Legislative Tracking

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Legislative Tracking

Deloitte Azerbaijan

Legislative Tracking is a daily, weekly and monthly newsletter designed to highlight the most significant legislative changes, proposals and events as reported in the Azerbaijani State press.

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Legal News Update - 22 August 2017

The Law “On Unemployment Insurance”

The President of the Republic of Azerbaijan approved a new Law “On Unemployment Insurance” (“Law”), which will be effective as of 1st January 2018.

The Law is aimed to establish relations and new financing mechanisms based on a risk transfer in the labor market; compensate lost wages of insured persons and ensure the social protection of the population through preventive measures to prevent the occurrence of unemployment.

The Law is intended to apply to those, whose employment agreements have been terminated due to liquidation of the state authority or legal entity or the redundancy. The Law will not apply to those holding political office.

As per the Law, the insurance will enable the unemployed to get payments over a definite period.  In order to be eligible for an insurance payment, the unemployed shall be registered within the State Employment Fund.  The amount of payments will be differentiated depending on the length of insurance record and the amount of past average monthly salary. 

 

Charter of the State Advertising Agency has been approved

The President of the Republic of Azerbaijan approved the Law “On organization of the State Advertising Agency of the Republic of Azerbaijan” on July 31, 2017. 

The Charter of the State Advertising Agency of the Republic of Azerbaijan has been approved by the President and the annual financial report of the Agency has been approved by the Cabinet of Ministers.  

The charter fund of the Agency is determined at the expense of the state budget in the amount of 10,000 AZN. The Supervisory Board consists of three members. The appointment and dismissal of the members of the Supervisory Board, as well as early termination of their office shall be determined by the President of the Republic of Azerbaijan. 

The Charter specifies the goals, functions and the rights of the Agency, the management of the organization, the charter fund, the basis of its property and financial activities, the form and scope of control over its activities, accounting and reporting in the Agency, its liquidation and reorganization.

 

Regulation of the Financial Stability Council has been approved

The President of the Republic of Azerbaijan signed the Decree “On approval of Regulation of the Financial Stability Council of the Republic of the Republic of Azerbaijan” on July 31, 2017.

The approved Regulation identifies Council’s functions, rights, obligations and the organization of its activities.

It should be noted that, the Decree “On the establishment of the Financial Stability Council of the Republic of Azerbaijan” aiming to facilitate macroeconomic and financial stability was issued on July 15, 2016.

 

Legal News - 22 August 2017

Legal News Update - 4 August 2017

Amendments to the law on “Non-Cash Settlements”

The President of the Republic of Azerbaijan approved the law “On amendments to the law on Non-Cash Settlements” on 13 July 2017.

Under the new amendments, along with some tehcnical changes, settlements specified in Article 3.4.4 which are pensions, scholarships, financial assistance, allowances (including one-time allowances), compensation, indemnities etc. shall not be subjected to detective search activity, intelligence and counter-intelligence activity. 

 

The Law on “Tourism” has been amended

The President of the Republic of Azerbaijan approved the law “On amendments to the law on Tourism” on 13 July 2017.

A new clause was added to Article 9 of the Law on Tourism according to which, payments to travel agents must only be made by non-cash methods. 

 

Amendments to the Labour Code

The law “On amendments to the Labour Code” was approved by the Presidential Decree of 13 July 2017.

New clause of “x” has been added to the first paragraph of Article 12 under which, all payments made to the employees may only be implemented according to the law on “Non-Cash Settlements”

 

Amendments to the Civil Code 

Presidential Decree of 25 April 2017 approved the “Law On Amendments to the Law on state duty”.

The amendments introduce state duty of AZN 500 for performing currency exchange operations.

 

Amendments to the law on Compulsory Insurances

The law “On amendments to the law on Compulsory Insurances” was approved by the Presidential Decree on 13 July 2017. 

A new Article 4-1 has been introduced under the current amendtments which states that:

“Payments under settlements defined with this law are implemented only in non-cash”

Moreover, Article 11.3 has been removed from the Law and the word “cash or” has been replaced with the word “only” in the text of Article 11.1.  As per the prior wording of Article 11.1, insurance premiums were paid in cash or non-cash.  Following the amendments, insurance premiums may be paid only in non-cash now.

 

Amendments to the law on Central Bank

The President of the Republic of Azerbaijan approved the Law “On amendments to the law on Central Bank” on 13 July 2017. 

Under the amendments, the word “Central” in Articles 22.0.5, 22.0.13, 22.0.16 has been replaced with the words “under an agreement with the appropriate executive power, Central” and the word “international” in Article 22.0.8 has also been replaced with the words “under an agreement with the appropriate executive power, international”. 

Now, by the virtue of Articles 22.0.5, 22.0.13 and 22.0.16, the Board of the Central Bank has an authority approve the Central Bank's budget and amendments to it, its organizational structure and management procedures, to determine the forms and amounts of remuneration by agreeing with the President of the Republic of Azerbaijan.

Moreover, the Board has an authority to define the strategy and rules for the maintenance and management of international gold and currency reserves by agreeing with the relevant international executive authority under article 22.0.16

 

Amendments to the law on Deposit Insurance

The President of the Republic of Azerbaijan approved the Law “On amendments to the law on Deposit Insurance” on 13 July 2017.

Under the amendments, according to Article 6.2, the Trustee Board consists of one representative of the financial markets supervisory authority, one representative of the Central Bank, three representatives of the relevant executive authorities (Ministry of Labour and Social Protection and Population, Ministry of Finance and Ministry of Economy respectively) and two representatives of the member banking community as recommended by member banks. 

At the same time, the word “the Fund’s” in Articles 8.1.1-8.1.4, 8.1.10, 8.1.13, 8.1.16 is replaced with the words “under an agreement with the appropriate executive power, the Fund’s”. 

According to the amendments, the Fund’s Board of Trustees has an authority, by agreeing with the President of the Republic of Azerbaijan, to approve Fund’s organizational structure, rules, annual budget and amendments to it and forms and amounts of remuneration of its employees; to determine the methods, directions and rules of placement of the it’s funds; to appoint the external auditor and confirm the audit results; to make a decision  on issuing long-term debt securities.

 

Legal News - 4 August 2017

Legal News Update - 18 July 2017

Amendments to the Code of Administrative Offences of the Republic of Azerbaijan  

The President of the Republic of Azerbaijan approved the Law “On Amendments to the Code of Administrative Offences” on 29 June 2017.  According to the amendments, after the word “persons” in Article 422, the words “central depositor, stock investment fund, investment fund manager” have been added. Therefore, under the current updates, for the violation of rules of data declaration by licensed persons, central depositor, stock investment fund, investment fund manager and issuer in securities market, the officials will be cautioned or imposed penalty in the amount of 500 to 600 AZN.  Legal entities will be subject to a penalty in the amount of 2000 to 3000 AZN for the same breach. 

                                                   

Changes in the Migration Code

The Law “On Amendments to the Migration Code of the Republic of Azerbaijan” passed the first reading at the Parliament of Azerbaijan on 03 July 2017.  A new paragraph is added to Article 38 of the Migration Code which states that foreigners or stateless persons should leave the territory of the Republic of Azerbaijan on the basis of an electronic visa they have presented while entering the country (except those who have been granted a temporary or temporary residence permit in the Republic of Azerbaijan).

Foreigners and stateless persons are required to present their e-visas along with border crossing documents when crossing Azerbaijani borders. 

Moreover, as per the introduced amendments, the information shall be sent to applicant’s email address within 3 hours after the receipt of application on issuance of an accelerated e-visa. 

 

Amendments to the Migration Code

The Law “On Amendments to Migration Code of the Republic of Azerbaijan” was approved by the Presidential Decree on July 14, 2017.

Under the new amendments, after receipt of the application, applicant shall be notified in 3 hours on the issuance of an accelerated e-visa.  At the same time, foreign nationals and stateless persons must submit e-visa information along with border crossing document while crossing the borders of the Republic of Azerbaijan.  According to the newly introduced Article 38.11 of the Migration Code, foreign nationals and stateless persons shall leave the country, based on the presented e-visa. However, this Article exempts foreigners and stateless persons who have extended their stay in Azerbaijan or who have obtained temporary residence permit.

 

Amendments to the Law of the Republic of Azerbaijan "On Children’s Rights"

The Law “On Amendments to the Law on Children’s Rights" was adopted on 31 May 2017 for the purpose of adjusting it to the Law “On Advertising”. Article 11-1 was added to the Law of the Republic of Azerbaijan on Children’s Rights. The new article provides protection for children in advertisements. There are several prohibitions in advertising to prevent children from being morally and physically harmed. For instance, encouraging children to repeat actions that are dangerous to life and health, showing children in situations which can create psychological tension, appealing to children about the use of alcoholic beverages, delivering programs for children with advertisements of alcoholic beverages and etc. are prohibited. Moreover, advertisements cannot be placed in textbooks, syllabus, educational materials, school diaries, books, albums, and children's books.

                                                                            

The Law “On Telecommunications" has been amended 

On 31 May 2017 the Law “On Amendments to the Law of the Republic of Azerbaijan on Telecommunications” was adopted.

According to the amendments, the operator and provider of advertisements may issue ads based on a contract signed with the advertiser. The operator and provider may advertise to the subscriber individually, if it is agreed upon in the written agreement with the subscriber. The operator and provider should allow the subscriber to refuse the advertisement at any time or to broadcast the ads that the subscriber only wishes. The operator and provider are responsible for the delivery of advertising that is contrary to the provisions of the Law of the Azerbaijan Republic "On Advertising" without the consent of the subscriber. In addition, alcoholic beverages, which contain more than 5% of alcohol, cannot be advertised on telecommunication devices.

 

The Strategic Roadmap For Development of Financial Services in the Republic of Azerbaijan has been prepared. 

For the purpose of performing the goals specified by the Presidential Decree “On approval of Main directions of the strategic roadmap for national economy and main sectors of economy and issues arising out of this” No.1897 dated March 16, 2016, Strategic Roadmap for development of financial services in the Republic of Azerbaijan” (hereinafter referred to as Strategic Roadmap) has been prepared by the Center for Analysis of Economic Reforms and Communication of Azerbaijan.

The Strategic Roadmap covering short, medium and long terms is comprised of the strategic vision and action plan for 2020, long term vision by 2025 and aspirational vision for post 2025. There have been prepared 5 strategic targets and 16 priorities for 2020 in order to achieve the objectives specified in the Strategic Roadmap.

 

Legal News - 18 July 2017

Legal News Update - 3 July 2017

Amendments to the Law “On the Central Bank of the Republic of Azerbaijan” 

On 25 April 2017, the President of Azerbaijan Republic approved the amendments to the Law “On the Central Bank of the Republic of Azerbaijan”. 

The Amendments revoke provision of targeted lending by the Central Bank to the credit institutions on the state guarantee in order to fund socio-economic projects, as well as provide financial support for real sector of the economy. 

The Amendments are effective as of 2nd June 2017. 

 

Amendments to the Law “On State Registration and State Registry of the Legal Entities”

Pursuant to the Amendment dated 14 April 2017 to the Law “On state registration and the state registry of legal entities”, information about founders (participants) of the legal entities and their shares in the charter capital is provided upon request to monitoring entities and other entities involved in monitoring in the manner prescribed in the legislation.

The Amendments are effective as of 4th June 2017. 

 

Amendments to the Law “On Securities Market” 

The President of Azerbaijan Republic approved The Amendments to the Law “On securities market” on 14th April 2017 to be effective as of 4th June 2017.  

