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Deloitte Tax News
This newsletter is designed to highlight the most significant changes and updates in the Taxation of Azerbaijan.
Tax News 17 November 2023
Non-residents engaged in electronic commerce are to be registered for tax purposes
New rules on online registration of non-residents conducting electronic commerce via internet (“e-commerce”) for tax purposes (“the Rules”) were adopted by the Decree of the Cabinet of Ministers of the Republic of Azerbaijan on 30 October 2023.
The Rules determine the procedure for electronic registration of non-residents engaged in e-commerce as well as re-registration and deregestration. The Rules are not applicable to non-residents operating through a permanent establishment within the territory of the Republic of Azerbaijan under Article 19 of the Tax Code of the Republic of Azerbaijan.
For the purposes of the Rules, a non-resident conducting e-commerce is described as a non-resident taking the role of a seller (or supplier) engaged in a supply of services through the internet such as downloading of electronic books, music, audio and video content, graphic images, virtual games, software, placement of advertisements, and other similar works and services.
Furthermore, non-residents must register for value added tax (“VAT”) purposes if any of the following conditions are met:
• When a resident receiving (buying) works and services makes payment through local banks, branches of foreign banks in Azerbaijan, national postal service, or other payment service providers;
• The recipient (buyer) of the works and services is located in Azerbaijan;
• The IP address of the device used by a resident who is the recipient (buyer) of works and services is located Azerbaijan;
• The resident's mobile operator's country code, whether for purchasing works and services or making payments, relates to Azerbaijan.
According to the Rules, non-residents falling under the aforementioned criteria are required to electronically register for VAT purposes. The following information should be included by non-residents to the platform for tax administration of e-commerce participants established within the Internet Tax Administration of the State Tax Service (“Platform”):
• full name;
• the name of the country of residence;
• the legal and actual address of the head office, the postal index;
• the web page (if available);
• email address;
• registration document number in the registered state;
• tax registration number in the registered state;
• the main type of activity (activities);
• the currency of the payable taxes (manat, U.S. dollars, euros or pounds);
• the start date of operation under the Tax Code of the Azerbaijan Republic;
• information about at least two people (surname, name, father's name, position, e-mail address, and contact phone) who are responsible for tax liabilities.
Electronic copies of the following supporting documents must be added over the Platform:
• registration certificate for tax purposes where the non-resident is registered;
• document confirming the appointment of the responsible person.
These documents can be provided either in Azerbaijani or English languages. In case if the language of the documents is different, notarized Azerbaijani or English translation of the information and the documents shall also be provided.
Following the submission of the information and documents submitted by the non-resident, the Azerbaijani tax authorities review them within 20 working days by using available databases and in case of full compliance, the non-resident is registered and provided with a tax identification number.
Upon registration, non-residents are liable to calculate and declare VAT and pay the collected VAT to the tax authorities in accordance with the provisions of the Tax Code of the Republic of Azerbaijan. Such a registration of a non-resident means that Article 169 (reverse charge application of non-residents VAT) of the Tax Code of the Republic of Azerbaijan will not be applied to the specified transactions, i.e. tax agents will not be liable to calculate and declare VAT from payments made to non-residents on behalf of them.
More detailed information on the decision of the Cabinet of Ministers of the Republic of Azerbaijan can be accessed from the following link:
https://nk.gov.az/az/senedler/qerarlar/internet-informasiya-ehtiyati-vasitesile-elektron-7485
Tax News 6 September 2022
Amendments to the Rules for determining and applying transfer prices
We would like to inform that by the aim of taking into account the changing trends in the field of international taxation, applying the principles of international taxation, ensuring the compliance of transactions related to transfer pricing with international standards, especially determining the issues arising from the Base Erosion and Profit Shifting Action Plans of the Organization for Economic Co-operation and Development, and to improve the advance pricing arrangement approach, a number of amendments have been made to the "Rules for determining and applying transfer prices" (“Rules”) in accordance with the Decision No. 17 of the Board of the Ministry of Economy of the Republic of Azerbaijan dated July 21, 2022.
