Azerbaijan: How to create a world-class taxation system from scratch

Author: Cemile Hacibeyoglu
Publication: Celebrating Reform 2009
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The government of Azerbaijan took on the challenge of creating, from scratch, a transparent tax administration system, as was necessary. The country’s tax administration was revolutionized by creating a state-of-the-art online system. Doing Business 2009 acknowledged Azerbaijan’s progress and named the country “top reformer” globally—with business-friendly reforms in 7 areas, including the “paying taxes” indicator.

This case study follows Azerbaijan’s bold reforms—from the creation of the new Ministry of Taxes in 2000 to the launch of the online tax system in early 2006.

Main Findings

  • The Automated Taxation Information Service was launched in January 2006 with training and outreach programs to facilitate its use.
  • As of September 2008, about 43% (85,000) of 200,000 active VAT payers use the Automated Taxation Information Service to file and pay their taxes. The Ministry of Taxes expected this number to keep rising.
  • Azerbaijan was able to cut 15 payments and 576 hours per year from its tax onus, as recorded by Doing Business 2008 and Doing Business 2009.