Further to the Amendments, information regarding the owners of the securities is provided upon request to monitoring entities and other entities involved in monitoring in the manner prescribed by the legislation and according to the “Law on Prevention of the Legalization of Criminally Obtained Funds or Other Property and the Financing of Terrorism”.

 

Amendments to the Civil Code 

Presidential Decree of 25 April 2017 approved the “Law On Amendments to the Law on state duty”.

The amendments introduce state duty of AZN 500 for performing currency exchange operations.

 

Amendments to the Law on “Law On Encumbrance of Movable Property”

Pursuant to the Presidential Decree dated 02 May 2017, the “Law On Encumbrance of Movable Property” has been approved. 

The Law provides for definitions such as encumbrance of movable property, the priority right, the subject of encumbrance, the debtor, the owner of encumbrance, state registry of encumbrance of movable property. 

According to the Law with the exception of movable objects registered in the registry of movable property and the securities to be registered, any movable property as well as rights and claims, including movable property that the owner of encumbrance will own in future can be subject of encumbrance. Encumbrance of movable property is divided into state, municipal and specific encumbrance type. The following notices are included in the register:

• Notification on encumbrance;

• Amendments to the notice on encumbrance;

• Notification on appeal to encumbrance;

• Notification on termination of encumbrance.

The following information is displayed in the notification of the encumbrance in the Registry:

• In case the owner of encumbrance is an individual – surname, name, patronymic, address, ID PIN code; TAX ID of taxpayer, contact information; passport series, number and contact information – in case the owner is a foreigner;

• In case the owner of encumbrance is a state or municipal authority, or legal entity – name, legal address, TAX ID, contact information, in case the owner is a foreign legal entity - full name in Latin letters and contact information;

• In case the debtor or the burdener is an individual - surname, name, patronymic, address, ID PIN code; TAX ID of taxpayer, contact information; passport series, number and contact information – in case the debtor or burdener is a foreigner;

• In case the debtor or the burdener is a state or municipal authority, or legal entity – name, legal address, TAX ID, contact information, in case the debtor or burdener is a foreign legal entity - full name in Latin letters and contact information;

• A description of the subject of encumbrance;

• The validity of the notice of encumbrance;

• Confirmation of consent of the burdener on inclusion of its information to the registry by marking the relevant cell;

• The amount of main obligation provided by encumbrance;

• Sex of debtor (if individual);

• New or repetitive client;

• Scope of the debtor`s activities;

• Type of movable property;

• Other information as may be required.

Fee is envisaged for an input of a notification on encumbrance, notification on amendment to the encumbrance, notification on termination of the encumbrance, and the issuance on paper of the approved report on the results of search at the request of person seeking information in the registry. The fee and exemptions from payment of the fee is determined by the relevant executive authority.

 

Approval of Convention “On Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism” 

On 25 June 2017 the President of Azerbaijan Republic approved the Law “On approval of the  Warsaw Convention on the Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism of 2005” with the relevant reservations and declarations of the Republic of Azerbaijan.  

This Convention is the first international treaty encompassing both the prevention and control of money laundering and the financing of terrorism.

 

Amendments to the Labor Code 

Law “On Amendments to the Labour Code of the Republic of Azerbaijan” has been officially published on 18 June 2017 and will become effective starting from 1 January 2018 (“Amendments”). 

As per the Amendments, employment agreement may be concluded for definite or indefinite periods.  However, in contrast to the past reading of the Labor Code, where a fixed-term employment agreement could be concluded for a maximum period of 5 years, such limitation has now been removed and the term may be defined based on a mutual agreement of both employer and the employee.

Further to the Amendments, automatic prolongation of a fixed-term employemnt agreement is possible provided that the fixed-term employment agreement is not considered as open ended (due to continuance during the last five years).

Furthermore, time period for sending a notification to an employee prior to termination of an employment agreement due to redundancy will now depend on seniority of an employee (seniority which is defined under the employment agreement with the current employer). 

Thus, notification will be sent to an employee within the following periods prior to termination of an employment agreement on the ground of redundancy:

• At least two calendar weeks – for an employee having up to 1 year of seniority;

• At least four calendar weeks – for an employee having from 1 to 5 years of seniority;

• At least six calendar weeks – for an employee having from 5 to 10 years of seniority;

• At least nine calendar weeks – for an employee having more than 10 years of seniority.

However, as per the Amendments, the aforementioned notification period may be also substituted by one-time payment of the salary followed by the termination of the employment agreement.  In such case, the amount of a one-time payment will depend on the length of notification period and defined as follows:

• 0,5 times of the average monthly salary – instead of a minimum two weeks notification period 

• 0,9 times of the average monthly salary – instead of a minimum four weeks notification period

• 1,4 times of the average monthly salary – instead of a minimum six weeks notification period

• 2 times of the average monthly salary – instead of a minimum nine weeks notification period.

Moreover, the Amendments now allow to provide the employee with one-time payment of the salary (not less than the average monthly salary) followed by the termination of the employment agreement instead of a one-month notification period communicated to an employee prior to the changes in the labor conditions.  However, such payment is reduced in proportion to the overdue portion of the notice period.  It shall be also emphasized that the Amendments do not prohibit the provision of a higher amount of payments instead of the aforementioned notification periods, if expressly stated in either the employment or collective agreements.

Another important update was introduced with respect to the amount of compensation granted to an employee upon termination of an employment agreement on the grounds of redundancy or liquidation of an entity.  Thus, the amount of such compensation shall be also contingent on employee’s seniority (seniority which is defined under the employment agreement with the current employer) and defined as follows:

• In the amount of an average monthly salary -  for an employee having minimum 1 year of seniority;

• At least 1.4 times the amount of average monthly salary – for an employee having from 1 to 5 years of seniority;

• At least 1.7 times the amount of average monthly salary – for an employee having from 5 to 10 years of seniority;

• At least twice the amount of average monthly salary – for an employee having more than 10 years of seniority.

The Amendments abolished the requirement stipulating the payment of the average salary to the employees for second and third months of unemployment based on the respective certificates issued by the State Employment Service (“Service”).

 

Draft Law on “Amendments to the Customs Code” 

Draft Law on “Amendments to the Customs Code of the Republic of Azerbaijan” has passed the first reading in the Parliament of the Republic of Azerbaijan (“Amendments”).  According to the Amendments, most of the applications of the individuals (e.g. on defining the classification of goods, their customs value, country of origin, amount of customs fees) and notifications sent by the customs authorities may now be provided electronically.  

Moreover, in case some of the documents are not submitted along with the customs declaration, the applicant may later submit them electronically.  Last but not least, if the Amendments are adopted, cargo customs declaration, being the only document for re-loading of the goods, will be removed.

 

Adoption of the Law on “Unemployment Insurance”

The Parliament has passed the law on "Insurance of Unemployment”. 

The law is aimed to establish relations and new financing mechanisms based on a risk transfer in the labor market; compensate lost wages of insured persons and ensure the social protection of the population through preventive measures to prevent the occurrence of unemployment.

The main principles of this law are coercion, the legal equality of unemployment insurance subjects and differentiation of insurance payments depending on insurance experience and duration of unemployment

Insurance tariffs for unemployment insurance are set at 0.5 per cent of employee's wage and 0.5 per cent of calculated labour compensation fund.

Calculation of the monthly insurance fee is carried out as follows: 50% of the lost monthly salary during the period of 3-5 years, 55% of the lost monthly salary during the period of 5-10 years, 60% of the lost monthly salary during 10 years of insurance experience.

Under the law, only insured persons whose employment relationships have been terminated because of the abolition of the state body or legal entity or the reduction of the staff of its employees have a right to determine insurance payments. The law will not apply to those holding political office either. 

The law will enter into force on January 1, 2018

 

Amendments to the Code of Administrative Offences of the Republic of Azerbaijan  

The President of the Republic of Azerbaijan Mr. Ilham Aliyev has confirmed the latest amendments to the Code of Administrative Offences. After the word “persons” in the Article 422, the words “central positor, stock investment fund, investment fund manager” have been added. Therefore, under the current updates, for the violation of rules of data declaration by licensed persons, central positor, stock investment fund, investment fund manager and issuer in securities market, the officials will be cautioned or charged in amount of 500 to 600 manats. Legal entities will also be fined in amount of 2000 manats to 3000 manats. 

 

Changes in the Migration Code

The Migration Code of the Republic of Azerbaijan is being amended. A new paragraph is added to Article 38 of the Code (Electronic Visas). According to the draft law, the new paragraph states that foreigners or stateless persons should leave the territory of the Republic of Azerbaijan on the basis of an electronic visa they have presented while entering the country 

(except those who have been granted a temporary or temporary residence permit in the Republic of Azerbaijan).

Foreigners and stateless persons shall demonstrate their e-visas along with border crossing documents when crossing Azerbaijani borders. 

Moreover, the information shall be sent to applicant’s email address in 3 hours after the receipt of application on issuance of accelerated e-visa.

 

Legal News - 3 July 2017

Legal News Update - 8 June 2017

Amendments to the Law “On the Central Bank of the Republic of Azerbaijan”

On 25 April 2017, the President approved the amendments to the Law “On the Central Bank of the Republic of Azerbaijan”.  

The Amendments revoke provision of targeted lending by the Central Bank to the credit institutions on the state guarantee in order to fund socio-economic projects, as well as provide financial support for real sector of the economy. 

The Amendments are effective as of 2nd June 2017.

 

Amendments to the Law “On State Registration and State Registry of the Legal Entities”

Pursuant to the Amendment dated 14 April 2017 to the Law “On state registration and the state registry of the legal entities”, information about founders (participants) of the legal entities and their shares in the charter capital is provided upon request to monitoring entities and other entities involved in monitoring in the manner prescribed in the legislation.

The Amendments are effective as of 4th June 2017. 

 

Amendments to the Law “On Securities Market”

The President approved Amendments to the Law “On securities market” on 14th April 2017 to be effective as of 4th June 2017.  

Further to the Amendments, information regarding the owners of the securities is provided upon request to monitoring entities and other entities involved in monitoring in the manner prescribed by the legislation and according to the “Law on Prevention of the Legalization of Criminally Obtained Funds or Other Property and the Financing of Terrorism”.

 

Legal News - 8 June 2017

Legal News Update - 26 May 2017

Amendments to the Civil Code

Presidential Decree of 25 April 2017  approved the “Law On Amendments to the Civil Code of the Republic of Azerbaijan”.

The amendments prohibit any subsidiary company and affiliates to buy the shares of the parent company.

In addition, the following provisions regarding the board of directors (supervisory board) of a Limited Liability Company (“LLC”) and Public Legal Entities are introduced to the Civil Code:

1. The chairman of the board of directors (supervisory board) of an LLC shall convene the meetings at least once in three months and preside over them. Meetings of the board of directors (supervisory board) may be also convened by the chairman of the board of directors (supervisory board) on the basis of a request of, inter alia, inspection committee (inspector), the executive body, board members and others as defined in the charter of the LLC. Rules on convoking the meeting shall be outlined in the charter of the LLC;

2. With one vote per member, decisions of the meeting of the board of directors (supervisory board) shall be made through a simple majority of votes. Where the number of votes are distributed equally, the conclusive vote shall belong to the chairman of the board of directors (supervisory board);

3. Protocol, reflecting the place, time, participants, agenda, summary of the outputs, results and decisions of the voting shall be drawn up and signed by the chairman and members of the board of directors (supervisory board).

