing the costs for observing the requirements.
The IMF thinks that these reforms can bring as much income as one can get with the non-oil GDP growth by 5-6 per cent.
"Expanding the tax base will require the reforms in VAT and income tax," a statement said.
According to the IMF experts, expanding the tax base will lead to the creation of optimal variants of special tax regimes within the PSA contracts and joint ventures.
The modernization of tax and customs control systems can be supplemented with appropriate technology for self-assessment and risk management. |
Thursday, 19 January 2012
Trend AZ
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