The Draft Law "On Amendments to the Tax Code" developed for the purpose of improving tax legislation and administration and other normative legal act drafts related to it were adopted by the Milli Majlis in the 3rd reading. As in previous years, the main target areas of the changes made in the Tax Code this time are optimization of the tax burden of business entities, promotion of business activity, reduction of the tax burden of the population with social tax concessions, and improvement of measures to combat the "shadow economy".
The State Tax Service under the Ministry of Economy presents the changes and their justification to the attention of the public in parts.
One of the important changes in the direction of reducing the tax burden of business and promoting entrepreneurial activity is related to the provision of property tax incentives to tourism subjects (hotels and sanatoriums).
As it is known, the income of regional tourism is mainly formed on seasonal activity, and the level of income on this sector decreases sharply at other times. The value of accommodation assets in the tourism sector is quite large. For this reason, property tax, being a fixed cost, creates a significant tax burden on businesses operating seasonally.
In order to develop regional tourism and reduce fixed tax costs, it is planned to provide tax incentives to tourism entities (hotels and sanatoriums). For this purpose, the Tax Code has been amended regarding the reduction of property tax by 75 percent for a period of 3 years from January 1, 2024 (except for the period when entrepreneurial activity is temporarily suspended in accordance with Article 16.3 of the Tax Code) for real estate used in the operation of hotels and sanatoriums in other cities and regions of the republic with the exception of the cities of Baku, Sumgayit, Khirdalan and Absheron region.
The main purpose of the change is to support regional tourism and optimize fixed tax costs on business.