Moreover, the amendments have introduced the following new provisions regarding the Audit Committee in the structure of both LLC and Joint Stock Company (“JSC):

1. An Audit Committee must be established by the board of directors (supervisory board) for the purposes of preparation and implementation of internal audit strategy and policy, as well as organization of the audit control, provided that the number of participants of an LLC or Public Legal Entity (or shareholders of a JSC) surpasses 50;

2. Where the number of participants of an LLC or Public Legal Entity (or shareholders of a JSC) is less than 50, the establishment of an Audit Committee is not mandatory and may be outlined in the Charter of an LLC (JSC);

3. Rules on establishment, content and activities of an Audit Committee are determined by the laws and charter of the LLC (JSC);

4. Members of an Audit Committee shall be comprised of physical persons, excluding any participant of the LLC (JSC) and/or person represented in other management body of the LLC (JSC);

5. Upon initiative of an Audit Committee, internal audit of the LLC (JSC) shall be conducted on the basis of either a resolution of its general meeting or the board of directors (supervisory board), or request of its executive body or participant, having more than 10 (ten) percent of shares; 

6. All bodies and officials of the LLC (JSC) shall present the documents related to the financial-economic activities upon the request of an Audit Committee;

7. An Audit Committee is reporting to the board of directors (supervisory board).

Furthermore, by virtue of the amendments, the Open JSC shall now publish the following information on an annual basis:

1. Financial indicators for the accounting period;

2. Deals of special importance and deals concluded with the related persons;

3. Engaged financial resources;

4. Management structure;

5. Management bodies and officials, their primary and secondary functions;

6. Development policy;

7. Returns of equity as well as dividend policy;

8. Payments to the members of executive bodies;

9. Volume and source of investments;

10. Turnover and profitability of securities;

11. Public projects.

Last but not least, the rights of the shareholders of a JSC were enhanced, including but not limited to participation in the process of sale of shares, applying to courts or other authorized bodies in regard to damages resulted from conclusion of deals and payment of costs thereof and etc. 

Pursuant to the Presidential Decree dated 07 April 2017, the agreement dated 28 November 2016 “On implementation of the agreement dated 21 November 2003 on cooperation between the Republic of Belarus and the Republic of Azerbaijan in the area of provision of pension” (“Agreement on cooperation”) between the Ministry of Labor and Social Protection of the Population of the Republic of Azerbaijan and the Ministry of Labor and Social Protection of the Population of the Republic of Belarus has been approved.

As per the main concept of the Agreement on cooperation, seniority, obtained in one of the states, party to the Agreement, shall be recognized on the territory of another state, party to the Agreement, excluding the cases where both seniorities overlapped in the same period. 

Amendments to the Criminal Code 

According to the amendments to Criminal Code approved on 25 April 2017, violation of the rules on conclusion of the transactions with the related persons as well as failure to provide the necessary information with respect to the said transactions, resulting in the damages (or generation of the incomes) with the amount of AZN 20,000 – 100,000 , may lead to a penalty constituting two to four fold of the amount of caused damages (generated incomes) or imprisonment up to one year. 

The same actions, however, causing the damages (or generating the incomes) in the amount exceeding AZN 100,000, are subject to the penalty comprising three to five fold of the amount of caused damages (generated incomes) or imprisonment up to three years.

Amendments to the Law on Currency Regulation

According to the Amendments to the Law on Currency Regulation, approved on 25 April 2017, local banks, local branches of the foreign banks, national postal operators, resident legal entities and individuals and branches of the non-resident legal entities are entitled to conduct currency exchange services based on the licence.

The currency exchange can be conducted only in cash and based on the client’s request. 

The state duty for obtaining of a license for currency exchange activity is defined as AZN 500

 

Legal News - 26 May 2017

Legal News Update - 11 May 2017

Transfer of non-performing (toxic) assets

Decree of the President of the Republic of Azerbaijan dated 03 May 2017 approved the Rules on “Transfer of non-performing (toxic) assets of insolvent banks as a part of their resolution and recovery measures” (“Rules”) in accordance with Article 164.1.36 of the Tax Code of the Republic of Azerbaijan.

According to the Rules, transfer of non-performing (toxic) assets of insolvent bank as a part of its resolution and recovery measures involves alienation of both, property rights over non-performing (toxic) assets and rights to pledge the collateral with respect to non-performing (toxic) assets.

Pursuant to the Rules, assets classified as non-standard assets in accordance with the normative acts of Financial Markets Supervision Chamber as well as collateral on such assets are defined as non-performing (toxic) assets.

Prior to transfer of non-performing (toxic) assets, the bank must receive the opinion of Financial Markets Supervision Chamber on recognition of such assets as non-performing (toxic) assets. Such opinion must be issued within 20 calendar days.

Transfer of non-performing (toxic) assets of insolvent banks as a part of their resolution and recovery measures must be conducted in compliance with civil contracts, reflecting at least the following:

  • Parties, subject and amount of a contract;
  • Rights and obligations as well as liability of the parties to the contract;
  • Parties, date and the number of a contract confirming the proprietary rights of an insolvent bank with respect to non-performing (toxic) assets.

Based on a mutual consent of the parties to the contract, the value of non-performing (toxic) assets is defined by an independent evaluator (evaluators).

Legal News - 11 May 2017

Legal News Update - 5 May 2017

Change of the pension age

On 10 March 2017, the President of the Republic of Azerbaijan approved the Amendments to the Law "On Labour Pensions" which increases the pension age from 57 to 60 for females and from 62 to 63 for males without consideration of the social insurance background provided that pension capital, registered within the insurance part of the personal account, is satisfactory for payment of minimum labor pension (AZN 110 as of 1st July 2017).  Otherwise, the individual must possess at least 25 years of the social insurance background.

Further to the Amendments, age limit is subject to annual increase of six months for females during the period of 1st July 2017 - 1st July 2027 and for males during the period of 1st July 2017 - 1st July 2021.

The Amendments are effective as of 1st July 2017.

Prevention of informal labour relations in the construction sector

On 28 April 2017, the President of the Republic of Azerbaijan signed the Decree "On Measures to Strengthen the Supervision over Prevention of Informal Employment in the Construction Sector".

The Decree provides for provisions on the following issues:

  • To establish an electronic registry of residential buildings under construction as well as individuals and legal entities engaged in construction of such buildings;
  • To integrate the electronic information system of the Ministry of Labour and Social Protection of Population of the Republic of Azerbaijan for registration of employment agreements with the aforementioned Registry;
  • To install real-time surveillance cameras at the construction sites at the expense of individuals or legal entities conducting the construction for the purpose of identifying the persons involved in execution of work (services) under employment agreements which are not registered;
  • To establish Labour Relations Monitoring Center within the State Agency for Public Service and Social Innovations under the President of the Republic of Azerbaijan for the purposes of coordination of  monitoring and control activities with respect to prevention of informal employment in the construction sector.

Labour Relations Monitoring Center will perform the following functions:

  • Carrying out the electronic Registry;
  • Observation of cameras installed at the construction sites;
  • Establishing and management of the analytical detection system carrying out identification of workers;
  • Conducting  comparative analysis of materials and reports of the Ministry of Taxes, Ministry of Labour and Social Protection of Population on measures implemented to prevent informal employment;
  • Allocation of mobile teams to monitor the construction sites;

Sending documents to the relevant public authorities for the purpose of documentation of the facts revealed and implementation of measures on administrative liability or criminal prosecution of the parties in breach of laws.

Amendments to the “List of permitted inspections conducted in cases of threatening human life and health, national security and economic interests” signed on 28 April 2017 by the President of the Republic of Azerbaijan, included the monitoring of cases informal employment to the respective list of inspections.  Such monitoring will be conducted by the State Agency for Public Service and Social Innovations under the President of the Republic of Azerbaijan.

Legal News - 5 May 2017

Legal News Update - 18 April 2017

Amendments to “Regulations on the form and rules of conducting unified register of inspections in the field of entrepreneurship”

On 16 March 2017, President of the Republic of Azerbaijan signed a Decree approving the Amendments to “Regulations on the form and rules of conducting unified register of inspections in the field of entrepreneurship”.

According to the amendments, any state authorities, public legal entities, as well as state-owned legal entities, which hold a dominant position in the sphere of provision of the respective services and are empowered to conduct inspection in the field of entrepreneurship, must ensure registration of all types of on-site inspections within the timeframe and order defined in the Regulations.

On-site inspections may only be conducted upon registration with the Registry.  The inspections conducted without proper registration will not be legally valid.

Decree “On establishment of the Commission on Regulation and Coordination of Employment Relations”

On 17 March 2017, President of the Republic of Azerbaijan signed a Decree “On establishment of the Commission on Regulation and Coordination of Employment Relations”. The functions of the Commission include:

 

  1. By analyzing the legislation and the current situation in the labour market and taking into account international experience, to make proposals to improve administration in the field of regulation of employment relations as well provide suggestions to the President of the Republic of Azerbaijan for the improvement of the respective industry;

  2. To ensure coordination of control measures to strengthen social protection of employees and formalization of employment relations;

  3. To ensure the preparation and approval of action plan on disclosure of informal employment relations, development and adaptation of legislative measures against persons who violated the laws in this field;

  4. To work out proposals for further improvement of the country's position in international rankings;

  5. To inform the President of the Republic of Azerbaijan once in a quarter on measures taken to ensure formalization of employment relations and improvement employees` social security.

 

Amendments to the Law “On Banks”

Amendment to the Law “On Banks” dated 07 April 2017 provides for the new definitions such as fund, bridge bank, banks important for the system, investor, a healthy active, resolution, bankrupt bank etc. The Amendments introduce provisions on appointment of a temporary administrator to the bank, which lost the ability to pay, and on the scope of authority of the temporary administrator in the bank's management. According to the changes, financial markets supervision authority controls the activities of the temporary administrators.

Moreover, according to amendments the courts appoint the Fund (defined as a legal entity established in accordance with the Law “On Insurance of Deposits”) as a liquidator of a bank subject to mandatory liquidation.  Based on contract, the Fund may assign the liquidator functions to legal entities or individuals.

The Amendment provides for the rules on:

  • Action plan on resolution of the bank which lost the ability to pay;

  • Transfer of the assets and liabilities of the bank which lost the ability to pay to the bank- acceptor;

  • Sale of the bank which lost the ability to pay and its joining to the healthy bank;

  • The establishment of the bridge bank and implementation of its sale;

  • Participation of the government in restoration of the solvency of banks important for the system;

  • Voluntary restructuring of the bank`s liabilities;

  • Mandatory liquidation of the bank;

  • Control over the activities of a liquidator by the financial markets supervision authority.

 

 

 

Legal News - 18 April 2017

Legal News Update - 9 March 2017

Amendment to the “Law on Education”

On 15th of February 2017, President of the Republic of Azerbaijan signed Decree amending the “Law on Education”. According to the amendments, no advertisement may be placed in the books, textbooks, teaching materials, diaries, albums and books designed for children.

In addition, advertisements that may affect children mentally and physically may not be placed closer to the pre-school establishments and general educational institutions than the distance defined by the respective executive bodies.

Amendment to the “Law on Lotteries”

On 15th of February 2017, President of the Republic of Azerbaijan signed a Decree, amending the “Law on Lotteries”. Amendments to the law are concerning advertisement of lotteries.

According to the amendments, it is allowed to place advertisements on lottery tickets. Additionally, the name of winner of lottery can not be announced in advertisements without his written consent.

The following are prohibited in advertisement of lotteries:

•To address to children

•Promotion of idea that participation in lottery is a way to gain reputation within society

•Guarantying earnings from lottery

•Discredit people who do not participate in lotteries

•Advertisements on lotteries can be placed in telecommunication and mass media devices, as well as transportations and advertisement banners in open spaces. Advertisements on lotteries cannot be displayed on advertisement carriers that are situated closer than 100 meters to establishments for children and educational institutions.