Thus, by the decision of the board of the Ministry of Economy, a number of amendments have been made to the Decision "On the approval of a number of document forms and rules provided for in the Tax Code of the Republic of Azerbaijan" of the board of the Ministry of Taxes of the Republic of Azerbaijan dated January 27, 2017.
Below we mention several important updates and new concepts that have been introduced.
Arm's length range
Transfer price will be calculated by finding an acceptable interquartile range of the selected relevant indicators (price, margin or specific weight) of all compared transactions. It should also be noted that the relevant indicators of the enterprise in the audited period are compared with the average indicators of the audited period and the previous two years of the non-controlled transactions of the selected enterprises.
Documentation
At the request of the tax authority, a taxpayer must submit documents containing a number of information required by the legislation on the enterprise’s group, audited enterprise, and controlled transactions. Article 7.4 of the Rules provides a list of documents required by the tax authority.
Advanced Price Agreements on transfer pricing methods
According to the Decision, the period of consideration of the taxpayer's application to the tax authority regarding APA is determined as 30 days.
The letter on APA that the tax authority provides to the taxpayer may also be used in connection to the identical transactions that occurred by the taxpayer in previous periods but were not covered by the tax audit. However, APA cannot be applied to the identical transactions carried out in previous periods covered by an ongoing tax audit initiated by the tax authority.
Furthermore, the formulas and indicators used for the distribution of income depending on the transaction type within the APA are also taking place in the list of amendments made to the legislation.
At the same time, within the framework of the Decision, the updated form of the "Notification on the controlled transactions" and the Appendix to this notification were approved.
You can find the amendments made to the legislation by visiting the Transfer pricing module through the link below.
https://www.taxes.gov.az/az/page/beynelxalq-vergi-munasibetleri
If you have any questions related to the recent amendments please do not hesitate to contact us.
Deloitte Azerbaijan Tax & Legal team
Tax News 15 May 2020
The Government approved tax support measures in connection with
the pandemic
In the previous newsletter, we introduced the details of the mechanism of tax benefits and holidays for businesses (including SMEs) operating in the areas most affected by the pandemic.
The Parliament of the Republic of Azerbaijan on 8 May 2020 has approved the said package of tax benefits.
A new Chapter 18 has been added to the Tax Code, under the name "Temporary tax regime due to significant changes in economic conditions as a result of the spread of the coronavirus pandemic". The provisions of this chapter are effective from 1 January 2020.
We are pleased to bring to your attention the highlights of tax support measures, and if you have any related questions, please be sure to contact Deloitte tax specialists
Tax News 20 April 2020
Deadline for submission of the tax reports has been extended
Announcement regarding extension of tax filing and payment deadlines has been published on the official web page of the Ministry of Taxes on 19 April 2020.
The Decree of the Cabinet of Ministers of the Republic of Azerbaijan dated 18 April 2020 has extended the special quarantine regime applied in the country until 4 May 2020.
Considering the extension of non-working days in the areas of activities that have been restricted due to the special quarantine regime, the deadline for the submission of tax returns and payment of taxes in accordance with Article 68.2 of the Tax Code, has been extended until 4 May 2020 for taxpayers whose activities have been restricted with respect to the following taxes:
• Submission of profit (income) and property tax returns for the year of 2019;
• Monthly tax returns for February and March 2020;
• Quarterly tax returns for the 1st quarter of 2020;
• Issuance of relevant note on advance tax payments, as well as payment of advance taxes.
Should you have any questions, please feel free to speak to Deloitte Tax Team.
Tax News 8 April 2020
Mechanism for providing financial support to entrepreneurs affected by the coronavirus (COVID-19) pandemic
As mentioned in our previous newsletter, on 4 April 2020 the Cabinet of Ministers of the Republic of Azerbaijan has approved the Action Plan on “Measures to be taken to reduce the negative impact of the coronavirus (COVID-19) pandemic triggering sharp fluctuations in world energy and stock markets, on the economy of the Republic of Azerbaijan, as well as macroeconomic stability, employment issues in the country and business entities operating in the affected areas” within the course of implementation of Article 10.2 of the Order No. 1950 of the President of the Republic of Azerbaijan dated 19 March 2020.
