key-issues-public-finance-taxation

Azerbaijani President Approves Rules on Internal and External Indebtedness of State Owned Entities

On December 28, 2016 the Azerbaijani President approved the Rules On Internal and External Indebtedness of State Owned Entities (the “Rules”). They were published on December 29, 2016. The Rules contain two key concepts: (i) the Azerbaijani Cabinet of Ministers sets the upper limit debt that may be taken out state owned entities and (ii) the Ministry of Finance must consent to debt arrangements of state owned entities.

For the purposes of the Rules a “state owned entity” means any entity (i) in which the state owns, either directly or indirectly, 51% or more shares, (ii) non-commercial entities and public legal entities and (iii) legal persons, including non-commercial legal persons and public legal persons, in which the entities listed in (i)-(ii) above own 51% or more shares.  The term indebtedness is defined broadly and includes loans, guarantees, debt undertakings under securities and leasing transactions and other borrowings.

The Rules do not apply to those debt arrangement of state owned entities, which are secured by a government guarantee. This is governed under Presidential Decree No. 368, dated February 13, 2006.

State owned entities must submit to the Ministry of Finance their estimate and plans for taking debt anytime before June 1 of each calendar year. The Ministry of Finance must analyze the information and, with the concurrence of the Azerbaijani Ministry for Economy, submit to the Azerbaijani Cabinet of Ministers investment projects to be financed with debt.  Presumably the Ministry must also submit its proposal on the upper limit of total debt. By September 15 of a calendar year the Cabinet of Ministers must, with the concurrence of the Azerbaijani President, set the upper limit of debt that may be taken out by state owned entities during the next calendar year. It is not clear from the Rules whether the “upper limit” means upper limit for each state owned entity, or upper limit of debt proposed to be taken by all state entities.

Before entering into a debt arrangement a state owned entity must obtain consent of the Ministry of Finance for that debt arrangement. In order to obtain this consent, the relevant entity must submit to the Ministry a set of documents, such as information on the project to be financed with the debt, feasibility study, positive opinion of the Azerbaijani Ministry for Economy for investment projects, initial revenue and expenses report for the year in which the application is made, its audited financial statements. The Ministry of Finance must review the documents and provide its opinion within 30 days. The Ministry may request opinion of other government agencies, in which case the timeline for issue of opinion can be extended for around 10 days.

If the Ministry of Finance believes that the proposed debt arrangement overly burdens the state owned entity and puts it under risk of default, the Ministry may refuse its consent. There are other grounds on which the Ministry may refuse its consent, such as providing false information by the state owned entity wishing to obtain the consent. In all other cases, the Ministry must issue its consent.

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New Amendments to Azerbaijani Tax Code Published

tax2The new amendments were published on December 25, 2016. The amendments have been made to several provisions of the Tax Code, including those relating to transfer pricing, tax rulings, obtaining information from financial institutions for the purpose of complying with international obligations, such as those relating to FATCA, tax audits and inspections, withholding taxes and application of VAT on e-commerce transactions. These amendments will enter into force in January 1, 2017. Below we provide more detailed information on these amendments.

The following are some of the most important amendments to the Tax Code:

1.   The Tax Code defines “income” as a gross income (Section 13.2.12).

2.   A payment made by an Azerbaijani resident or Azerbaijani permanent establishment of a non-resident to a person incorporated in a tax preferential jurisdiction is considered an income from an Azerbaijani source (Section 13.2.16.14-1). The list of tax preferential jurisdiction is set by the relevant government authority (the Azerbaijani President). The purpose of this provision is to tax such payments – the Tax Code introduced 10% withholding tax on those payments.

3.   New Sections 13.2.49-1 and 77-1 provide for issue of tax rulings – formal opinion of a tax authority on tax implications of a future transaction. The issue of tax rulings is governed in more detail in new Section 77-1 of the Tax Code.

