MP: Tax on deposits to be charged from this date

15:01 - 31 January 2023

January 31, Fineko/ "Deposits in banks have been exempt from tax for 7 (seven) years since 1 February 2016. Thus, according to Article 102.1.22 of the Tax Code, annual interest income paid by a local bank and a branch of a foreign bank in Azerbaijan on deposits of individuals, as well as dividends, discount (the difference resulting from the placement of bonds below par) and interest income paid by the issuer on investment securities are exempt from income tax. But this period ends tomorrow," ABC.AZ reports, quoting MP Vugar Bayramov.

He noted that, at the same time, the latest amendments to the Tax Code do not provide for the extension of the grace period under this article. This means that if this article is not adjusted, the deposit tax will be charged from tomorrow.

"The exemption of deposits from income tax allowed banks to attract more deposits. However, this was not the only reason. But tax-free deposits were more attractive to citizens. If in 2016, when the changes were adopted, individuals had AZN 8 billion in banks. AZN 77 million of deposits, then over the past period this figure has grown to AZN 11.743 bn. This means that over the same period, deposits of individuals in banks increased by more than 45.0%. However, the special role of financial stability, which was achieved in these growth rates after 2017."

By Elmir Murad