Additionally, terms of lottery, its time and duration, prize fund, place and time of provision of prizes, terms of receiving thereof and information about organizer have to be indicated or sounded in the advertisements on lotteries.

Beverages containing more than 5% of alcohol, tobacco and tobacco products cannot be offered as a prize of lottery.

Conduction of a lottery with the purpose of promotion of sales of beverages containing more than 5% alcohol, tobacco and tobacco products is prohibited.

Organization of lotteries that are not duly registered or are prohibited by law cannot be advertised.

 

Changes to the list of state officials entitled to access commercial (tax) secret


The Presidential Decree signed on 1 February 2017, approved the new list of state officials who are permitted to obtain commercial (tax) secret which include:
1. Minister of Taxes of the Republic of Azerbaijan
2. First Deputy Minister of Taxes of the Republic
of Azerbaijan
3. Deputy Ministers of Taxes of the Republic of Azerbaijan
4. General Director of Department on Tax Policy and Strategic Researches of the Ministry of Taxes of the Republic of Azerbaijan
5. General Director of Department on Internal Security of the Ministry of Taxes of Republic of Azerbaijan
6. General Director of Legal Department of the Ministry of Taxes of the Republic of Azerbaijan
7. General Director of Tax Risks Analysis and Control Department of Ministry of Taxes of Republic of Azerbaijan
8. General Director of Work with Territorial Tax bodies Department of Ministry of Taxes of Republic of Azerbaijan
9. General Director of Services to taxpayers and transparent tax partnership Department of Ministry of Taxes of Republic of Azerbaijan.
10. General Director of International Cooperation and tax monitoring in financial institutions Department of Ministry of Taxes of Republic of Azerbaijan.
11. General Director of Control on execution of tax liabilities Department of Ministry of Taxes of Republic of Azerbaijan.
12. General Director of Control on execution of Tax legislation Department of Ministry of Taxes of Republic of Azerbaijan.
13. General Directors of departments and territorial tax departments under the Ministry of Taxes of the Republic of Azerbaijan
14. General Directors of territorial tax offices and regional tax departments
15. Head of the Section for Fight Against Organized Crimes in the Economic Sphere within the Primary Investigation of Tax Crimes Department of the Ministry of Taxes of the Republic of Azerbaijan

 

 

 

Legal News Update  - 27 December 2016

Law on living minimum for 2017


The Law of the Republic of Azerbaijan “On living minimum for 2017” (“Law”) will become effective as of 01 January 2017. According to the Law, the countrywide average living minimum for 2017 is determined as AZN 155. The law differentiates the living minimum for the following categories of population:
• For able-bodied population – AZN 164.5
• For pensioners – AZN 130.2
• For children – AZN 136.6.

New Rules on Conducting Foreign Currency Operations by Residents and Non-residents in Azerbaijan 

On 28 November 2016 the Central Bank of Azerbaijan approved the new Rules on Conducting Foreign Currency Operations by Residents and Non-residents of Azerbaijan (hereinafter, the “Rules”).
Rule No. 12 dated 27 May 2002, previously regulating the foreign currency transactions of residents and non-residents, was annulled with the adoption of the new Rules.
For the purposes of the Rules, “bank account” is defined as any current, credit, deposit or other account opened within a bank. The Rules further provide for the definition of “imported services” as services and works provided by non-residents within the territory of Azerbaijan as well as services and works provided for the benefit of residents outside of the country.

The Rules provide guidelines on foreign currency transactions with and without opening a bank account as described below.

Foreign currency transactions without opening a bank account

According to the Rules, only resident and non-resident individuals may conduct a foreign currency transfer within or outside of Azerbaijan without opening a bank account. Legal entities are not allowed to transfer foreign currency without opening a bank account.

The amount of the transfer of foreign currency without opening a bank account may not exceed the equivalent of USD 1,000 per day and the equivalent of USD 10,000 per month for both resident and non-resident individuals.

Foreign currency transactions conducted through bank accounts

Remittance of foreign currency (in cash or via transfer) to the foreign currency bank accounts of residents and non-residents may be conducted freely. The transfer of currency outside of Azerbaijan from bank accounts may be conducted for the following transactions:

1. Transfer of payments for goods or services imported to the country by residents and non-residents, including advance payments. As per the newly established rules, if payment for the importation of goods or services is made in advance, supporting documents attesting the customs clearance of the goods and provision of services must be submitted to the bank within 180 days.
2. The following transactions have not been significantly affected by the introduction of new rules:
• Payments for re-export of goods and services;
• Advance payments of contracts that have not been executed;
• Transactions of resident legal entities with a branch or representative offices abroad (by stating the purpose of transfers);
• Payments of debts obtained abroad;
• Payments for courts, notaries, state fees, other mandatory payments, scholarships, pensions, aliments and other similar or related payments;
• Payments of dividends to non-residents from residents.

3. Additionally, according to the rules, the transfer of foreign currency for the following activities may be carried out upon submission of the relevant agreement, invoice or digital commercial notification indicating the amount and purpose of the transaction:
• Payment of participation fees for international events, conferences and exhibitions;
• Payments of subscription fees and fees for advertisements to foreign publication products, libraries, data centres;
• Payments for education and medical treatments;
• Payments for the use of author rights, patent and franchising fees.
4. Transfers for personal purposes:
• Transfer of resident physical persons to their close relatives not exceeding USD 10,000 a month;
• Transfer of money previously brought into the country in cash or by bank transfer by providing the necessary documents proving the aforementioned;
• Any other transfer that does not exceed USD 1,000 a day and USD 10,000 a month.
5. Repatriation transfer of investments made by foreign companies to the economy of Azerbaijan by non-residents.
6. Transfer of revenue from investment projects carried out in Azerbaijan by non-residents, including compensations and payments related to losses.
7. Transfer of the salaries of foreign employees who have entered into employment agreements with residents and non-residents.
8. Transfer of the following cash flows by resident and non-resident individuals and legal entities with the respective documentation:
• Transfer of foreign currency for contribution to the charter capital of legal entities established outside of Azerbaijan;
• Transfer of foreign currency to acquire securities;
• Payments related to the fees for ownership rights of properties as well as other rights related to properties.


The rules on the implementation of the “build-operate-transfer” model were approved

Presidential Decree of 7 December 2016 approved the Rules regulating the implementation of investment projects on construction and infrastructure through the “build-operate-transfer” model (hereinafter, the “BOT Model”) on the basis of special financing (hereinafter, the “Rules”).

The Rules were prepared according to the Law “On the implementation of investment projects in connection with construction and infrastructure facilities on the basis of special funding”.

The state body authorized to perform duties with respect to the implementation of this model is the Ministry of Economy of Azerbaijan.

The rules include all the necessary information for investors who are planning to benefit from the BOT Model. The document contains information on the following matters:

1. Terms of implementing investment projects and requirements with respect to investors
2. Terms and characteristics of agreements to be signed between the authorized state body and investors
3. Rules on defining the value of products and services that would be obtained through investment
4. Rules on conducting bids
5. Authorities of the Ministry of Economy with regard to the implementation of the BOT Model

New Law “on Cashless Settlements”

The Law “On cashless settlements” was approved on 16 December 2016 by the President of the Republic of Azerbaijan (hereinafter, the “Law”).
The Law aims at ensuring the transparency of transactions and settlements, protection of consumer rights, replacement of cash settlements with cashless ones and the development of the banking system in Azerbaijan.
The Law defines the following settlements as cashless:
• Settlements through bank transfers, including transfers via payment means or devices (payment cards, payment orders, mobile phones, computers, etc.);
• Settlements through payment terminals;
• Cash settlements to the seller's bank account.

According to the Law, cashless payments within settlements between parties that are tax payers can be performed only through bank transfers, including transfers via payment means or devices.
Settlements within a calendar month in excess of AZN 30,000 performed by VAT registered taxpayers and taxpayers within the trade or public catering industry, whose taxable transactions during one month (months) of any consecutive twelve month period exceed AZN 200,000, and settlements of any other taxpayers within a calendar month in excess of AZN 15,000 shall be performed only by cashless means.
This requirement will come into force on 1 January 2017 for VAT registered taxpayers and taxpayers within the trade or public catering industry, whose taxable transactions during one month (months) of any consecutive twelve month period exceed AZN 200,000 and on 1 April 2017 for other taxpayers.

Regardless of the above, the following settlements must be performed by only cashless means:
• Payment of taxes, customs duties and levies, administrative fines, financial sanctions and interests, repayment of debt amounts under leasing transactions and issuance of credits;
• Payments defined under the laws of the Republic of Azerbaijan “On insurance activity” and “On compulsory insurance”;
• Payment of service fees and other payments made to government agencies, state-owned legal entities or legal entities, in which the state owns control package, public legal entities and budget enterprises;
• Payment of salaries and other payments defined by the legislation and paid to employees by employers, except those engaged in retail trade, public catering and the service industry, whose taxable transactions during one month (months) of any consecutive twelve month period are up to AZN 200,000; pensions, scholarships, financial aid, bonuses (including one-time bonuses), compensation and benefits;
• Payment of landline phone services and utility costs;
• Payment and repayment of interest-free cash funds (except where such funds are provided by non-taxpayers) and other money allocations;
• Utilisation/expenditure of funds received under public procurement contracts;
• Payment of tuition fees;
• Payments made to tour agents.
The following commodities can be sold and purchased by taxpayers from individuals who are not taxpayers by using cash:
• Obtaining agricultural products from the producers of agricultural products;
• Obtaining non-ferrous and ferrous scrap metal;
• Obtaining paper, glass and plastic products for recycling and other purposes;
• Obtaining used tires for recycling purposes.

Regulation “On e-Mortgage System” approved

The Regulation “On e-Mortgage System” was approved by the Presidential Decree dated 24 November 2016. The e-Mortgage system will be running on the e-government portal. The purpose of introducing the electronic system is to ease the access to mortgage loans and create equal conditions for those wishing to get a mortgage loan.


Amendment to the Law on State Registration of Real Estate

Amendment to the Law “On State Registration of Real Estate” (the “Law”) dated 14 November 2016 will simplify the state registration of residential houses. According to the new edition of Article 8.0.9.1. of the Law, the state registration of houses requires only the document certifying property rights of the owner of land where the house is situated. In addition, the new amendment applies to houses:
• Built before 01 January 2013
• Not taller than 12 meters
• Built on the land that meets basic living conditions
The list of documents required for the registration of houses situated on leased land remains the same as before; it includes approved building project, commissioning act and land lease documents.

Legal News - 9 March 2017

Legal News Update - 7 December 2016

Strategic road maps for the national economy and main economic sectors approved

On 6 December 2016,  the President of Azerbaijan has signed a Decree approving “Strategic road maps for the national economy and main economic sectors”. Strategic road maps approved by the presidential Decree aim to define the country`s development goals and priorities as well as ensure their implementation.

The Decree has approved the Road Maps for the following sectors of the economy:

• For the prospects of the national economy;
• For the development of the oil and gas industry;
• For the manufacture and processing of agricultural products;
• For the manufacture of small and medium entrepreneurship-level consumer goods;
• For the development of heavy industry and machinery;
• For the development of specialized tourism industry;
• For the development of logistics and trade;
• For the development of housing provision at a reasonable price;
• For the development of vocational education and training;
• For the development of financial services;
• For the development of communication and information technologies;
• For the development of utilities (electricity and thermal energy, water and gas supply) in the Republic of Azerbaijan.