4.   Section 13 now contains definitions of “production of agricultural products”, “sale of agricultural products”, “whole sale”, “retail”, “electronic audit” and some other definitions. The Section introduced the definition that can be translated into English as “trade margin” – the difference between sale price and “price paid to a supplier” (essentially, purchase price). The trade margin does not take into account a VAT.

5.   New section 13.2.65 defines a “transfer price” as the average price obtained by dividing sum of comparable prices in transactions executed on the same terms by number of such transactions (TP = Sum of Comparable Prices in Similar Transactions / Number of Those Transactions), and the price determined pursuant to Section 14-1. The transfer pricing matters are governed in more detail in Sections 14 and 14-1 of the Tax Code.

6.   The Tax Code defines “tax advantage” and “tax avoidance scheme” (Sections 13.2.69-13.2.70). Tax advantage is avoiding taxes or payment of taxes on time by executing transactions, which do not involve change in underlying economic terms. Underlying economic terms mean volume, price, time period for execution and terms of a taxable transaction (Section 13.2.71). Tax avoidance scheme means a transaction or operation have the purpose of obtaining a tax advantage.

7.   Section 14-1 set out the methods for calculating “transfer prices”. Two of the four methods are calculated using the method for establishing “market price” of a product or service as set forth in Section 14 of the Tax Code. The Tax Code, therefore, makes distinction between “market price” and “transfer price” and as is apparent, the reason for this is that transfer price applies to specific situations as defined in Section 14-1.2. Specifically, the tax authority may take transfer price as a basis for calculating a person’s income and taxes in case of transactions between: (i) a resident and its related non-resident, (ii) non-residents PE in Azerbaijan and itself or the non-resident’s branches, rep offices and other divisions outside Azerbaijan, and (iii) between Azerbaijani residents or non-resident’s PE in Azerbaijan and persons incorporated in a tax preferential jurisdiction.

There are conditions for applying a transfer price. Among those conditions is that a value of a transaction to which a transfer price regulation can be applied must exceed AZN 500,000.

A taxpayer is entitled to produce evidence confirming his estimate of the transfer price.

The Tax Code authorizes the relevant executive authority (the Ministry of Taxes) to set forth the procedure for determining and applying a transfer price.

8.   Under Section 16.1.4 a tax payer must submit to tax authority, among other things, information on transactions to which a transfer price can be applied. The information must be submitted not later than March 31 of the year following the year for which the information must be submitted.

9.   Amendments to Section 16.1.8 have the effect of broadening types of businesses that can accept cash without having to install check machines. Specifically, with few exceptions retail and public service (such as restaurants) must install check machines and issues checks. Other businesses, mostly service businesses, may use other types of checks as evidence accepting cash. The new Law On Non-Cash Transactions has entered into force. The Law also sets out certain requirements with respect to cash transactions and require that certain operations be conducted only through bank transfers.

10.   Some of the amendments to Section 16.1.11, 23, 35 and 36 have the purpose of allowing a tax authority to demand from a financial institution (such as bank, securities trader, depositary) documents and information required under international treaties. These seem to aim to enable tax authority to comply with certain international instruments, such as FATCA related intergovernmental agreements.

11.   Certain amendments have been made to provisions of the Tax Code relating to tax audits, including on-site tax audits. Those amendments, however, are not significant and, in particular, do not provide any additional guarantees for tax payers.

12.   The amendments provide for financial penalties for failure by financial institutions to comply with laws and international agreements. In particular, there is a financial penalty in the amount of 100 AZN for failing to comply with laws or international agreements when opening bank accounts. A financial institution can be subject to the fine in the amount of AZN 1000 for failing to submit electronic reports as provided in Section 16.1.11-4 of the Tax Code. Those are reports relating to compliance issues.

13.   New Section 71-1 provides for electronic invoices. The issue and use of electronic invoices must be determined by the relevant government authority (the Azerbaijani Cabinet of Ministers).