In this regard, the official website of the Ministry of Economy of the Republic of Azerbaijan has announced the mechanism for providing financial support to entrepreneurs affected by the Coronavirus (COVID-19) pandemic.
The actions are to be implemented in three stages. The following are going to be initial measures put in action:
- Partial payment of salaries of employees working under employment contracts in order to prevent the number of job reductions in the areas affected by the pandemic - part of the salary and the corresponding social insurance contributions to be paid to employees will be transferred to employers' bank accounts. Compensation amount will not exceed the average monthly salary (AZN 712) for employees with income higher than the average monthly salary.
- Providing financial support to individual (micro) entrepreneurs - this financial support applies to taxpayers who paid taxes, compulsory state social insurance contributions and unemployment insurance contributions in 2019, and the allocated funds will be transferred to the bank accounts of such individual entrepreneurs. If the amount of payment of the individual (micro) entrepreneur to the state budget in 2019 was less than AZN 250, financial support will be set in the amount of AZN 250.
Applications for the financial support shall be submitted through the taxpayers’ electronic cabinet within the Internet Tax Office.
Additionally, with the Decree dated 7 April 2020 the Cabinet of Ministers of the Republic of Azerbaijan has approved "Conditions and procedure for payment of lump sum amounts to persons registered as unemployed due to the application of a special quarantine regime during the coronavirus (COVID-19) pandemic."
The decision envisages a lump sum payment of AZN 190 per month to persons registered as unemployed in the "Employment" subsystem of the centralized electronic information system of the Ministry of Labor and Social Protection of the Republic of Azerbaijan during the special quarantine regime in connection with the coronavirus (COVID-19) pandemic.
Please feel free to contact us with any related questions.
Tax News 28 March 2020
Rules on refund of VAT paid for goods by individual consumers have been approved
We are pleased to inform you that, “Rules for refund of VAT paid by individuals for purchased goods from entities engaged in retail trade or catering services in Azerbaijan (except for oil and gas products)” (“Rules”) have been approved by the Decree of the President of the Republic of Azerbaijan dated March 21, 2020.
According to the Rules, individuals who paid VAT for purchased goods from entities engaged in retail trade or catering services in Azerbaijan will be able to receive refund of such VAT via transfer in accordance with the defined procedures. It shall be noted that, refund will be carried out via transfer to the consumers’ bank card (or bank account). If the consumer is a foreigner or a stateless person, VAT will be refunded only if such individual have a bank card (or account) in Azerbaijan Manat.
For such purpose, individual consumers shall complete a registration on the portal – the special information base for a VAT refund. The consumer should submit an application for a VAT refund by entering information on the cash register receipt or POS-terminal extract to the Portal within 90 days from the issuance of the cash register receipt. The application received on the Portal is activated within 14 days after the date of issuance of the cash register receipt. After review by the State Tax Service the respective information is transferred to the authorized bank. Individual consumers are entitled to receive 15% of VAT paid cashless and 10% of VAT paid in cash to their bank accounts within 30 days from the date of submission of the application to the Portal.
Moreover, the Rules also define procedures for return of the purchased goods by consumers after the refund of the VAT amount. In such case, the amount to be paid to the consumers for the returned goods will be reduced in the amount of the refunded VAT.
For more comprehensive information please follow below link. https://president.az/articles/36239
Tax News 5 September 2019
Changes to the Code of Administrative Offenses of the Republic of Azerbaijan
On 12 July, 2019, the President of the Republic of Azerbaijan signed the Decree on "Amendments to the Code of Administrative Offenses of the Republic of Azerbaijan". The changes relate to the violations of employment legislation.