The strategic road maps will cover 2016-2020 economic development strategy, long-term outlook up to 2025 and target vision after 2025.
 

Legal News - 7 December 2016

Legal News Update - 14 November 2016

Amendments to the Rules “On submission and publication of the annual and consolidated financial statements by commercial legal entities” have been introduced

The Resolution of the Cabinet of Ministers of Azerbaijan dated 21 October 2016 (“Resolution”) introduced amendments to the Rules “On submission and publication of the annual and consolidated financial statements by commercial legal entities” dated 27 May 2010.

According to the Resolution, the content of the annual financial statements of commercial entities has been amended and set as below:
1. Statement on financial condition
2. Statement on profit or loss and other comprehensive income
3. Statement on changes in equity
4. Cash flow statement
5. Significant accounting policies and explanatory notes.
 

Ministry of Economy approved criteria for selection of foreign countries, public venues, mass media, shops, including duty free shops in foreign countries to promote “Made in Azerbaijan” brand 

On 18 October 2016, the Ministry of Economy of Azerbaijan approved criteria for selection of shops in foreign countries, including duty free shops to place shelves with “Made in Azerbaijan” brand (“Brand”) and criteria for selection of foreign countries, mass media and public venues, where advertisement will be placed to promote the Brand. Such criteria include, amongst others:
• economic and trade relations between Azerbaijan and the foreign country
• export potential of Azerbaijani products in the foreign country
• requests of entrepreneurs.
Additionally, such criteria as broadness of media audience as well as high density of population in the places where advertisement is intended to be placed shall also be considered.
 

New standard forms on procurement of food products in a centralized manner at the expense of the state budget have been approved

On 27 October 2016 the Cabinet of Ministers of Azerbaijan approved the standard forms for procurement of food products in a centralized manner at the expense of the state budget by state enterprises, such as:

1. Information on demand for food products of a purchasing entity
2. Announcement on food products intended to be purchased, their prices and purchase conditions (also purchasing cycle)
3. Agreement between the Ministry of Agriculture of Azerbaijan and “Procurement and Supply of Food Products” Open Joint Stock Company (“OJSC”)
4. Agreement between the purchasing entities and the OJSC
5. Agreement between the OJSC and producers or sellers of food products
6. Information on agreements between purchasing entities and the OJSC
7. Information on agreements between the OJSC and producers or sellers of food products.
 

Amendments to the Law “On Combatting Corruption” have been adopted

On 14 October 2016, the Law of the Republic of Azerbaijan “On making amendments to the Law of the Republic of Azerbaijan On Combatting Corruption” was adopted (“Amendment”).
The Amendment reinstated each individual’s right to report on corruption both in verbal and written manner. Additionally, senior officials of state enterprises, municipalities, legal entities owned by the state or municipalities or legal entities, where the state or municipalities own interest, shall appoint a person or create a unit (department) responsible for collection of information regarding corruption. Employees of the aforementioned entities may report law breaks related to corruption to the authorized person or unit (department).
The Amendment eliminates the opportunity for the person who is the subject of the reported information or who may have any direct or indirect interest in the results of the investigation to get involved in the respective corruption investigation.

The Amendment introduces protection of the interests of the person reporting the corruption case. Thus, the authorized person, unit (department), senior officials of the state enterprises, the respective state authorities are obliged to keep information regarding the reporting person confidential. Such information can be disclosed only with the written consent of the reporting person.
Furthermore, the Amendment stipulates the opportunity for the individuals intending to report the corruption case to refer to the prosecution officials in cases when there is a real threat of death, damage to health, pressure, and usage of physical force against them or their relatives.
 

Azerbaijan signed the Convention of the Council of Europe on Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism

On 7 November 2016, Azerbaijan signed the Convention of the Council of Europe On Laundering, Search, Seizure and Confiscation of the Proceeds from Crime and on the Financing of Terrorism dated effective as of 01 May 2008 (“Convention”).
The Convention includes provisions, which facilitate international co-operation and mutual investigation of crimes, seizure and confiscation of the criminal proceeds.
 

Legal News - 14 November 2016

Legal News Update - 19 October 2016

Licensing rules have been amended

In accordance with Resolution of the Cabinet of Ministers of Azerbaijan No. 39 of 06 October 2016, the following amendments have been introduced:
1. Medical insurance contracts shall specify the insurance provider’s license number.
2. Only pharmacies and other medical establishments possessing a license for the sale of medications containing narcotic and psychotropic ingredients can sell such products to individuals for medical purposes.
3. To be registered, mortgage papers shall be printed only by print shops possessing a license for the preparation and sale of blank forms of securities.
4. Only properly licensed public and private preschool education institutions may teach children.
5. In accordance with the abovementioned amendments, a mobile operator is defined as a properly licensed telecommunications operator providing cellular (mobile) services within the public telecommunications network.

The major purpose of the above changes was to bring clarity to licensing rules, which required special permits for the respective activities as well. Under the described changes, such activities will be conducted only based on licenses.

Legal News - 19 October 2016

Legal News Update - 11 October 2016

The Cabinet of Ministers of the Republic of Azerbaijan approved the list of products falling under export promotion


According to the Resolution of the Cabinet of Ministers of the Republic of Azerbaijan (the Cabinet) No. 401, dated 6 October 2016, (the Resolution) “The Rules on Payment of Export Promotion to Persons Engaged in the Export of Non-oil products”, “List of Non-oil Products Falling Under Export Promotion, in Accordance With the Commodity Nomenclature of Foreign Economic Activity”, “Coefficients to be Applied to the Base Amount of Export Promotion” were approved.

As per the Resolution, export promotion will apply to products of Azerbaijani origin. The specific weight of the value of local components of exported non-oil products produced in Azerbaijan or used in manufacturing process and non-oil products created in Azerbaijan will be determined based on the certificate of origin.

The amount of export promotion will be calculated and paid by applying coefficients determined by the Cabinet, depending on the type of non-oil products. The base amount of export promotion is three percent of the customs value of exported goods specified in the export customs declaration.
 

Legal News - 11 October 2016

Legal News Update - 10 October 2016

Charter of OJSC Food Product Procurement and Supply approved


A Presidential Decree of 30 September 2016 approved the charter of OJSC Food Product Procurement and Supply (the “Company”), which was established on 11 April 2016 under Presidential Decree No. 1944.
According to the charter, the main goal of the Company is to stimulate the production and utilisation of agricultural products by (i) organising the centralised supply of food products purchased by state companies and organisations; (ii) monitoring activities of local producers; (iii) facilitating the direct purchase of food products by state companies and organisations from producers via the Company’s e-portal, etc.
Initially, the state will be the owner of all shares in the Company.

Amendments to the regulations of the State Customs Committee


In accordance with the Presidential Decree of 30 September 2016 (the “Decree”), amendments have been introduced to the Regulations of the State Customs Committee, entrusting the Committee with new duties. The new duties of the State Customs Committee include (i) updating the “Restriction List for Border Crossing” by recording information about wanted individuals, as well as individuals (a) with respect to whom an order on detainment has been issued; (b) accused of a crime; (c) with respect to whom preventive measures in relation to leaving the country are being taken; (ii) updating the “Special Attention List for Border Crossing” by recording information on individuals temporarily importing or exporting vehicles and goods for production and commercial purposes in the Republic of Azerbaijan, along with vehicles and goods temporarily imported or exported for production and commercial purposes.

Azerbaijan to promote ‘Made in Azerbaijan’ brand on foreign markets


The Presidential Decree signed on 5 October (the “Decree”) provides for measures for promoting the “Made in Azerbaijan” brand worldwide. The Decree outlines rules for defining and regulating the subsidy program related to the establishment of export missions to foreign countries, research of foreign markets and marketing activities, promotion of the “Made in Azerbaijan” brand on foreign markets, obtaining certificates and patents by local companies abroad for export purposes and export-related research programs and projects.
Three million manats from the President’s Reserve Fund has been allocated for financing the support measures outlined in the Decree.

Changes to list of individuals able to access commercial (tax) secret


The Presidential Decree signed on 4 October, approved the new list of state officials who are permitted to obtain commercial (tax) secrets which include:
1. Minister of Taxes of the Republic of Azerbaijan
2. First Deputy Minister of Taxes of the Republic of Azerbaijan
3. Deputy Ministers of Taxes of the Republic of Azerbaijan
4. Head of Main Department on Tax Policy and Strategic Researches of the Ministry of Taxes of the Republic of Azerbaijan
5. Head of the Main Department on Internal Security of the Ministry of Taxes of the Republic of Azerbaijan
6. Head of Legal of the Main Department of the Ministry of Taxes of the Republic of Azerbaijan
7. Head of Tax Risks Analysis and Control Department of Ministry of Taxes of the Republic of Azerbaijan
8. Head of Tax Audit and Operative (Operations) Control department of Ministry of Taxes of the Republic of Azerbaijan
9. Heads of departments under the Ministry of Taxes of the Republic of Azerbaijan
10. Heads of local tax departments, local tax offices, regional tax bodies
11. Head of the department for counteracting organised crime in the economic sphere within the Primary Investigation of Tax Crimes Department of the Ministry of Taxes of the Republic of Azerbaijan

New custom duties rates for importing certain products


The Resolution of the Cabinet of Ministers No. 367, dated 02 October, approved amendments to “Customs Duty Rates for Import/export Operations in the Republic of Azerbaijan” adopted by Resolution No. 80 of 12 April 2001. The amendments provide for new import duties for certain product groups such as meat, dairy products, eggs, natural honey, vegetables, fruits, nuts, alcoholic and non-alcoholic beverages.

Legal News - 10 October 2016

Legal News Update - 29 September 2016

New public entity in Azerbaijan to support family businesses, small and medium entrepreneurs

The Presidential Decree of 23 September 2016 provides for the establishment of the “ABAD” (“Ailə Biznesinə Asan Dəstək”, which means Easy Support for Family Business) public entity under the State Agency for Public Service and Social Innovations under the President of Azerbaijan. It has been created for the purpose of promoting the active participation of citizens in the socio-economic development of Azerbaijan, improving the employment rate and encouraging the creation of competitive family businesses. AZN 1 million was allocated to the State Agency for Public Service and Social Innovations from the President’s Reserve Fund in order to establish the ABAD centres.


Decree on establishing a single database of goods produced in Azerbaijan

Under the Presidential Decree #2349 dated 21 September 2016, a single database of the goods produced in Azerbaijan will be established. The purpose for establishing the database is to support the continuity of fast development of entrepreneurship, to promote products of Azerbaijan internationally and to accelerate the process of integration into the international markets.
According to the Decree, an internet portal must be established within three months, which will contain information at least in three languages about the goods produced in Azerbaijan and their producers.

 

Legal News - 29 September 2016

Legal News Update - 27 September 2016

Presidential Decree on the establishment of Pirallahi Industrial District


Pirallahi Industrial District (“Industrial District”) is to be established under the Presidential Decree “On the Establishment of Pirallahi Industrial District” of 14 September 2016.
The Industrial District is intended to support small and medium-size businesses engaged in manufacturing and processing activities in non-oil industries and enhancing local production in order to increase employment in the manufacturing sector, along with the development of the pharmaceutical industry, particularly in reducing dependence on imported pharmaceutical products.

 

Amendments to the Decree of the Cabinet of Ministers of Azerbaijan #70, dated 13 April 2005


According to the Decree of the Cabinet of Ministers of Azerbaijan #354, dated 21 September 2016 amending the rules of the state registration of legal entities, the commercial legal entities are now required to notify the Ministry of Labor and Social Protection of Population instead of the State Social Protection Fund on liquidations or mergers.

