One of the main directions of the tax policy implemented in our country is the further expansion of the application of digital approaches and solutions in tax administration and the efficient use of existing resources for this purpose. Tax policy is being adapted to the pace of changes in the digital economy and the developing economic environment.
Expansion of Digitalization and Electronic Services Continues
The State Tax Service (STS) is undertaking necessary efforts to expand the number of electronic services and to further modernize these services. In Azerbaijan, tax declarations have been submitted electronically for many years, an electronic tax invoice system is in place, and more than 60 electronic services are provided to taxpayers. Currently, over 90% of taxpayers nationwide submit their reports and declarations electronically. Tax authorities are working on innovations that simplify the existing system to help entrepreneurs fulfill their tax obligations. The service system is being improved in line with taxpayers’ expectations and demands. Preparations are underway to enable micro and small entrepreneurs to fulfill their tax obligations via mobile applications, i.e., simple mobile apps. One of the main goals is to minimize live contact between entrepreneurs and tax authorities and to ensure that each taxpayer can access any service anytime, anywhere. The application of new technologies supports targeted government services, the complete transfer of interactions with taxpayers to electronic format, and full transparency in these relations. New technologies play a significant role in increasing voluntary compliance with tax legislation. This contributes to strengthening mutual trust between society and the state, enhancing citizen satisfaction, and ensuring transparency of the economy for all parties.
Digital Solutions Are More Effective for Fulfilling Tax Obligations
One of the main goals of digital transformation at the State Tax Service is to establish an efficient and fast data processing system that enables agile decision-making. The use of digitalization is not limited to services provided to taxpayers but also applies to analysis, auditing, and desk audits, using programs based on artificial intelligence and modern information technologies. Efforts continue to improve the application of IT in tax administration, including the further expansion of electronic services. The Digital Transformation Council operates to increase the efficiency of operations in the IT field, develop unified principles and standards, manage digitalization and automation processes within the STS, and ensure the highest levels of security and uninterrupted operations.
Systematic Fight Against the “Shadow Economy” and Increasing Transparency…
Among the digital tools applied by tax authorities, the introduction of next-generation control-cash registers is a significant event for further improving the business environment and advancing entrepreneurial activity to a new qualitative level. The main benefit of this innovation is the increased transparency, which serves both entrepreneurs’ and the state’s interests. The use of new cash registers allows for more transparent settlements, prevents illegal circulation of goods, and ensures control over turnover. Currently, more than 71,000 such cash registers have been installed in the country. Since these cash registers allow remote monitoring of taxpayers’ activities and offer flexible settlement methods, the scope of activities requiring their use is expanding. The expansion of their application positively impacts the innovative “VAT Refund” project. This year, amendments to the legislation included the VAT refund mechanism for medical services. The “VAT refund” mechanism has been implemented not only for retail trade and public catering but also for medical services, aiming to increase turnover transparency in the healthcare sector and encourage citizens’ direct participation.
According to the “2022-2026 Socio-Economic Development Strategy,” systematic efforts to combat the “shadow economy” and increase transparency include expanding digitalization in tax policy. Among other targets, the coverage of digital tax collection (the ratio of submitted invoices and online cash register turnover to declared turnover) aims to exceed 75%.Digital tax services