According to the changes:
· Employers are subject to a penalty in the amount of AZN 300-500 for the failure to submit Reports On Recruiting, including recruitment according to set quota or dismissal of employees
·Employers are subject to a penalty in the amount of AZN 500-1,000 for the failure to report information on open and closed vacancies along with the salary information into the centralized electronic system in the form established by the respective executive authority within 5 (five) working days from the date of opening or closing of the vacancy
· Employers are subject to a penalty in the amount of AZN300-500 for the failure to submit to the respective executive authority information on occupation of a vacant job within 5 (five) working days from the date of receipt of the Employee Reference Form from the body determined by the relevant executive authority
If the dismissal of the employees at the initiative of the employer in the course of increasing efficiency of production, improvement of labor arrangement, liquidation of the enterprise, reduction of the number of staff or jobs took place without prior written notification (at least 3 months) to the relevant trade union or without negotiating with employees about the protection of their rights and interests, except for instances provided by the Labor Code of the Republic of Azerbaijan, the employer is subject to a penalty in the amount of AZN 500-1,000.
Tax News 28 December 2018
Amendments to Law on Social Insurance
The Law on Amendments to the Law of the Republic of Azerbaijan “On Social Insurance” (“Law”) was issued on 21 December 2018. The Law will go into effect on 1 January 2019.
The amendments to the Law are in line with the significant changes introduced in the tax legislation earlier. In this newsletter we bring to your attention a summary of major amendments to the Law.
Tax News 7 November 2018
Deadline for becoming a Chartered Accountant has been defined
According to the decree of the Cabinet of Ministers of the Republic of Azerbaijan # 464, dated 25 October 2018, deadlines and sequence for becoming Chartered Certified Accountant for chief accountants at state-owned legal entities, other public interest entities except for publicly traded legal entities, large entrepreneurships, budget organizations and public legal entities who publish their annual financial statements (consolidated statements) have been defined as following:
1. Chief accountants at public legal entities who publish their annual financial statements (consolidated statements) – by 30 December 2021;
2. Chief accountants at large entrepreneurships – by 30 December 2022;
3. Chief accountants at state-owned legal entities – by 30 December 2022;
4. Chief accountants at other public interest entities except for publicly traded legal entities - by 30 December 2022;
5. With respect to budget organizations:
5.1. Chief accountants of organizations funded at the account of centralized expenditure budget – by 30 December 2021; 5.2. Chief accountants of organizations at the account of local expenditure budget – by 30 December 2022.
Tax News 1 October 2018
Measures to be taken in the framework of ‘’State Program on Expansion of Digital Payments in 2018-2020 in the Republic of Azerbaijan’’
President Ilham Aliyev has signed an order to approve a ‘’State Program on Expansion of Digital Payments in 2018-2020 in the Republic of Azerbaijan’’.
The measures to be taken include gradual replacement of simplified tax system with VAT system and differentiation of VAT rate.
In the framework of the program it is stipulated to prepare a stepwise transition mechanism from simplified tax system to VAT system and to develop a planned approach for various sectors and economic entities depending on their scale. Upon completion of the transition process, issue on the differentiation of VAT rate will be submitted for consideration. Such approach will enhance the transition process from simplified tax system to VAT system.
In addition to that, program provides for implementation of ”Integrated Accounting System’’ for all taxpayers. Therefore, extended use of E-accounting will be of utmost importance and in order to provide a smooth transition to a new accounting system, a stepwise migration plan for small and medium sized companies will be developed.
The program also considers taking significant measures towards reduction of non-formal employment for the purpose of strengthening social protection system. In order to encourage employers and employees to switch to official salaries, relevant measures on the expansion of the insurance system will be undertaken under the State Program.
The program will also consider setting "minimum labor standards" to reduce the level of employment with unregistered labor agreements in sectors with high indicators of informal employment.
Tax News 5 July 2018
Organizational changes in the Ministry of Taxes
Ministry of Taxes announced significant changes to the existing organizational structure effective from July 2, 2018. Among many other, there has been established Administrative Complaints Investigation Division which will be in charge of preventing possible corruption elements and solving administrative complaints submitted by entrepreneurs.
Another important unit is Tax Audit Department, which will ensure execution of consistent and qualitative tax audits.
You may find the full list of the organizational units following the link below:
http://www.taxes.gov.az/modul.php?name=metbuat&bolme=pressreliz&pid=1665&lang
Tax News 28 June 2018
Increase of per diem allowance
The Cabinet of Ministers of the Republic of Azerbaijan adopted the Amendments to the Decree №14 dated 28 January 2008 “On per diem rates during business trip” on 20th June 2018 (“Amendments”).