 

Rules On the Unified Register of Licenses and Permits


By the Decree No. 347 of 16 September 2016, the Cabinet of Ministers of Azerbaijan approved the establishment of a unified register of licenses and permits within the Ministry of Economy of Azerbaijan, which would contain all information on issued licenses and permits.

Legal News - 27 September 2016

Legal News Update - 20 June 2016

State Duty for single entry and transit visas were reduced

As per the amendments to the Law “On State Duties” effective as of 14 June 2016, the state duty for single entry and transit visas is defined in the amount of USD 20.

Presidential Decree on establishment of Masalli Industrial District

Under the Presidential Decree “On Establishment of Masalli Industrial District” dated 13 June 2016 (“Decree”), Masalli Industrial District (“Industrial District”) was established. The Industrial District is intended to support small and medium size businesses engaged in manufacturing, processing activity as well as in provision of services within industries other than oil and gas sector. According to the Decree “Azerbaijan investment Company” OJSC is assigned to manage, develop and arrange the activity of the Industrial District.

Legal News - 20 June 2016

Legal News Update - 07 June 2016

Amendments to the Code of Administrative Offences of the Republic of Azerbaijan

Amendments to the Administrative Code of the Republic of Azerbaijan dated 2 June 2016 provide for new penalties for violation of the rules on conclusion of deals with related persons. As per the amendments, officials and legal entities, violating the rules on conclusion of deals with related persons to the bank and non-bank credit institutions, which inter alia includes failure to provide information on such deals in compliance with the legislative requirements, are respectively subject to penalties of 2,000-2,500 AZN and 15,000-20,000 AZN.

Officials and legal entities, violating the aforementioned rules with respect to joint stock companies are respectively subject to penalties of 1,000-1,500 AZN and 10,000 – 15,000 AZN. Officials and legal entities, violating the aforementioned rules with regard to other legal entities, are respectively exposed to penalties of 500-1,000 AZN and 5,000-10,000 AZN.

 

Amendments to the Criminal Code of the Republic of Azerbaijan

Amendments to the Criminal Code of the Republic of Azerbaijan (“Amendment”) effective as of 1 June 2016 defines new and updated provisions, stricter and expanded penalties for certain crimes, predominantly concerning the economic sphere. Thus, the Amendments stipulate increased penalties and new rules particularly concerning theft, property damage by a deceit or abuse, interference with the entrepreneurial activity, illegal obtaining of credit or its use in excess of the designated purpose, trade mark infringement, infringement of rules on emission of securities and other crimes in the economic sphere. The Code provides for retroactive force of those amended provisions eliminating or softening the penalties for an individual currently or previously convicted or sentenced for committing a crime.

 

Presidential Decree “On Simplification of Issuance of Electronic Visas and Creation of ‘ASAN Visa’ System

Presidential Decree on “Simplification of Issuance of Electronic Visas and Creation of ‘ASAN Visa’ System” dated 1 June 2016 (“the Decree”) aims at establishing the electronic visa system, to ensure the efficiency and transparency via modern information technology. Under the Decree, foreigners or stateless persons intending to visit Azerbaijan (“Applicants”) can now benefit from obtaining an electronic visa by merely using ‘ASAN Visa’ System. The applicants may enter all necessary information required for obtaining an electronic visa directly to ‘ASAN Visa’ System. The state duty for electronic visas can be also paid via ‘ASAN Visa’ System. An electronic visa will be issued within three working days and sent to the electronic address of an Applicant. It must be emphasized that the electronic visa is issued for the Applicants of the countries approved by the Ministry of Foreign Affairs of the Republic of Azerbaijan.

 

Rules “On Implementation of ‘Green corridor’ and Other Border Crossing Systems in relation to Release of the Goods and Vehicles through the Customs Border”

In a move to boost the flexibility and transparency of the customs clearance process of goods and vehicles and its simplification, the Presidential Decree dated 21 May 2016 approved the Rules on “Implementation of ‘Green corridor’ and Other Border Crossing Systems in relation to Release of the Goods and Vehicles through the Customs Border” (“Rules”). The Rules introduce four types of Border Crossing Systems (“Corridors”) (i.e. Green Corridor, Blue Corridor, Yellow Corridor and Red Corridor) and mainly concern the conditions and requirements for their implementation. The Green Corridor is defined as a system, where the goods and vehicles are released to the customs territory without the conduct of physical inspection in compliance with the customs procedure. The Blue Corridor is defined as a system, where the goods and vehicles released to the customs territory are subject to application of customs control forms. The Yellow Corridor is defined as a system, requiring the application of customs control forms and presentation of supplementary documents (e.g. veterinary, phytosanitary, hygienic certificates, special permits and etc.) during the border crossing. The Red Corridor is defined as a border crossing system, requiring undertaking of all mandatory inspections in relation to the goods and vehicles, as well as individuals, if necessary. The type of a Corridor for every good and vehicle is defined in line with the electronically submitted brief declaration specified in the Rules. In addition, the Rules outline the factors affecting risk criterions taken into account while classification of importers as high, medium or low risk groups. Information on whether an Importer belongs to high, medium or low risk group can be attained only after registration within the official website of the State Customs Committee. The criterions of classification under the aforementioned risk groups are also considered while selecting the relevant Corridor.


Amendments to the Presidential Decree “On Regulations of Central and Local Executive Authorities

Amendments to the Presidential Decrees “On Regulations of Central Executive Authorities” and “On Regulations of Local Executive Authorities” effective since 20 May 2016 introduce the Board of Appeals, aiming at investigation of recurring complaints made of individuals or legal entities, engaged in entrepreneurial activities, on decisions, actions or inactions (excluding corruption related matters) of the respective executive authorities or their local organizations.

 

Amendments to the Migration Code of the Republic of Azerbaijan

Amendments to the Migration Code of the Republic of Azerbaijan effective since 02 June 2016 (“Amendments”) outline new provisions in relation to the exemptions from residence and work permits. Under the Amendments, the following individuals are also exempted from obtaining the work permit, and therefore, have grounds to apply for residence permit:

  • Experts, having higher education in shipbuilding area or vocational training in the relevant field with at least 1 year experience in the respective area, which are invited either by Azerbaijani citizens or contractors of an Azerbaijani legal entity, or the residents of Garadagh Industrial Park
  • Heads or Deputy Heads of a legal entity established in the Republic of Azerbaijan, whose shareholder or at least one of its shareholders is a foreign legal entity or individual. Amendment to the Law on Customs Tariff According to the Amendment to the Law “On Customs Tariff” effective since 01 June 2016, import of all types of the goods for the purposes of shipbuilding activity by a resident of Garadagh Industrial Park shall be exempt from customs duty as of 1 May 2016 for the period of 5 years.

 

Legal News - 7 June 2016

Administrative regulations for acceptance of electronic customs declarations for customs clearance of goods and vehicles

The Resolution of the Board of the State Customs Committee No. 100/03/001 “On administrative regulations for acceptance of electronic declarations for customs clearance of goods and vehicles” which became effective from of 03 May 2016 provides for the rules on submission and processing of customs declarations electronically for import or export of goods and vehicles.

According to the Regulations, applicants must submit scanned copies of supplementary documents, which are required for import of goods and vehicles along with the e-declaration. If all requirements are met, e-declarations will be approved by an authorized official of the State Customs Committee on the day of submission through an e-signature and the goods will be released for customs control.

The electronic service is subject to the fee of AZN 30 per page of declaration.

Below is the list of websites for electronic customs services:

http://dgk.gov.az/az/e-xidnew.html

http://www.e-gov.az

 

Legal News - 11 May 2016

Law on Implementation of Investment Projects on Construction and Infrastructure on the basis of Special Financing

Law on “Implementation of Investment Projects on Construction and Infrastructure on the basis of Special Financing” effective as of 21 April 2016 (“the Law”) stipulates the legal and economic grounds for execution of investment projects on construction and infrastructure objects on the basis of special financing. The Law outlines the provisions on newly adopted BOT (Build-Operate-Transfer) model. BOT is a form of project financing, wherein a private entity receives a concession from the private or public sector to finance, design, construct, and operate a facility stated in the concession contract.

Amendments to the Law on Investment Funds

The Amendments to the “Law on Investment Funds” effective as of 20 April 2016 (“the Amendments”) mainly concern the provisions on deals between the Stock Investment Fund (“the Fund”) and related persons. As per the Amendments, if the value of a deal comprises 5% or more of the total value of assets of the Fund, the deal may be concluded on the basis of independent auditor’s report and decision of general meeting by simple majority of shareholders’ votes. Where the value of deal between the Fund and related persons is less than 5% of the total value of assets of the fund, the deal may be concluded on the basis of decision of either General Meeting, Supervisory Board or Executive Authority in compliance with the Charter of the Fund.

Amendments to the Law on Non-Bank Credit Institutions (“NBCI”)

According to the Amendments to the “Law on Non-Bank Credit Institutions” effective as of 20 April 2016 (“the Law”), the definition of related persons and provisions on deals between the NBCI and related persons are now identified in accordance with the Civil Code (“the Code”) of Azerbaijan. Referring to the Code, related persons include:
1. Chairman and members of the executive body and supervisory board of the legal entity;
2. Chairman of the structural unit of the legal entity (i.e. Branch, Representative Office etc.);
3. Spouse, parents, parents of spouse, grandparents, children, stepchildren, stepparents, siblings of the persons indicated in points 1 and 2;
4. Person directly or indirectly holding 10% of participation interest in the legal entity;
5. Legal entities where the persons indicated in points 1, 2 and 4 directly or indirectly possess participation interest;
6. Entities where the legal entity holds at least 20% of participation interests;
7. Persons holding 20% of participation interest in the legal entities indicated in points 4 and 6;
8. Chairman of the supervisory board and executive body of the legal entities indicated in points 4 and 6.
Moreover, conclusion of deals between the NBCI and related persons are subject to the following rules:
Where the value of the deal with the related person is 5% of total value of assets of the legal entity or more, the deal must be evaluated by the independent auditor and approved by a decision of the general meeting.
Where the value of the deal with the related person is less than 5% of total value of assets of the legal entity, the deal must be approved by the general meeting of participants, the supervisory board or the executive body in accordance with the charter of that legal entity.

Law on Licenses and Permissions

Law on Licenses and Permissions effective as of 20 April 2016 (“the Law”) introduces the legal, economic and organizational regulation of licensing and permission system for conduct of entrepreneurial activity (excluding activity in the area of financial markets).
The Law provides for the criteria, list and principles of state regulation of activities requiring licenses and special permissions, as well as for the rules on issuance, re-issuance, suspension, renewal and revocation of licenses (permissions).
The Law differentiates the meaning of license and permission, where the first grants the right to undertake the entrepreneurial activity as defined by the Law and the latter entitles to undertake certain actions related to entrepreneurial activity.
The Law applies to all legal entities, including representative offices and branches of the foreign legal entities, in the Republic of Azerbaijan, along with individual entrepreneurs.

Rules on Issuance of Confirmation Certificate on Import of Techniques, Technological Equipment and Installations to Legal Entities and Individual Entrepreneurs holding Investment Promotion Certificate


The Rules on Issuance of Confirmation Certificate on Import of Techniques, Technological Equipment and Installations to Legal Entities and Individual Entrepreneurs holding Investment Promotion Certificate (“the Rules”) were approved by the Presidential Decree of 20 April 2016.
By virtue of the Rules, the Confirmation Certificate (“Certificate”) on import of Techniques, Technological Equipment and Installations is issued to the legal entities and individual entrepreneurs having obtained the Investment Promotion Certificate.
The applicant shall file an application to the Ministry of Economy of the Republic of Azerbaijan following the requirements of the Rules which must be processed and resolved upon within seven working days. The form for Certificate is already approved under the Rules.

