Page 22 - Azerbaijan State University of Economics

Aynur Suleymanova: Assessment of Laffer Points of the I and II Types of VAT (on the
Example of Russian Federation, Kazakhstan and Azerbaijan Republics

this, under conditions of imperfect tax legislation and administration, high VAT
rates can lead to tax evasion and the shadow economy to flourish. We also have to
note that in Russia and Azerbaijan VAT has been applied since January 1, 1992, and
in Kazakhstan since July 1, 1995. Both in Russia and Azerbaijan since the VAT has
been implemented, its rate was 28 percent of the value added, but then gradually
decreased and stopped at the level of 18 percent. But in Kazakhstan, VAT initially
began to be taxed at a rate of 20 percent, but later this has been lowered and now is
12 percent.

2. THE RELEVANCE OF RESEARCH
The optimal level of tax burden is the level at which the volume of tax revenues to
the budget, as well as the volume of gross domestic product reaches its maximum
value, while the levels of tax evasion and the shadow economy decrease. The theory
expressing the dependence of the volume of tax revenues on the level of tax burden
was first proposed by the American economist Arthur Laffer. It should be noted that
this approach cannot cover all the factors affecting tax revenues, which is why this
theory has its opponents. Despite this, the calculation of the optimal level of tax
burden does not lose its relevance for countries rich in natural resources, as well as
with a high level of shadow economy [Yadulla Hasanli. 2014; Yadulla Hasanli,
Nazim Hajiyev, Fail Kazimov. 2019; Y Hasanli, S Bayzakov, V Valiyev, G
Sarsembaeva. 2011; Adalat Muradov, Yadulla Hasanli, Nazim Hajiyev 2019;
Yadulla Hasanli, Simrah Ismayilova. 2017; Gorkhmaz Imanov, Yadulla Hasanli.
2014]. One of the functions that taxes perform is to control the economy at all levels
of production and sales of goods. Better than all other types of taxes, this function
can be performed by VAT. Therefore, achieving an optimal level of VAT helps to
improve the efficiency of fiscal and tax policies, among other things.

In order for a tax policy to be effective, a very important condition is that the tax
burden should be at an optimal level [Balatsky E.V. 2005]. In some countries,
studies have been conducted in order to calculate the optimal rate of various taxes
[Balatsky E.V. 1997, 1999; Hasanli Y. 2007; Kalbiyev Y. 2005; Movshovich S.M.,
Sokolovsky L.E.1994; Aynur Sabir Suleymanova, Gunay Fazil Rahimli. 2019;
Yadulla Hasanli, Nazim Hajiyev, Aynur Suleymanova. 2018].

Considering the fact that a comparative analysis of optimal VAT rates for Russia,
Kazakhstan and Azerbaijan was never carried out, we decided to calculate the
optimal level of VAT tax burden for these three countries using econometric tools,
and then carry out a corresponding analysis [Dimitrios Asteriou, Stephen G.Hall.
2016; Magnus Y.R., Katyshev P.K., Peresetsky A.A. 2004; Tikhomirov N.P.,
Dorokhina E.Y. 2003; Valentinov V.A. 2006]. It should also be noted that the
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