Pursuant to the Amendments, per diem allowance within the territory of Azerbaijan will increase as the following:
• AZN 90 for Baku;
• AZN 70 for Sumgait, Nakhichevan and Ganja; and
• AZN 65 for other destinations.
Moreover, additional daily payment for the employees whose employment conditions bear permanently travelling character will be increased from AZN 10 to AZN 15.
Increased rates are effective as of 1st July 2018.
Amendments to the Tax Code
The President has signed the Law on amendments to the Tax Code dated 12 June 2018. The amendments implies twice and thrice increase of excise tax in respect of cigars (cigarillos) and cigarettes respectively.
The Law will enter into force on July 1, 2018.
Tax News 6 June 2018
Amendments to the Law “On Accounting”
The President of the Republic of Azerbaijan approved the Amendments to the Law of the Republic of Azerbaijan “On Accounting” on 4th of May 2018 (“Amendments”).
As per the Amendments, all entities subject to accounting rules are obliged to carry out their bookkeeping and to prepare their financial reports in accordance with the accounting rules described in the Law on Accounting and International Financial Reporting Standards (IFRS).
The Amendments eliminate reference to the National Accounting Reporting Standards of the Republic of Azerbaijan as they will become invalid after official translation and publication of the IFRS to Azerbaijani language.
Further to abolishment of the Simplified Accounting Rules of the Republic of Azerbaijan dated 3 February 2016, small and medium-sized enterprises (SMEs) may choose to prepare their financial statements either in accordance with the IFRS or in accordance with the IFRS for SMEs.
A number of new significant definitions have been included into the Law. Persons who become certified accountants through successfully passing exams and who are members of a professional accountants’ organization can function using a status of a Chartered Certified Accountant.
State-owned legal entities, except publicly traded legal entities, other public interest entities, large entrepreneurships, budget organizations and public legal entities who publish their annual financial statements (consolidated statements) should have Chartered Certified Accountant at a chief accountant position.
By virtue of Articles 4.3.7 and 4.3.8 of the Amendments, the Ministry of Finance shall provide accreditation of a non-commercial organization, which shall certify professional accountants and the maintenance of the State Register of Chartered Accountants. The certificates shall be granted upon successful passing of the accounting exam conducted by the abovementioned organization and shall be valid for five years. Upon expiration of the certificate, the accountant will have to retake the exam. The certificate received after the second exam shall be valid for indefinite period.
Furthermore, as per Law, entities should adopt their internal accounting policy. As per the definition in the Law, the accounting policy is a document containing specific principles, fundamentals, conditions and approaches in the accounting of the company.
Sate control over the accounting records of the entities subject to accounting rules (credits organizations, insurance companies, investment funds and heads of these funds, except persons licenced in stock exchange markets in compliance with Law) is performed by the Ministry of Taxes during state financial control reviews and tax audits.
The list of the commercial organizations obliged to publish their financial statements and consolidated financial statements together with an auditor’s opinion (expect those specified in article 12.2 of the Law) shall be presented to the Ministry of Finance annually on 31 March by the Ministry of Taxes.
As per the Law the tax reports submitted in accordance with the provisions of the Tax Code of the Republic of Azerbaijan does not provide a substitution for financial statements prepared in accordance with the Law.
Tax News - July 2017:
The Rules on Accounting for income and expenses for taxation purposes in the field of wholesale trade and manufacturing sector
The Rules on “Accounting for income and expenses for taxation purposes in the field of wholesale trade” and The Rules on “Accounting for income and expenses for taxation purposes in the field of manufacturing” (together “Rules”) have been approved by the Decree of President of the Republic of Azerbaijan on 26th of June 2017. The Rules are effective from 15th of July 2017.
