Table of contents introduction
Table 4. Foreign investment (million US dollars)
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- Bu səhifədəki naviqasiya:
- Source: stat.gov.az
- 2.4. Taxe Rate
- Table 4 . Tax rates on other income received by individuals in connection with non-entrepreneurial activities
Table 4. Foreign investment (million US dollars)
Source: stat.gov.az It is an undeniable fact that foreign investments allow our country to become economically strong, while at the same time securing its long-term strategic interests. Therefore, the growing interest in Azerbaijan's investments in the world should be taken as a very important fact. Especially at a time when the world's leading financial institutions are making positive predictions that Azerbaijan's investment potential will increase in the future. By the way, according to the World Bank, Azerbaijan will become a major foreign investor in the medium term. Another important point in this area is the existence of holdings in our country that successfully operate in various sectors of the economy, resulting in a slight increase in financial opportunities. Today, the class of entrepreneurs formed due to the favorable conditions created in a short time and the concessions made have become the main force of the country's economy. At present, their question comes from foreign countries. Accordingly, the role of these holdings in the recognition of Azerbaijan as an investor in the world is not small. In particular, in 2016, Karat Holding commissioned the Manbe sanatorium-resort center in Yessentuki worth $ 25 million. Azersun Holding has a $ 8 million canned fruit and vegetable plant in Krasnodar and a $ 3 million tea factory. Karvan-L has implemented the construction and supply of STALPROM in Kabardino-Balkaria and the construction of the $ 1.5 million Anji sports complex in the Republic of Dagestan. Matanat-A has built a $ 33 million dry construction mix plant in Krasnodar region. 2.4. Taxe Rate Taxes play an important role in the formation of the budget of any state. Thus, the state needs a certain amount of funds to cover the costs required from the state budget, as well as to perform the functions specific to the state, to cover the costs of enterprises subordinate to the state structure. Budget revenues, especially taxes, are of great importance in raising these funds. Personal income tax is applied to income received by residents or non-residents. In other words, the main object of taxation of personal income tax is the income received by residents and non-residents during a certain period. Resident persons are persons living or operating in the territory of the Republic of Azerbaijan for 182 consecutive days (A.Shakaraliyev, G.Shakaraliyev, 2016, p.44). In order to further analyze and study the history of the emergence, formation and development of the personal income tax, it is necessary to pay special attention to the history of the development of taxation. The mechanism of taxation can be divided into three main stages in terms of historical and chronological development (Akbulut A, 2000, p.122):
The first stage covering the Middle Ages. The main characteristic of this stage is explained by the fact that in the Middle Ages there was no single structured system for the determination of taxes, as well as the application of tax rates. Taxes were collected in kind, not in a systematic way. The second stage covering the XVI-XIX centuries. During this period, tax systems have already begun to develop at a rapid pace, shifting to the application of direct and indirect taxes. In the 16th and 19th centuries, the emergence of state bodies and apparatuses that could control the collection of taxes led to the systematic collection of taxes at this stage. The third stage, covering the period after the First World War. This stage is characterized by the emergence of theoretical research on the development of the mechanism of taxation. Thus, with the end of the First World War, fundamental reforms were carried out in the field of taxation, and as a result, the fundamental foundations of the tax rates we apply in our time were laid. During the Soviet period, the share of personal income tax in state budget revenues was very low. Thus, only 6-8 percent of the funds received by the state budget were formed at the expense of personal income tax. The main reason for this was the tax exemption of income of workers and peasants at that time. Thus, workers, collective farmers, farmers and other people from this category, which cover a large segment of the population, are completely exempt from income tax, which has led to a significant reduction in income taxes in the state budget. Instead, high taxes were levied on artisans. Thus, 81% of the total annual income of artists was taxed. This has led to the underdevelopment of the industry, with fewer people moving away from crafts due to higher tax rates. On October 18, 1991, the Republic of Azerbaijan regained its independence. After gaining independence, fundamental reforms were launched in the tax system of the republic. Thus, from the first day of 1992, the personal income tax was introduced on the basis of new principles. In other words, from January 1, 1992, taxpayers began to pay taxes on the basis of equality before the law, regardless of social groups and the amount of income they earned. This led to the transfer of some funds from the funds earned by everyone to the state budget, which resulted in the development of the budget for future periods (P.Q.Rzayev, 2012, p.88). The second income tax reform in the Republic of Azerbaijan took place on June 24, 1992. Thus, the Law of the Republic of Azerbaijan "On Income Tax of Individuals" adopted on this date has led to the determination of income tax rates in the amount of 12-55%. According to this law, income tax was to be applied to the monthly income of individuals on a 6-step scale. One of the main reforms implemented by the Republic of Azerbaijan in the field of taxation is the Tax Code of the Republic of Azerbaijan adopted in 2000. The adoption of the Tax Code has revealed many innovations in the regulation of personal income tax in Azerbaijan. Thus, the first significant change accelerated the introduction of a more simplified mechanism of personal income tax, and as a result, the 6-tier scale adopted in 1992 was replaced by a 2-tier scale. If the income tax in the workplaces of individuals with employment records is up to 2,500 manat, the tax is applied to the remaining amount by reducing it by 1 times the subsistence minimum provided for 2021. For example, the tax rate for a person earning 796 manat is 14%. However, the 14% tax rate does not apply to all 796 manats, but to the remaining part after deducting 1 times the subsistence level. That is, 796-196 = 600 manats and 14% tax rate will be calculated over 600 manats. Here, 196 manat is the subsistence minimum for 2021 (Tax Code of the Republic of Azerbaijan). The rate of income tax applied to persons engaged in entrepreneurial activities without obtaining the status of a legal entity is set at 20 percent. As we have mentioned, one of the revenues from non-employment activities is the income from non-entrepreneurial activities. The following are examples of these incomes obtained as a result of non-entrepreneurial activity (A.Mammadov, I.Seyfullayev., 2013, p.89):
Interest income; Dividend; Royalties; Income from property lease; Amount of debt forgiven to the taxpayer (except for cases of forgiveness of any debt or obligation of the employee to the employer or enterprise); Income from assets not used for the main purposes of entrepreneurial activity; Income from betting on sports games, etc. Interest, dividends, as well as winnings when betting on sports games, and money received as a result of the lottery are taxed at 10 percent. Income from royalties and rents is taxed at a rate of 14%. Other income received by individuals in connection with non-entrepreneurial activities is taxed as follows: Table 4 . Tax rates on other income received by individuals in connection with non-entrepreneurial activities
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