Approved criteria for Investment Projects

As per the Rules “On Issuance of Investment Promotion Certificate”, Investment Promotion Certificate is issued to the Legal Entities and Individual Entrepreneurs provided that they have presented investment projects which meet the following criteria (“Criteria”):
• Area of an economic activity where investment is carried out;
• Minimum amount in relation to the size of an investment project;
• Administrative-territorial units where investment project will be carried out.

Legal News - 28 April 2016

Customs e-declaration of goods and vehicles with ASAN Signature

An electronic customs declaration system was introduced in Azerbaijan on 4 April 2016, aimed at ensuring transparency and efficiency in the customs process.
Electronic declaration services for goods and vehicles are now available through the E-Government Portal (www.e-gov.az).Individuals can benefit from prompt online customs clearance of imported goods and vehicles by simply using an ASAN Signature. This procedure involves logging into the E-Government Portal using the ASAN signature and filling in the customs declaration form by choosing the relevant electronic service. The completed declaration must be authenticated (signed) using the ASAN signature.

Legal News - 19 April 2016
Law “On Full Insurance Coverage of Deposits”

In a move to boost public confidence in commercial banks a new Law “On Full Insurance Coverage of Deposits” was adopted on 19 January 2016.

By virtue of the Law, all deposits that are within the frames of the annual interest rates on deposits defined by the Board of Trustees of the Deposit Insurance Fund will be insured irrespective of their amount for the period of three years since the effective date of the Law.
For the purpose of the Law, the frames of annual interest rates on deposits constitute 3% in relation to a foreign currency deposits and 12% for the local currency deposits.
Deposits with annual interest rates exceeding the defined interest rates shall neither be subject to compensation nor full insurance. Depositors who have already held deposits by the effective date of the Law and those with annual interest rates exceeding the defined interest rates can become eligible for full insurance and compensation provided that they adjust their deposit agreements to the requirements of the Law. Once amendments are made to the deposit agreements, interest rates accrued up to the date of the amendments shall be fully paid to the depositors in accordance with the terms of the then valid agreements.

Amendments to the Law “On Insurance of Deposits”


Amendments to the Law “On Insurance of Deposits” were approved by the Parliament of Azerbaijan on 29 December 2015.
The Amendments introduce the additional rules for payment of compensation for deposits in case a depositor has outstanding obligations with regard to the bank at the time of an insurance event. The amount of an outstanding obligation will be deducted by the bank from the amount of compensation payable to the depositor.

Decree “On Implementation of Additional Measures Aimed at Encouraging Exportation of Non-oil Products in Azerbaijan”

The President of Azerbaijan has signed a Decree “On Implementation of additional measures aimed at encouraging exportation of non-oil products manufactured in Azerbaijan” dated 1 March 2016.
According to the Decree, individuals or entities engaged in exporting of non-oil products in the territory of Azerbaijan will receive export promotional payments, which will vary depending on the share value and types of local components either produced or used in production or manufacturing of non-oil products in Azerbaijan.
The base part of the promotional payment has been defined as 3% from the customs value of the actually exported product as defined in the export customs declaration.
The Decree has become effective from 1 March 2016 and is valid until 31 December 2020.
 

Legal News - 4 March 2016

Law “On Approval of the New Administrative Code of Azerbaijan”


The Law of Azerbaijan “On Approval of the New Administrative Code of Azerbaijan” was adopted on 29 December 2015 and becomes effective as of 1 March 2016 (“Law”).
By virtue of the Law, the new Administrative Code of Azerbaijan (“Code”) has been adopted and stipulates new as well as updated penalties for violation of, inter alia, migration, labor, currency and other legislative requirements.

Area Status Subject matter Penalty (AZN) Exposed persons
Migration New Engagement in a paid labor activity without a work permit required for such activity 300-400, with or without administrative deportation Foreigners or stateless persons
New Intentional re-entrance into the country with amended documents once deported during the restriction period 500, together with administrative deportation Foreigners or stateless persons
New Employment of a foreign or stateless employee in the place other than his place of work 500 Officials of the employer
Updated Accepting, ensuring employment or provision of services in regard to foreigners or stateless persons, together with fulfilling duties in allowing them to stay, reside in Azerbaijan or transit, as well as violation of the established rules on registration, de-registration, or authorizing documents on their stay or residence in Azerbaijan 2,000-3,000 Legal entities
Updated Employment of one foreigner or a stateless person without obtaining work permit 3,000-4,000 Officials of the employer
15,000-20,000 Legal entities
Employment of three or more foreigners or stateless persons without a work permit 5,000-7,000 Officials
30,000-35,000 Legal entities
Currency Updated Purchase and sale, or exchange of currency values at public places violating the legislation, as well as acceptance of currency values as payment means 40-80% from the amount of transaction Individuals and legal entities
State Language Updated Violation of the rules regarding usage of official language (particularly propagation against, counteraction in usage and development of official language, along with attempt in limitation of the sphere of its usage and prevention of application of the Latin alphabet) in Azerbaijan 1,000 -1,500 Individuals
2,500-4,000 Officials of the legal entities
12,000-16,000 Legal entities

Amendment to the Migration Code of Azerbaijan on Issuance of Electronic Visas


In accordance with the Amendment to the Migration Code of Azerbaijan made on 1 February 2016 (“Amendment”), the term for review of the application made through tourism companies accredited in Azerbaijan concerning issuance of electronic visas to tourists is reduced from 10 up to five working days.

Law “On Ratification of the United Nations Convention on Contracts for the International Sale of Goods”
According to the Law of Azerbaijan “On joining the United Nations Convention on Contracts for the International Sale of Goods” dated 1 February 2016, Azerbaijan ratified the “United Nations Convention on Contracts for the International Sale of Goods” signed on 11 April 1980 (“Convention”).
This would mean that persons whose place of business is in Azerbaijan will be eligible to apply the entire Convention or any of its provisions within their contractual relationship in cross-border sale of goods, provided that the counterparty’s business place is in the member country to the Convention.
It should be noted that according to the Convention:
i. if a party has more than one place of business, the place of business would be that which has the closest relationship to the contract and its performance, having regard to the circumstances known to or contemplated by the parties at any time before or at the conclusion of the contract;
ii. if a party does not have a place of business, reference is to be made to his habitual residence.

Amendments to the Law “On Compulsory Insurance”


Amendments to the Law of Azerbaijan “On Compulsory Insurance” adopted on 18 December 2015 (“Law”) provides for the additional rules for payment of compulsory insurance fees. Thus, insurance agents may transfer fees received from the insured in cash to the accounts of the relevant insurers via the payment system integrated with information system. The previously mentioned payment system shall allow obtaining an electronic report on payments made to the Compulsory Insurance Bureau or accounts of the relevant insurers.
Moreover, the Law prohibits making any extras or discounts with regard to compulsory insurance fee or offering any other deals while concluding compulsory insurance agreement.
Last but not least, the Law now demands conclusion of compulsory insurance agreements on the liability of vehicle owners in the form of an electronic document in accordance with the requirements of the Law of Azerbaijan “On Electronic Signature and Electronic Document”.

Amendment to the Labor Code of Azerbaijan on Certification Rules of Employees working in the Field of Practical Medical or Pharmaceutical Activities


According to the Amendment to the Labor Code of Azerbaijan dated 19 January 2016, employees engaged in the field of practical medicine or pharmaceutical activity shall neither be questioned on matters not directly related to their activities, nor evaluated about their political views or beliefs during their professional certification.

Rules on issuing identification documents for the citizens of Azerbaijan under the age of 15
The Amendment to the Law of Azerbaijan “On Identification Document of Citizen Azerbaijan” dated 29 December 2015 (“Amendment”) introduces the following provisions:
• Towards implementation of personal identification card for Azerbaijani citizens under the age of 15 (“citizens under the age of 15”) as of 1 January 2020, citizens under the age of 15 shall obtain ID cards during the period from 1 January 2017 to 1 January 2020.
• Issuance or replacement of ID cards to citizens under the age of 15 shall be carried out via an application of either their parent, adopter, trustee or guardian.
• ID cards of citizens under the age of 15 will cover their personal photo, excluding personal signature.
• ID cards of Azerbaijani citizens under the age of 5 and 15 shall expire upon their 5th or 15th anniversary.
• ID card of an Azerbaijani citizen aged 5 to 15 years shall expire upon his/her 15th anniversaries, accordingly.

The Amendment shall be effective from of 1 January 2017.

Legal News - 23 February 2016

Decree “On Establishment of the Financial Market Supervisory Chamber Public Legal Entity in Azerbaijan”

For the purposes of licensing, regulation and control of securities market, investment funds, insurance companies, credit organizations (banks, non-banking organizations and operators of postal communication) and payment systems, along with strengthening the control over prevention of the legalization of criminally obtained funds or other property and the financing of terrorism, the President of Azerbaijan signed the Decree “On Establishment of the Financial Market Supervisory Chamber Public Legal Entity in Azerbaijan” dated 3 February 2016 (“Decree”).
By virtue of the Decree, the Financial Market Supervisory Chamber public legal entity (“Chamber”) has been established in Azerbaijan. The President of Azerbaijan has retained certain powers as a founder of the Chamber, such as approval of the charter of the Chamber, defining the amount of charter fund of the Chamber, etc.
The Chamber will be governed by the Board of Directors comprising of five members to be appointed and removed by the President of the Republic of Azerbaijan.

As a result of creation of the Chamber, the below listed state bodies shall be liquidated upon approval of the charter of the Chamber:

1. State Securities Committee of Azerbaijan

2. State Insurance Control Service under the Ministry of Finance of Azerbaijan

3. Financial Monitoring Service under the Central Bank of Azerbaijan.

A special working group has been composed in order to support the activity of the Chamber.

New Law on Public Legal Entities


The Law of the Republic of Azerbaijan “On Public Legal Entities” was adopted on 29 December 2015 and became effective as of 3 February 2016 (“Law”).
The Law provides for the rules on establishment, operation and formation of the public legal entities and does not apply to the state owned entities.
The Law defines a public legal entity as any entity (excluding state or municipal authority), engaged in national and public activities and established either by state or municipal authority, or by a public legal entity.
The Law further provides for general rules of operation of public legal entities in Azerbaijan, their governance, liquidation procedures, property issues, etc.

Decree “On Establishment of the Board of Appeal in the Central and Local Executive Authorities”


Towards the establishment of transparency and objectivity during the review of appeals made by individuals and legal entities engaged in entrepreneurial activities, on 3 February 2016 the President of Azerbaijan signed the Decree “On Establishment of the Board of Appeal in the Central and Local Executive Authorities” (“Decree”).
The Decree envisages establishment of the Boards of Appeal within the central and local executive authorities and adoption of their model regulations.

Decree “On Establishment of the Board of Appeal under the President of the Republic of Azerbaijan”


On 3 February 2016 the President of Azerbaijan signed the Decree “On Establishment of the Board of Appeals under the President of the Republic of Azerbaijan” (“Decree”). The Decree stipulates establishment of multilevel structure for consideration of appeals made by individuals and legal entities engaged in entrepreneurial activities and aims at improvement of the appeal mechanism on decisions, actions or failure to act by central and local executive authorities.


The list of members of the Board of Appeal under the President of Azerbaijan was approved by the Decree of the President of the Republic of Azerbaijan dated 3 February 2016.
 

