The role of taxes in the development of the country's economy in modern times

Taxes not only are significant components in forming financial resources of the state but also in today's economic system have regulatory and stimulating functions. It is especially critical that tax policy is effective in delivering sustainable economic development, funding public spending and social policies and regulating economic activity. The functions of taxes are not only to augment the budget revenues in the present conditions. Tax rates and incentives can affect the decisions of entrepreneurs to start a business, investment, growth of production and the growth of different sectors of the economy, if they are determined properly. The tax reform is an important element of economic policy in Azerbaijan. Over the past few years, a number of steps have been taken towards digitalising tax administration, to foster voluntary tax compliance, to diminish the shadow economy, and to enhance the overall business climate. This article looks in detail into the fiscal, regulatory and stimulating role of taxes in the context of economic development and investigates the effect of tax policy on entrepreneurship and on investment climate. It also takes into account the key issues affecting tax systems in the contemporary era and explores potential avenues for enhancing their effectiveness. This study shows that one of the conditions for an effective tax policy is to build a proper balance between fiscal interests and economic development goals. An effective tax system can have a positive impact on improving public finances and can facilitate sustainable economic growth, investment and entrepreneurship.