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The Tax system of the Azerbaijan Republic


State taxes, the taxes of the autonomous republic, and local taxes (municipal taxes) are determined and paid in the Azerbaijan Republic. State taxes are the taxes that should be paid in all the regions of the Azerbaijan Republic, and the taxes of the autonomous republic are the taxes in Nakhchivan AR that are determined by the laws of the Nakhchivan Autonomous Republic and that are paid in Nakhchivan AR, local taxes (municipal taxes) are the taxes that are determined by the tax code and relevant laws, applied according to the rules of the municipalities, and paid at the territories of municipalities. Other obligatory payments applied by the municipalities are determined by the law. Tax amount is taken in the following forms: 
Directly from the source (levying the tax till getting income or benefit) 
According to the statement (levying the tax after getting income or benefit) 
According to the notification (the payment of the tax by a tax payer on the payment notification for the sum that was calculated by the tax body or municipality on the basis of the value and area of the tax object) 

State taxes are the followings: 
1) Income tax of natural persons; 
2) Income tax of juridical persons (except the institutions and organizations that are in the property of municipalities); 
3) Value Added Tax; 
4) Excise tax;
5) Property tax of juridical persons; 
6) Land tax of juridical persons; 
7) Road tax; 
8) Simplified tax. 
The tax system of the Azerbaijan Republic was formed at the end of 1991 and the beginning of 1992, after Azerbaijan gained independence. This process is divided into 3 stages: 
The first stage, the years of 1991-1992 – laws on the taxes levied on mainly revenues and expenses were passed at this stage. In the December of 1991, the laws on “Value Added Tax” and “Excise”, “The Taxes from different kinds of incomes and benefits of juridical persons” and “Income tax of natural persons” were passed.  Beginning from the middle of 1992, the independent tax service of the republic was formed. 
The second stage, the years of 1993-1996 – many new tax types were adopted according to the demands of the market economy; their standard-legal source was formed. So, the  “Land tax” in the February of 1993, “Property tax” and ”Mine tax” in 1995, “The taxes on State road fund”  in the December of  1996 were accepted, and instructions, regulations on the application of tax laws were worked out. 
The third stage, the end of 1996 and 2000 included, some work was done in the direction of the improvement of the laws that were passed at the previous stage depending on the quality changes in the society and economy, some amendments and changes  were made to the to the relevant tax laws, the president of the Republic signed a decree on the “Elimination of false obstacles in the development of the ownership and the improvement of state control system” that directly concern the tax bodies. As a result of this stage, we can state the admission the “Tax Code” in the June of 2000. 
The tax system of the Azerbaijan Republic today ensures the action mechanism of the country, enables financing the urgent needs of the state, prevents the increase of the budget deficit, and meets all the demands for the transition to the market economy. 
 The state tax service of the Azerbaijan Republic is the common centralized system consisting of the Ministry of Taxes and territorial tax bodies that directly subject to the Ministry. The structure of the Ministry of Taxes of the Azerbaijan Republic include the tax offices and departments, such as the Ministry of Taxes of Nakhchivan AR, the Education Center of the Ministry of Taxes, the Department on large tax payers and the institutions with the special tax regime, the Department of the primary investigation of tax offenses, Baku City Chief Tax Department, Regional Tax Department, tax departments in towns and regions of the Republic. 
The Ministry of Taxes is considered to be the state governing body and is subjected to the President the Government of the Azerbaijan Republic. The formation of the tax service as a centralized system enables to implement the common tax policy in all the regions of the republic. The Ministry of Taxes is the system that was formed on the subordination principle of lower bodies to higher bodies. The Ministry and all the subordinated tax bodies are the juridical persons, and each of them has independent expense  estimate, current account at a bank, treasury account to the body of notification, the seal in which the Azerbaijan Republic’s coat of arms was described, relevant stamps and seals, and Identification Number of tax payers. 
The Ministry of Taxes is headed by the minister who is personally responsible for the accomplishment of demands and duties of the tax bodies. He is appointed to this position by the President of the Azerbaijan Republic. State tax service bodies operate on the vertical subordination principle. Vertical subordination accelerates the exchange of information and stipulates the expansion of executive materials of instructions among the tax bodies. 

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