Identifying the directions for improving the tax environment in the Republic of Azerbaijan

Abstract

The article provides a comprehensive analysis of the formation of the tax environment in the Republic of Azerbaijan and its impact on economic development and entrepreneurial activity. The study examines the essence of the tax environment and evaluates key factors such as tax burden, tax rates, tax administration, and the stability of tax legislation. It is substantiated that an increase in the tax burden leads to a decline in economic activity, a reduction in investment and savings levels, and an expansion of the shadow economy. At the same time, the article demonstrates that reducing tax rates and applying tax incentives play a significant role in stimulating entrepreneurship, improving the investment climate, and increasing employment. The study also draws on international experience, particularly the examples of Estonia, Ireland, and Georgia, to identify the main directions for improving Azerbaijan’s tax system. The findings suggest that the establishment of a transparent, stable, and simplified tax system is a key prerequisite for sustainable economic growth and long-term development.