RESPONSIBLE ENTREPRENEURSHIP VISION DEVELOPMENT AND ETHICS

444 RESPONSIBLE ENTREPRENEURSHIP
Although the entrepreneurs have access to soft loans, the commercial banks don’t have
authority to directly approve such loans. It is necessary for banks to get final approval by
ANFES. This may increase the period of decision making on the side of ANFES. Since banks
are in a better position to evaluate and decide on approving loans, it would be more efficient
to make banks in charge of the final decision on approving loans. Not only loans, but also
subsidy mechanism should be reformed in order to eliminate phantom support.
Given the high interest rates at banks as well as limited access to budget loans, there is a
need to develop financial markets, in order for entrepreneurs to be able to obtain external
financing. Through sales of securities, SME’s may be able to acquire more affordable financing.
Development of financial markets would also give wider access for entrepreneurs to get
funding. Since small enterprises need much more financial support, there is a need for specialized
banks that can assess risk more accurately and accord loan conditions to it.
Sole proprietors play an important role in the entrepreneurial climate in Azerbaijan. For
instance, 92% of small enterprises are sole proprietors in 2014. There is a need for government
to facilitate their transformation into legal persons to accelerate their growth since enterprises
can get finance with better conditions than physical persons.
As President of the Republic mentioned, unfortunately, the culture of paying taxes by
entrepreneurs has not been fully established yet and main revenue of government should come
from such taxes. While it is important to increase tax base through stimulating entrepreneurship,
this requires creating more favorable environment to do business. Entrepreneurs still
remain dependent on support through tax exemptions as well. Agriculture sector is almost
tax and duty-free which is big part of social importance, but small part of the economy in
Azerbaijan. Despite low tax rate (20%) compared to EU countries, the reasons why some
entrepreneurs still avoiding paying taxes requires further research.
Conclusion
Azerbaijan grew very rapidly during the last decade injecting oil revenues into the economy.
As a result of the privatization process, employment in the private sector reached to
more than 80% in 2014 compared with 29% in 1994. Since independence the government
has taken steps to develop entrepreneurships and SMEs by creating legal and financial framework
as well as by providing organizational and technical assistance. Since millennium government
has established financial support background and began to lend soft loans priory to
agriculture sector. To improve financial condition of entrepreneurs, the government also uses
tax policies, in particular tax exemption on agribusiness, regional based tax policies.
Supporting agriculture sector is important for government because significant part (37.1%)
of labor force work in this sector. Government provides addition support for agricultural sector
such as subsidizing half of the cost of fuel and motor oil expenses, offering 70% discount
on fertilizers and agricultural machines at a 40% discount. So far, agricultural entrepreneurs
have received 645 million manats of subsidies and 1.4 billion USD as tax savings.
As of January 1, 2016, 1,754 million manats have been given as loans to 30,044 entre -
preneurs and it is expected that at the end of 2016 it will reach 2 billion manats. Since the
end of 2015, all types of inspections of entrepreneurs have been suspended for 2 years and
all type of licenses to entrepreneurs can be received through one-stop shop Government