14.   The amendments introduced voluntary disclosure – that is voluntary disclosure of violations of tax laws, which have not been detected during tax audit. In case of such disclosure, a tax payer must pay only accrued interest. Such tax payer is not subject to any penalties or fines (amendments to Section 75).

15.   The amendment to Section 76.1 crystallizes the current practice. Under the current version of the article tax authorities may demand and financial institutions must provide information about accounts of a tax payer, who is being audited by tax authorities. There is no requirement that a tax payer be suspected of breaching any rules.

16.   New Section 76-1 provides that a financial institution must provide to an authority of a foreign country information about financial operations of legal and physical persons of the foreign country through the relevant government agency. The section is similar to the deleted Section 76.2-1.

17.   Section 77-1 governs advance tax rulings in more detail. A tax ruling can be obtained for a particular transaction and the minimum amount of the transaction must be at least AZN 10 million. There is, therefore, a significant threshold for making an application for a tax ruling. An applicant must provide documents regarding the contemplated transaction and its notes on legal consequences of a transaction. If the documents are complete a tax authority must issue its decision within 30 business days.

A tax ruling is effective only with respect to a transaction for which is was issued. Unfortunately, this provision limits the use of a tax ruling as precedents.

A tax authority may refuse a tax ruling under certain circumstances. In particular, if a transaction has the purpose of tax evasion, or a tax authority has issued opinion on the transaction, the transaction has been completed and there is decision of a tax authority or court on the transaction etc, a tax authority can refuse tax ruling.

A tax ruling is valid for 3 year from the date it is issued, unless changes in a legislation affect conclusions in the ruling.

18.   Section 109.8 provides that checks issued via check machines or receipts cannot be considered evidence of an expense. This is rather interesting provision. Apparently, the purpose is to state that only “qaima-faktura” or “electronic qaima-faktura” can be considered prove of an expense.

19.   Under Section 125.1.9 a payment by a non-residents Azerbaijani PE to a person registered in a tax preferential jurisdiction is subject to 10% withholding tax.

20.   Under Section 125.1-1 a transfer of funds to an electronic wallet owned by a foreign person is subject to 10% withholding tax. This tax is withheld by the transferring financial institution.

21.   New Section 130-1 provides that a relevant government authority (the Azerbaijani President) shall set the rules for recording of income and expenses by persons engaged in different sectors. The rules shall be specific to different business sectors. These regulations have not been published yet.

22.   Sections 150.1.12 and 220.12 provide for a withholding tax of 1% for cash withdrawals by legal persons or sole proprietors from bank accounts. This means that any legal person or sole proprietor, who withdraws cash from his account would be paying 1% withholding tax. This tax is withheld by a paying financial institution.

23.   Amendments to Section 153 provide that VAT on the sale of agricultural products is calculated from the trade margin on those products.

24.   Amendments to Sections 168 and 169 require payment of VAT on services and works provided through e-commerce channels. If a non-resident offering the services or works online does not have tax registration in Azerbaijan, the transferring financial institution must accept VAT from a customer and pay to the state budget.

There are other amendments to the Tax Code concerning sale of land, simplified tax and other matters.

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Azerbaijan’s Central Bank approves new rules on transfer of currency

 

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.

 
Photo: lawyerist.com

Texnologiyanın lisenziya əsasında əldə edilməsi

 

Azərbaycan investorları və sahibkarları üçün istehsal bizinesinə başlamağın bir yolu (çox zaman da əsas yolu) xaricdən istehsalın texnologiyasını əldə etməkdir. Misal üçün, Alfa MMC şirkəti avtomobil şüşələri istehsal etmək istəyir. Bunun üçün o gərək texnologiyanı özü yaratsın – yəni bir qrup alimlərə tapşırsın ki, onlar araşdırma aparsınlar (ingiliscə Research and Development, və ya R&D) və avtomobil şüşələrinin istehsalı texnologiyasını yaratsınlar. Digər və daha asan yol isə artıq icad olunmuş texnologiyanı əldə etməkdir. Alfa MMC Niderland şirkəti olan Nidavtoco BV şirkətindən hazır texnologiyanı əldə edir – bu texnologiyadan istifadə edərək Alfa MMC Azərbaycanda zavod tikir və avtomobil şüşələri istehsal edir.

