Amendments to the Tax Code also include provisions on tax benefits granted to individuals. Tax specialist Ilgar Asadov is of the opinion that this amendment has changed the attitude towards receiving the right to benefit.
“According to Article 102.8 of the Tax Code, when calculating the tax withheld from thesalary, the right of individuals to the tax benefits listed in this article shall be applied from the moment of submission of the documents determined by the relevant executive authority and shall be carried out only at the main workplace of the individual (where the employment book is located). If the individual has the status that gives the basis for obtaining the tax benefits listed in this article, but submits the relevant documents confirming the right to benefit after the employment contract enters into legal force, the tax benefit shall be calculated from the date when the employment contract of that individual enters into legal force.
Previously, whenever a person who was eligible for any status submitted documents confirming the relevant status, employers applied a benefit to his/her income from that month and did not take into account previous dates. There were no clarifications about this in the declarations.
According to the new approach that came into force after the amendment, if a person with the right to tax benefit, who started to work in January of the current year, submits a document confirming the right to benefit, for example, in December, the Accounting Departmentmust take into account his/her right to benefit from the date the employment contract comes into legal force, that is, from January.
The amendment aims to eliminate real challenges. In a number of cases, persons with the right to benefit have serious difficulties in obtaining relevant certificates and documents.
The amendment also solves another problem. Until now, the right to benefit arose from the moment of submission of documents. This means that if the employee submitted the document to the Accounting Department on the 17th of the month, the benefit was not applied to the first 17 days of that month. This created a technical difficulty in terms of submission of declarations.
In addition, the expression of the moment of submission of the documents made the work a little more difficult: sometimes the date of the reference or document issued may be different, but the employee may have submitted it to the workplace a little late for certain reasons. With the new amendment, such cases have been eliminated.
I would like to note that the list of documents referred to here is the “List of documents for determining the right to tax benefits of individuals when calculating the tax withheld from salary” approved by the Decision No. 4, dated January 4, 2001 of the Cabinet of Ministers.
Another point is that the provision of this article also applies to persons who obtained the relevant status before January 2022: according to Part VII of Article 149 of the Constitution, “VII. The force of normative legal acts that improve the legal status of individuals and legal entities, eliminate or mitigate legal liability is applied retroactively. The force of other normative legal acts does not apply retroactively”.
Since the right to benefit alleviates the situation of the individual, this right must be retroactive.