According to the Rules, taxpayers in wholesale trade and manufacturing are imposed the following obligations:
• Accurate bookkeeping of income and expenses in a timely manner
• To fulfill the requirements of the Tax Code of Azerbaijan Republic and the Law of the Republic of Azerbaijan "On Accounting" and other appropriate legislative acts in respect of the accounting of revenues, expenses, taxation objects and commodity stocks, as well as compilation and maintenance of the accounting documents
• Depending on the applicable accounting method under the Tax Code, recording income and expenses in periods when they obtained and incurred, respectively
• Maintaining bookkeeping in a manner allowing to track commencement, progress and completion of all transactions
Additionally, the Rules contain the following requirements relating to wholesale trade and manufacturing:
• Documentation of the receipt of raw materials into warehouse
• Documentation of the receipt of goods from persons without tax registrations
• Documentation of the release of raw materials into main and auxiliary production
• Documentation of the warehousing and sale of finished products
• Determination of income and expenses of taxpayers
• Methods of accounting for the closing inventory balance
New Double Tax Treaty administration rules published
On 12 June 2017, changes to the Rules on “Administration of international agreements for the avoidance of double taxation concluded between the Republic of Azerbaijan and other states’’ (“DTT administration rules”) approved by the Board of Ministry of Taxes of the Republic of Azerbaijan.
According to the introduced changes to the Double Tax Treaty (“DTT”) administration rules, non-residents are entitled a right of submission of DTA forms electronically via online tax cabinet for all types of income independently or via tax agent along with traditional submission via physical forms to the Ministry of Taxes. Previously, obtaining advance tax exemption or reducing tax rates was only possible for 4 types of income (i.e. interest, dividend, royalty and international transportation) and submission of necessary documentation was only in hard copies. The published changes provide a handy application process to use tax exemptions and privileges stipulated under the DTTs.
Pursuant to the DTT administration rules, the tax authorities are obliged to respond to the taxpayers’ applications not later than 20 days upon receiving respective DTA-forms. An extension of additional 20 days can be applied by the tax authorities with relevant justification for the analysis of applications require additional time.
A guideline for submission of DTA forms, and DTT administration rules can be found via following link:
http://www.taxes.gov.az/modul.php?name=beynelxalq&cat=12
On 11 July 2017, a Presidential Decree approved a list of 40 countries and territories with low-tax regimes
It is worth mentioning that, the list of low-tax countries and territories is determined in accordance with the Law of the Republic of Azerbaijan “On Amendments to the Tax Code of the Republic of Azerbaijan” dated 16 December 2016.
This list will be used for the following purposes:
a) Application of extra WHT of 10% under Article 125.1.9 of the Tax Code;
b) Determining controlled transactions for Transfer Pricing purposes in accordance with Article 14-1 of the Tax Code;
c) Taxation of income of a resident generated from countries with low tax jurisdictions pursuant to Article 128 of the Tax Code.
The complete list of jurisdictions with preferential taxation is presented below:
1 Andorra
2 Anguilla islands
3 Antigua and Barbuda
4 Aruba
5 Antilles islands (Netherlands)
6 Bahamas
7 Bahrain
8 Bermuda
9 British Virgin Islands
10 Belize
11 Barbados
12 Gibraltar
13 Jersey
14 Dominica
15 Hon Kong (China)
16 Cayman Islands
17 Cook Islands
18 Costa Rica
19 Guernsey
20 Grenada Islands
21 Liberia
22 Lichtenstein
23 Maldives
24 Isle of Man
25 Marshall Islands
26 Montserrat
27 Monaco
28 Macau (China)
29 Nauru
30 Niue
31 Panama
32 Palau
33 Seychelles
34 Saint Kitts and Nevis
35 Samoa
36 Saint Vincent and the Grenadines
37 Saint Lucia
38 Turks and Caicos Islands
39 Vanuatu
40 Virgin Islands (US)
Tax News - June 2017: New changes in Tax Administration Procedures
On 16 June 2017, Ministry of Taxes of Azerbaijan held a presentation on upcoming changes in tax administration procedures
According to the officials of the Ministry of Taxes, new changes to be made to the Rules on “Administration of international agreements for the avoidance of double taxation concluded between the Republic of Azerbaijan and other states’’ (“DTT administration rules”) as a continuation of improving business environment. As per the expected changes to the DTT administration rules, non-residents will be able to submit DTA forms electronically (i.e. via online tax cabinet) for all types of income independently or via tax agent. Previously, obtaining advance tax exemption or reducing tax rates was only possible for 4 types of income (i.e. interest, dividend, royalty and international transportation) and submission of necessary documentation was only in hard copies. The upcoming changes, will significantly ease the process of using tax exemptions and privileges stipulated under the DTTs.