 

Bu əldə etmə prosesinin özü bir neçə addımdan ibarətdir. Birinci addım əlbəttə ki, texnologiya lisenziyası müqaviləsinin bağlanmasıdır. Bu müqaviləyə əsasən Nidavtoco BV onda olan texnologiyanı şüşə istehsalı zavodunun tikintisi üçün Alfa MMC-yə istifadəyə verir. Texnologiya digər formalarda da təqdim edilə bilər. Misal üçün, bir istehsalçı özünə məxsus hər hansı unikal bir avadanlığı satır və bu avadanlıq istehsalın mühüm tərkib hissəsini təşkil edir. Bu zaman mahiyyət etibarı ilə istehsalçı avadanlıqla birlikdə texnologiyasını da əldə edən şəxsə təqdim etmiş olur. 

 

Texnologiyanın lisenziyası haqda müqaviləni nəzərdə keçirərkən o cümlədən aşağıdakı məsələlərə diqqət yetirmək lazımdır:

1. Təqdim edilən hüquqların həcmi. Yəni texnologiya sahibi (misal üçün, Nidavtoco BV) konkret hansı hüquqları təqdim edir. Hüquq yalnız prosesə aiddir, yoxsa istehsal olunan mallara da? Təqdim edilən hüquqlar məhsulun istehsalı üçün kifayə edirmi, yoxsa əlavə texnologiyanın əldə edilməsi də tələb olunur? və sair.

2. Hüquqlara dair zəmanət. Texnologiyanı təqdim edən bəzi zəmanətlər verməlidir. Bunlardan ikisi mühüm əhəmiyyət kəsb edir. Birincisi hüquqlara dair zəmanətdir. Texnologiyanın sahibi zəmanət verir və təsdiq edir ki, onun hüququ vardır ki, texnologiyanı digər şəxslərin istifadəsinə versin. Yəni lisenziya təqdim ediləndən sonra heç bir üçünjcü şəxs lisenziya alana qarşı iddia irəli sürməyəcəkdir. Bir qədər loru dildə desək, texnologiyanı təqdim edən (misal üçün, Nidavtoco BV) təsdiq edir ki, o texnologiyanı oğurlamayıbdır və əldə edən (Alfa MMC) bu texnologiyadan istifadə edərkən digər şəxslərlə mübahisəyə daxil olmayacaqdır.

3. Digər mühüm zəmanət texnologiyanın “istifadəsi” və ya “fəaliyyəti” zəmanətidir (ingiliscə performance guarantee). Texnologiyanı təqdim edən zəmanət verir ki, texnologiyanın istifadəsi nəticəsində lazım olan keyfiyyətdə məhsul istehsal etmək mümkün olacaqdır. Bu zaman “lazım olan keyfiyyət”in konkret meyarlarını müqavilədə (adətən müqavilənin əlavəsində) göstərmək zəruridir. Bu daha çox texniki məsələdir və burada mütəxəssislərin köməyinə ehtiyac vardır. Misal üçün, avtomobil şüşəsinin kimyəvi (konkret kimyəvi maddələr və onların nisbəti) və fiziki (misal üçün, sıxlıq) tərkibi müqavilədə göstərilməlidir.

