AZE - TAX CHANGES

IMPORTATION OF GOODS

Effective January 1, 2023 changes have been introduced to the Tax Code in relation to importation of goods.

Such, opposite to the older version nowadays the taxpayer shall officially inform Tax Authorities in a specifically designated format about goods imported to the Azerbaijan Republic not later than date of completion of customs clearance.

In certain cases, however, if goods are being imported to and stored in a warehouse or other place duly registered with the Ministry of Taxes, then submitting of the above information does not become mandatory.

BANK ACCOUNT OPENING

A noteworthy change has been made to the area of the Tax Code which regulates the matters of opening of bank accounts. Such, according to the new changes the taxpayer shall have the right to open bank account without obtaining of any prior permission from the Ministry of Taxes.  On another hand, reporting obligation has been moved to banks to officially inform the Ministry of Taxes within a day from the date of opening of new bank account.

FINANCIAL SANCTIONS

Rather significant amendments have been made to the area of the Tax Code regulating various financial sanctions.  Among such changes the Government introduced fairly hefty penalty for failure to submit Group Reporting for multinational companies whose annual turnover exceeds 750 million EURO leading to the financial sanction of AZN10,000. 

The Government is also looking into other compliance matters such as the Statute of Limitations for financial documents retention, thus imposing a penalty in the amount of AZN1,000 for failure to comply with the existing statute of limitation of 5 years. 

Furthermore, more penalties yet of less severe nature, are envisaged for failure to register with the Ministry of Taxes taxpayers’ actual business address, submittal of incorrect information or failure to comply with reporting requirements, failure to issue electronic invoices and so on.

Other important changes are focused on the area of offshore zones or jurisdictions with preferential taxation, now clearly describing Government requirements for information exchange, definitions of such jurisdictions and applicable tax rates, confidentiality of financial and beneficiary information.