One of the most important pieces of regulation that Azerbaijan’s Central Bank approves is the currency rules (the “Rules”) which define the procedure for, among other things, transferring of foreign currency outside Azerbaijan.
Among the new elements is the requirement that legal persons transfer foreign currency only through their bank accounts. Only physical persons may transfer foreign currency without opening of a bank account. The Rules set the maximum limit for such personal transfers, which must not exceed USD 1000 (or its equivalent in other currency) within any day, and USD 10,000 within a calendar year.
The Rules allow the transfer of a foreign currency outside Azerbaijan as follows:
(i) as payment for imported goods or services. The payer must provide a bank with certain documents, such as a contract and, in case of sale of goods, customs declaration evidencing import of the products. In case of advance payments, the payer must submit to a bank the relevant documents within 180 days from the date of the payment;
(ii) payments in connection with re-export;
(iii) transferring back advance payments for obligations under import agreements, which have not been performed;
(iv) transfer by local legal persons of funds to their representative, branch offices or subsidiaries or affiliate companies. In case of such transfers, the transferor (i.e., the legal person making the transfer) must disclose the purpose of the transfer;
(v) payment of interests, principal and other obligations under loans or similar instruments issued by foreign institutions;
(vi) payment of court, notarial and arbitration expenses, state duties, pensions, allowances etc;
(vii) payment of conference fees and fees for subscribing to publications, tuition fees and medical expenses,
(viii) payment of royalties, including franchise fees;
(ix) distribution of dividends;
(x) repatriation of foreign investment and transfer of revenues from foreign investments. In case of repatriation, a transferor must provide the transferring bank with evidence of foreign investment in Azerbaijan. In case of transfer revenues from foreign investment, the transferor must provide evidence that it has complied with its tax obligations, and if it benefits from any tax exemptions, the document evidencing such exemptions.
(xi) transfers in connection with (a) contribution of capital to a share of foreign entity, (b) purchase of securities and (c) investment in real estate outside Azerbaijan.
The Rules also allow for certain other transfers, such as transfer of foreign currency by physical persons to their relatives outside Azerbaijan.
While we have listed documentary requirements for some of the transfers or payments, nearly all them must have some documentary basis, such as agreement and/or invoice evidencing the purpose of such transfers or payments.