4. Cərimənin ödənilməsi texnologiya müqavilələrində tənzimlənməli olan mühüm məsələlərdən biridir. Əgər, misal üçün, texnologiyanı təqdim edənin istifadə və ya fəaliyyət zəmanəti pozularsa – yəni nəticədə lazımi keyfiyyətli məhsul istehsal edilməzsə – o zaman texnologiyanı təqdim edən cərimə ödəməlidir. Burada istər cərimənin, istərsə də zərərin ödənilməsi nəzərdə tutula bilər. Ancaq texnologiyanı təqdim edənlər adətən öz məsuliyyətlərini məhdudlaşdırmağa çalışırlar. Ona görə də iri müqavilələrdə tez-tez cərimənin (və ya Anqlo-Sakson hüququnda liquidated damage) ödənilməsi barədə öhdəliyə tez-tez rast gəlinir və bu öhdəliyin də adətən məhdudiyyətləri olur – misal üçün, lisenziya haqqının 30%-i.

5. Lisenziya haqqının ödənilməsi prosedurunu lisenziya əldə edən risklərin idarə edilməsi üçün də istifadə edə bilər. Misal üçün, lisenziya haqqının 3-4 dəfəyə və hər biri 10-12 aylıq fasilə ilə ödənilməsi nəzərdə tutula bilər. Bu müddət ərzində əgər hər hansı hal baş verərsə, misal üçün, texnologiya artıq lazım olmaz, lisenziya əldə edən öz zərərini məhdudlaşdıra bilər.

 

Texnologiyaların lisenziyası haqqında müqavilələr geniş yayılmışdır və muxtəlif formalarda olur. Geniş yayılmış praktika belədir ki, texnologiyanı təqdim edənlər üzərilərinə çox məsuliyyət götürmək istəmirlər, çünki prosesdə bir çox problemlər ortaya çıxa bilər. Ona görə də texnologiyanı əldə edənlər (misal üçün, yerli sahibkarlar) müqaviləni bağlayarkən diqqətli olmalı və öz risklərini anlamalıdırlar.

 
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Siz “ağ mühasibatlıqla” işləməyə çalışırsınız? Artıq zamanı gəlir

 

in Azerbaijani

Azərbaycanda bu ilin 1-ci kvartalında cəmi 34 vergi yoxlaması keçirilmişdir. Bunu Azərbaycan Prezidenti Nazirlər Kabinetinin 9 aprel 2016-cı ildə keçirilən iclasında bəyan etmişdir. Bu rəqəm çox şeyi deyir. Ən əsası isə belə görünür, vergi yoxlamaları ölkə Prezidentinin birbaşa nəzarətindədir. 

Son vaxtlar dövlət orqanları üzərində nəzarətin güclənməsi Azərbaycanda biznes mühitinin daha da yaxşılaşmasına gətirib çıxarmışdır. Bizim müşahidələrimiz bunu tam təsdiq edir. Biz bunları demək olar ki, gündəlik praktikadan keçiririk.

Təəssüf ki, ötən illərdə mövcud olan şərait Azərbaycan şirkətləri arasında “qara mühasibatlığın” yaranmasına səbəb olmuşdur. Bunun üçün biznesləri qınamaq düzgün olmazdı, çünki onlar sadəcə mövcud şəraitdə fəaliyyət göstərməli olurlar. Ancaq son zamanlar cənab Prezidentin səyləri ilə görülən tədbirlər getdikcə yerli şikətlərə “ağ mühasibatlıq”la işləməyə şərait yaradır. Düzdür, bu məsələ hələ də tam olaraq öz həllini tapmamışdır, biznes ictimaiyyəti bir sıra qurumlardan daha əməli tədbirlər gözləyir. Ancaq müasir tendensiyanı nəzərə alaraq hesab edirik ki, bizneslər tərəfindən “ağlaşdırma” istiqamətində səmərəli tədbirlərin görülməsinin vaxtı gəlib çatıbdır.