Another significant change is expected to be in obtaining zero-rated VAT exemption certificate for foreign subcontractors operating under existing Production Sharing Agreements (“PSA”). According to the upcoming changes taxpayers operating under the PSA taxation regime, will be able to apply and obtain such certificates electronically (i.e. via online tax cabinet) without undertaking any tiresome paperwork.
It is expected that all instructions related to the above mentioned changes to the tax administration procedures will be send to the online tax accounts of the taxpayers soon.
Tax News - May 2017: Preparing for a changing landscape
The Law on amendments to the Tax Code has been approved
On 17 May 2017, The Azerbaijani Parliament approved the Law on amendments to the Tax Code of the Republic of Azerbaijan. New amendments cover several significant issues.
Introduction of “public legal entities” notion to the Tax Code
With the recent amendment definition of “public legal entities” has been added to the Tax Code. Moreover, public legal entities are not allowed to be simplified taxpayers.
Clarified financial sanctions for violation of the law “On Cashless Payments”
The new law threw light on certain unclear aspects of implementation of the law “On Cashless Payments”, in particular range of responsible parties. So the following taxpayers will be subject to a financial sanction of up to 40% of the transaction value for violating the cashless payment regulations:
• For 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 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;
• 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 of any consecutive twelve month period are up to AZN 200,000; pensions, scholarships, financial aid, bonuses (including one-time bonuses), compensation and benefits;
• Utilization/expenditure of funds received under public procurement contracts;
• Leasing/Loan providers for receiving cash payments;
• Insurers and reinsurers for receiving and payment of insurance premiums and claims respectively;
• Recipients of cash payment of service fees and other payments made to government agencies, state-owned legal entities or legal entities, in which the state owns controlling interest, public legal entities and those funded by the State Budget;
• Recipients of cash in respect of payment of landline phone services and utility costs;
• To payers and recipients for cash payment and repayment of interest-free cash funds (except where such funds are provided by non-taxpayers) and other monetary allocations;
• For cash receipt of tuition and tourism agent fees;
More goods for excise tax
• Fur and leather products are also included in the list of goods subject to excise tax.
Tax News - April 2017:
The Rules on “Accounting for income and expenses for taxation purposes in the field of public catering” and the Rule on “Accounting for income and expenses for taxation purposes in the field of retail trade” (together “Rules”) have been approved
The Rule on “Accounting for income and expenses for taxation purposes in the field of public catering” and the Rule on “Accounting for income and expenses for taxation purposes in the field of retail trade” (together “Rules”) have been approved by the Decree of the President of the Republic of Azerbaijan dated 19 April 2017.
According to the Rules, taxpayers in public catering and retail trade are imposed the following obligations:
•Accurate bookkeeping of income and expenses in a timely manner in accordance with the Tax Code;
•Depending on the applicable accounting method under to the Tax Code, recording income and expenses in periods when they obtained and incurred, respectively;
•Maintaining bookkeeping in a manner allowing to track commencement, progress and completion of all transactions.
Additionally,the Rules contain the following requirements relating to public catering and retail trade:
•Documentation of goods received;
•Documentation of tansactions related to sale of goods and, in public catering, transactions related to consumption of goods for production;
•Methods for income and expense recognition;
•Methods of accounting of closing inventory balance.
Tax News - March 2017: Transfer price rules have been approved
On 27 January 2017 the Ministry of Taxes approved the Rules on transfer pricing and its application (“Rules”) that become effective from 8 February 2017.
In the attached newsletters, we are pleased to share with you highlights of the transfer pricing regulations, and we trust you will find them interesting and helpful.
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