New system of appellate councils aim to protect business in Azerbaijan

 

Introduction

The President of Azerbaijan created Appellate Council to handle complaints from businesses more efficiently.  Decree, No. 761, date 3 February 2016, On Establishment of the Appellate Council created the Appellate Council (the “Council”) in the President’s Office.  The same Decree requires that local and centralized executive authorities (such as ministries and state committees) create their internal appellate councils.

How This New System Works

The idea is that if an entrepreneur faces a challenge from any executive authority – e.g., refused a favorable decision on its case – and it believes the authority has breached the law, it may appeal the matter to the appellate council of that authority.  In other words, appeal to the internal appellate council of the authority, which issued (or refused issuing) the decision.  The internal appellate council must review the complaint and issue its decision.  If the entrepreneur is not happy with the decision of the internal appellate council, it may appeal the internal council’s decision to the Appellate Council in the President’s Office.

The Council

The Council is a collegial and public state institution.  The members of the Council are appointed by the President.

The Council receives appeals in written form (in person, postal or electronically). It hears complaints from a decision, refusal of decision, as well as any actions or inactions of internal appellate councils. Appeals must be in connection with business activities of an appellant.If the Council finds a violation it is authorized to refer the violation to the President of Azerbaijan for taking actions regarding persons, who commits the violation.

The Council is authorized to obtain documents from any state bodies, municipalities, NGOs and natural or legal persons.

Further details in connection with appeals are set out in the Law On Administrative Proceeding. According to the Law, an administrative complaint must be handled and a decision adopted not later than one month from the date it is received.

 

Azerbaijan suspends government audits of local businesses for at least two years

 

The Azerbaijani President signed the Law On Suspension of Audits of Business in Azerbaijan (Law).  Under the Law expect in few circumstances, starting from November 1, 2015 government audit of businesses in Azerbaijan is suspended for at least 2 years (until November 1, 2017).  This important measure is aimed at further improving the business environment and creating favorable investment climate in Azerbaijan.

There are few exceptions to this suspension requirement.  In particular, audit by the Ministry of Health of medical drugs and other similar substances in terms of their effect to health and security, audit by the Central Bank of Azerbaijan of banks and other credit organizations, illegal connection to electricity, gas and other utilities, and audit by the Ministry for Emergency Situations of potentially hazardous objects in terms of their compliance with the technical security requirements are not covered by the Law.

Tax audits are also not covered by the Law, however, on October 27, 2015 the Ministry of Taxes issued a statement that it (i) suspends on-site audit of business, whose turnover does not exceed AZN 120,000 and (ii) on-side audit of other businesses may be carried out with regard to only high risk entities – i.e., entities with respect to which there is high-risk of their tax evasion.

The Azerbaijani President initiated the suspension of government audits and the decision has been saluted and supported by majority of Azerbaijan’s population.  It is no doubt the initiate will further contribute to business environment in Azerbaijan.