Azerbaijan: Tax Code of Azerbaijan Republic: 2023 Tax Amendments

Tax Code of Azerbaijan Republic: 2023 Tax Amendments.

According to the amendment to Article 13.2.16.14-1 of the Tax Code, during the payments made to countries or territories subject to preferential taxation, the clause of transferring (giving) the net profit of the non-resident's permanent representative office to the non-resident is added to the list of income which is not considered as gained from the Azerbaijani source during the payments made to countries or territories subject to preferential taxation.

Tax audit, tax control, and financial sanctions:

Starting from January 1, 2023, taxes will be calculated based on the market price if documents on the provision (receipt) of goods (works, services) are not submitted (not available) by the taxpayer during the measures on tax control.

Also, starting from the above-mentioned date, there is no requirement to send electronic invoices for payments made by advocates and advocacy organizations to the Bar Association of the Republic of Azerbaijan.

With the exception of taxpayers who are functioning in the oil and gas field or belong to the public sector, as well as those who use the "Green Corridor" release system, other taxpayers must provide the following information to the tax authority where he is registered about the goods to be imported in the form approved by the body (institution) determined by the relevant executive power body until the time when the goods leave the customs control (within 1 working day from the time the goods transported by air leave the customs control).

Financial sanctions: 

- In the financial year, if the group of multinational companies whose total income exceeds the manat equivalent of 750 million euros, within the framework of the international agreements to which the Republic of Azerbaijan is a party, the enterprise that is part of the group of multinational companies and is a resident of the Republic of Azerbaijan do not submit a report in the period, form and manner approved by the authority (institution) in order to implement automated information exchange with the authorities of other states, a financial sanction in the amount of 10,000 manats are applied to the taxpayer for not submitting the report.

- The limitation of keeping company documents to 5 years is canceled and they must be kept for at least 5 years from January 1, 2023.

- VAT payers, as well as legal entities and budget organizations whose more than 50 percent of registered and non-registered shares belong to the state, should pay VAT within 1 working day based on the electronic invoices issued to them when purchasing goods, services (works), as well as the persons buying residential and non-residential from the persons engaged in building construction activities within 1 working day.

Amendments made for opening accounts for taxpayers:

When taxpayers apply to credit institutions and the national operator of postal communication (hereinafter - persons conducting banking transactions) with the right to open and maintain bank accounts to open an account after tax registration, persons conducting bank transactions open accounts for taxpayers (cases that justify a refusal to open an account by law taking into account) and the information form approved by the authority (institution) on the opening bank account is sent to the tax authority for registration of opened accounts (except for non-resident accounts not related to entrepreneurial activity) with the tax authority electronically within 1 business day from the date of account opening.

Provisions relating to individual persons - On the income of physical persons:

- full value of prizes received in the form of items in competitions and contests. The value of prizes received in the form of money in international competitions (except for sports competitions) and competitions is up to 4000 manats, and in republican, regional, city and district competitions (except for sports competitions), it is up to 200 manats;

- The full value of prizes given by the organizers of international and cross-country sports competitions, as well as the value of prizes given in the form of money by republican sports federations (associations) and sports clubs in connection with domestic (republic, regional, city and district level) sports competitions, up to 50,000 manats.”

- 50 percent of the income of individual entrepreneurs producing food (food) products, whose list is approved by the body (institution) determined by the relevant executive authority, to replace imported goods with locally produced (processed) goods – for the period of 7 years from the year of approval of the relevant list;

- In accordance with Article 10 of the Law of the Republic of Azerbaijan "On the use of renewable energy sources in the production of electricity" from the transmission of electricity produced by an active consumer included in the population group at the expense of renewable energy sources up to the power limit of 150 kW (including 150 kW) to the electricity supply network income

Additional exemptions to corporate profit tax adopted:

- non-sales income of legal entities engaged in the production of agricultural products (including by industrial method), subsidies given to legal entities in connection with the production of agricultural products at the expense of the state budget, as well as dividend income of legal entities that are participants of resident legal entities in this field - for a period of 1 year from January 1, 2023.

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Reference/ Citation‍

https://www.caspianlegalcenter.az/news/more/tax-amendments-2023