Orkhan Nazarli: Reducing scale of shadow economy led to increase in tax revenues

Along with economic growth in Azerbaijan, measures to reduce the scale of the "shadow economy" and legalize entrepreneurial activity and incomes played an important role in achieving fiscal goals, head of the State Tax Service (STS) under the Ministry of Economy of Azerbaijan, Orkhan Nazarli, said on February 10 at the conference “Heydar Aliyev and the tax system of Azerbaijan: towards new challenges”, Report informs.

According to him, if we return to 2018 - a period that can be described as a "new qualitative beginning" in the tax system - we can see that over the past 5 years in this area, as well as in relations between the business state and business activity, there have been big changes: "Reducing the scale of the 'shadow economy' and ensuring transparency have become the most important factors in recent years, contributing to the dynamic growth of tax revenues from the non-oil and gas sector and the expansion of the tax base."

Nazarli noted that in 2022, the nominal growth rate of tax revenues from the non-oil and gas sector amounted to 27.9%. This exceeds the nominal growth rate of 21.6% of the part of GDP that is the basis of tax revenues in this sector. Thus, it was the factor of ensuring transparency that led to the achievement of such results.

The head of the State Tax Service said that the measures implemented in the areas of increasing business activity and reducing the scale of the "shadow economy" made it possible to legalize activities in many areas and increase the category of active payers. The observed increase in the number of VAT payers is especially relevant from a fiscal point of view. In 2022, the number of active taxpayers increased by 7%, the number of active VAT payers - by 15.1%, active objects - by 3.2%. As of January of this year, the number of active taxpayers approached 712,000.