The tax system consists of a set of taxes, levies, duties and other payments levied in the prescribed manner.
In general, analyzing the tax systems of the European Union and other countries, it can be concluded that a progressive tax system must meet the following 5 basic principles:
1. Equality-tax system should be equal and fair for all taxpayers, as a result, the same taxes should be levied on taxpayers in the same conditions and the same transactions should be taxed in the same way.
2. Simplicity – the tax system should be as simple as possible so that taxpayers can easily understand their obligations and pay taxes on time and in full, while reducing the administrative costs of tax authorities and difficulties in tax control.
3. The guarantee-tax system must provide the state budget with sufficient and well-known sources of income.
4. Efficiency – the tax system should be efficient and should not prevent or reduce the increase in production of goods and services in the country’s economy.
5. Competitiveness – the national tax system of other countries’ tax systems must be competitive, because it must be a system that ensures long-term, sustainable and real economic development, creation and growth of new jobs.
Principles of taxation:
The principles of taxation are understood as a set of basic ideas and rules that exist in the field of taxation. The principles of taxation were first mentioned in 1776 by the English economist A. Smith in his work “On the Nature and Causes of the Wealth of Nations.” He outlined 5 basic principles:
- The principle of economic independence and freedom
- The principle of justice
- The principle of certainty
- The principle of affordability
- The principle of economy
Currently, the following principles of taxation are implemented:
1. The principle of economic independence and freedom.
2. The principle of justice
3. The principle of balance.
4. The principle of maximum consideration of the interests and opportunities of taxpayers.
5. The principle of efficiency.
The set of measures taken to meet the financial needs of the state and various social groups of society through the redistribution of financial resources, the formation of the country’s tax system is the basis of the country’s tax policy.
According to Article 4 of the Tax Code of the Republic of Azerbaijan, the following taxes are determined and paid: -State taxes-Autonomous Republic Taxes-Local taxes.
State Taxes include the following:
-Individual income tax
-Law of corporate income tax
-property tax of legal entities
– Group tax of legal entities and land tax of individuals