Legal News - 04 February 2016

Visa facilitation for foreign citizens

Towards the execution of tasks reflected in the Presidential Decrees of the Republic of Azerbaijan dated 30 November 2012 and 20 November 2014, the Ministry of Foreign Affairs announced that citizens of Qatar, Oman, Saudi Arabia, Bahrain, Kuwait, Japan, China, South Korea, Malaysia and Singapore may enjoy simplified visa procedures starting from 1 February 2016. Consequently, citizens of the above countries will be able to obtain tourist or business visas by providing passports in all international airports of Azerbaijan

Legal News - 26 January 2016

Simplified procedures for declaration of goods by individuals

For the purposes of ensuring convenience and transparency during the declaration of the goods by physical persons, the State Customs Committee of Azerbaijan integrated the electronic service on “Simplified Declaration for the Physical Persons” into the “E-Government Portal” as of 5 January 2016.

As a result, any individual entering or exiting the country, may electronically declare the information on vehicles, jewelries, currency and goods, conveyed through customs border, to the customs authorities. Online declaration may be done either via the official website of State Customs Committee (www.dgk.gov.az) or E-Government Portal (www.e-gov.az).

In addition, citizens may fill in the simplified electronic declaration, as well as get information on basic provisions of customs legislation and rules required for customs control by using special “customs” kiosks installed at all border checkpoints.

At the same time, the list of goods prohibited or limited for circulation can be found in special designated places at the border checkpoints.
 

Legal News - 12 January 2016

Work time rate and production calendar for 2016

The Board of the Ministry of Labour and Social Protection of Population of Azerbaijan has approved the “Work Time Rate and Production Calendar” (“Production Calendar”) for 2016 by the Resolution # 9 dated 29 December 2015. Based on the Labour Code Azerbaijan and Resolution # 402 dated 24 December 2015 approved by the Cabinet of Ministers of Azerbaijan regarding “Novruz, Ramadan, Gurban holidays in 2016” (“Resolution”), the Production Calendar affirmed the following non-working days:

  • January 1-2 (New Year Holiday) 
  • January 20 (Day of National Mourning)
  •  March 8 (Women’s day) 
  •  March 20, 21, 22, 23, 24 ( Novruz holiday) 
  •  May 9 (Victory day over Fascism) 
  •  May 28 (Republic Day) 
  •  June 15 (National Salvation Day of Azerbaijan) 
  •  June 26 (Armed Forces Day of of Azerbaijan)
  •  July 6, 7 (Ramadan Holiday) 
  •  September 12,13 (Qurban Holiday) 
  •  November 9 (Day of the State Flag of Azerbaijan) 
  •  December 31(Day of Solidarity of World Azerbaijanis)

According to the Resolution, following days will also be considered as non-working days due to coincidence of holidays with the weekends:

  • 25 March, 30 May, 27 June with respect to five-day working week and;
  •  25 March, 30 May with respect to six-day working week. 

The annual rate of working time in 2016 will constitute 1937 hours for 40 hours weekly work and will be applicable with respect to both five-day and six-day working weeks. 

New Administrative Delinquencies Code to be adopted

During the last meeting of autumn session that was held on 29 December 2015, the Parliament of Azerbaijan approved the adoption of the new Administrative Delinquencies Code of the Republic of Azerbaijan (the “Code”). The Code consists of 40 Chapters and 608 Articles (in comparison to its predecessor, which contained 35 Chapters, 458 Articles) and determines stricter penalties and other updates in several areas. The Code is currently pending the approval of the President, and to be effective from 1 May 2016. 

 

Legal News - 7 January 2016

Decree of the President of Azerbaijan “On Licensing Procedure”

According to the Decree of the President of Azerbaijan “On Licensing Procedure” dated 21 December 2015 (the “Decree”) the list of licenses and respective state duties were revised. According to the Decree, licenses will be issued for an indefinite period.

The Ministry of Economy and Industry of Azerbaijan (the “Ministry”) will be responsible for issuance of licenses for all types of activities, excluding those related to the state security.
The following lists are approved by the Decree which constitute annexes thereof:
i. The list of activities requiring licenses (except for those which, are related to the state security) and the amount of state duty for license for those types of activities;
ii. The list of activities related to the state security requiring licenses and the amount of state duty for license for those types of activities;
iii. The list of activities requiring licenses issued by executive authorities of Nakhichevan Autonomous Republic.
As per the Decree, the resolutions of the Ministry on licensing issues are mandatory for all the state authorities issuing licenses, as well as other central executive authorities, local authorities and local self-government bodies, legal entities and individuals.
Licenses issued by the relevant authorities of Nakhichevan Autonomous Republic are only valid on the territory of Nakhichevan Autonomous Republic.
Request for any additional document from the applicant not reflected in the Decree is forbidden.
In case any insufficiencies detected in the submitted application the authority issuing the licenses notifies the applicant on this within 5 working days upon submission of application. All insufficiencies should be eliminated by the applicant within 10 working days upon receipt of such notification. In such cases, the period for processing of license applications is suspended. Once insufficiencies are eliminated the processing of applications resumes.
The state authority issuing licenses must resolve on issuance or refusal of requested licenses within 10 working days upon registration of the respective application.

Decree of the President of Azerbaijan “on Approval of Regulations on turnover of the goods subject to excise marking in the territory of Azerbaijan”


According to the Decree of the President of Azerbaijan “on Approval of Regulations on turnover of the goods subject to excise marking in the territory of the Republic of Azerbaijan” dated 07 December 2015 (the “Decree”) the goods subject to excise marking include
i. Drinkable alcohol
ii. All types of alcoholic beverages
iii. Beer (excluding non-alcoholic beer) and other beverages containing beer
iv. Tobacco products
As per the new rules, Release from the production building, import and sale of the goods subject to excise marking is allowed only:
i. If production and sale of such goods is conducted by a taxpayer holding a respective license;
ii. In case documents confirming the non-cash payment of the value of goods by a provider of such goods are available (except for the cases when such goods are provided by producers);
iii. In case provision of such goods (excluding cases when such provision is carried out for personal consumption of individuals at retail trade and catering facilities) is documented with a strict reporting form (with electronic VAT invoice in case h provided by the producer).
It is not allowed to pay the value of goods subject to excise marking in cash (except for retail of tobacco products) at the time of sale and the purchase for selling purposes;
For the purposes of the Decree, Retail means the sale of goods only for personal, family, household and other purposes of this kind, which is not directly related to entrepreneurial activity.
Those who produce, import, sell and purchase the goods subject to excise marking (except for individuals purchasing for personal consumption) are required to provide the documents confirming the purchase of such goods to the representatives of the Ministry of Taxes upon their request.

Legal News - December 2015

Suspension of Audits in the Sphere of Entrepreneurship

The President of Azerbaijan signed a new law titled “On Suspension of Audits in the Sphere of Entrepreneurship” (“Law”), dated 20 October 2015. The Law will go into effect on 1 November 2015 with the purpose of stimulating entrepreneurship. The Law suspends the audits in the sphere of entrepreneurship for the period of two years; however, it does not apply to tax audits and audits by the General Prosecutor’s Office concerning corruption crimes, life and health-threatening situations, and instances threatening national security or the state’s economic interests. The Decree of the President “On Imposing Additional Measures on Application of the Law” (“Decree”) dated 26 October 2015 defines and approves the list of the aforementioned audits not subject to suspension under the Law. The Decree lists the processes of the aforementioned audits that arise from situations where human health and life, state security, or the state’s economic interests may be at risk:

• Checking the quality of drugs and verify compliance with the rules of safety and sanitary requirements set by the Ministry of Health of Azerbaijan

• Verifying compliance with phytosanitary and veterinary requirements set by the Ministry of Agriculture of Azerbaijan

• Investigating illegal access to gas, water supply, electricity, or heating networks
• Auditing of insurance and reinsurance companies (to be performed by the Ministry of Finance of Azerbaijan)

• Auditing of credit institutions and their affiliated business entities (to be performed by the Central Bank of Azerbaijan)

• Auditing the storage and distribution of radioactive, explosive, or highly dangerous substances or equipment. Verifying compliance with the technical safety codes of the mining industry, the hydraulic engineering, oil & gas industries, and the construction industry, as well as technical and fire safety codes set by the Ministry of Emergency Situations

• Checking all other activities that may pose a threat to human health and life, state security, or the state’s economic interests. All such audits shall be approved by the Ministry of Economy and Industry of the Republic of Azerbaijan. In the event of any violation of the requirements under the Law, an entrepreneur is entitled to file a claim with the Ministry of Economy and Industry of the Republic of Azerbaijan or to commence administrative and legal proceedings.

Legal News - 28 October 2015

Rules on duty-free import of goods for non-commercial purposes were amended

Rules on duty-free import of goods for non-commercial purposes were amended The Presidential Decree dated 23 October 2015 (“Decree”) on simplification of control rules at customs check points amended the rules on import of goods for personal use. As per the Decree, individuals importing goods (excluding goods subject to excise tax, motor vehicles and goods for meeting the essential needs of the individuals during the trips) with customs value of not more than USD 10,000 (and additionally USD 2000 per accompanied minor) and which are not intended for manufactural or commercial purposes will be exempt from customs duties. The State Customs Committee of the Republic of Azerbaijan is assigned to arrange placing of the list of the goods prohibited/restricted for export/import on boards visible to everyone at the state border checkpoints.

Legal News - October 2015

Legal News October 2015

Deloitte in Azerbaijan issued an autumn edition of Legal News which includes new Decree of 19 October 2015 (“Decree”), issuance of all types of licenses (with the exception of licenses concerning public security).

To read more, please, click the .pdf file on the left

 

Legal News - October 2015

Tax and Legal News August 2015

Deloitte in Azerbaijan issued a summer edition of Tax and Legal News 2015 which includes new Codes, Laws, changes to existing legislation and etc.

To read more, please, click the .pdf file on the left

 

Tax and Legal News Summary 2015

Tax and Legal News Summary 2014

Deloitte in Azerbaijan issued an annual Tax and Legal News Summary 2014 which includes new Codes, Laws, changes to existing legislation and etc.

To read more, please, click the .pdf file on the left

 

Tax and Legal News Summary 2014

Important Migration Update 2014

The Migration Code of the Republic of Azerbaijan (“Migration Code”) provides a list of foreign nationals and stateless persons who are exempt from obtaining work permits in Azerbaijan. This list includes foreign nationals and stateless persons who are on business trips, provided that:

(i) The business trip does not last more than 90 days within a year; and 

(ii) activities during the business trip take place in the industries defined by the Cabinet of Ministers of Azerbaijan.

Previously, foreign nationals and stateless persons, in the absence of a list of exempted activities, were not required to obtain work permits while on business trips shorter than 90 days.

This list of exempted activities has now been approved by Decree # 387 of the Cabinet of Ministers of the Republic of Azerbaijan of 4 December 2014 “On approval of the list of activities exempt from obtaining a work permit for foreign nationals and stateless persons on business trips in the Republic of Azerbaijan for a period not exceeding 90 days within a year” (“List of Activities”).

The List of Activities includes the following industries:
1. Mining;
2. Processing;
3. Electricity, gas, steam, and air conditioning supply;
4. Information and communication;
5. Finance and insurance;
6. Education;
7. Transport;
8. Water supply, waste water, and refuse treatment.

The process of applying for work permits for foreign nationals and stateless persons on business trips for short periods is not yet clear and will be the subject of future communication.


 

 

To read more, please click the .pdf file on the left.

Important Migration Update 2014 22 December 2014

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