Korporativ Strukturlaşdırma

Bizim hüquq şirkəti bu məsələ barədə uzun müddətdir ki, araşdırma aparır və iş adamları ilə müzakirə edir. Hüquqşünas olaraq bizim bizneslərə gətirə biləcəyimiz dəyər, bir sıra məsələlərlə yanaşı, korrporativ strukturlaşdırma ilə bağlıdır. Bu struktur elə qurulmalıdır ki, maliyyə nöqteyi- nəzərdən səmərəli olsun. Mümkün qədər çalışmaq lazımdır ki, əlavə vergi yükünün yaranmasına və ya vergi optimallaşdırmasına nail olunsun. Həmçinin strukturlaşdırma zamanı əlavə xərcləri aradan qaldırmaq və sinerjiyə nail olmaq mümkündür (konkret haldan asılı olaraq).

Digər mühüm məsələlərdən biri idarəçiliyin daha səmərəli olmasının təmin edilməsidir. Bu zaman hansı vəzifənin kim tərəfindən yerinə yetirilməsi, holdinqə daxil olan şirkətlər arasında istər maliyyə, istərsə də hüquqi əlaqənin qurulması, subordinasiya və sair kimi məsələlər meydana çıxır.

Gömrük

Gömrük orqanlarında bir çox məsələlər öz həllini tapmaqdadır. Bununla belə bir mühüm məsələni nəzərə almaq zəruridir. Əvvəla, bizim müşahidələrimiz göstərir ki, ötən illərdən fərqli olaraq hazırda yaranan problemlərin əksəriyyəti (hamısı deyil) “pərakəndə” xarakter daşıyır (sistemli deyildir). Əgər əvvəllər gömrük orqanı qeyri-rəsmiliyi sistemli olaraq tətbiq edirdisə, hazırda onun bəzi qurumları konkret şəraitdən istifadə etməyə çalışırlar. Xalq dili ilə desək “kimi xamlaya bildi, xamladı”.

Digər bir məsələ idxal zamanı gömrük rüsumları ilə bağlıdır. Nədənsə demək olar bütün növ mal və məhsullar idxal edənlər elə düşünürlər ki, onlar 36% idaxal ödənişləri etməlidirlər. Bu maksimum məbləğdir, və idxal rüsumu bundan az da ola bilər. Bu idaxal edilən konkret mal və ya məhsuldan asılıdır.

Ümumi desək, aksiz mallarını nəzərə almadan, idxal ödənişlərinə 3 cür ödəniş daxildir: (i) əlavə dəyər vergisi (ƏDV), (ii) gömrük idxal rüsumu və (iii) rəsmiləşdirmə haqqı. ƏDV-nin dərəcəsi 18%-dir. Bəzi mallar ƏDV-dən azaddırlar. Rəsmiləşdirmə haqqı idxal edilən malların həcmindən asılı olaraq dəyişir, ancaq maksimal həddi təqribən 275 manatdır.

Əsas problem gömrük idxal rüsumu ilə bağlıdır. Gömrük idxal rüsumunun dərəcəsi konkret mal və ya məhsuldan asılı olaraq 0%, 5%, 10% və 15% ola bilər. Həmin geniş yayılan 36% ödəniş onu ehtimal edir ki, idxal olunan mala 15% gömrük idxal rüsumu tətbiq edilir.

Konkret malı və ya məhsulu idxal edərkən ona tətbiq edilən rüsum dərəcəsini onlayn yoxlamağınızı məsləhət görərdik. Bu linkə http://c2b.customs.gov.az/tnved_public.aspx daxil olun. Malın Ümumdünya Gömrük Təşkilatının Harmonizə Sisteminə uyğun olan malın nömrəsini daxil edin. Konkret məhsulun növünü seçkdikdən sonra həmin səhifədə “Gömrük ödənişləri” qrafasının üzərindən tıklayın. Bu sizə gömrük rüsumunun dərəcəsini göstərəcəkdir.

Bu rüsumlar Azərbaycan Respublikasının Nazirlər Kabineti tərəfindən təsdiq olunmuşdur. Hər hansı sual və ya problem yarandığı halda həmin Nazirlər Kabinetinin müvafiq qərarlarına müraciət etmək olar.

Vergi

Bir çox vergi məsələləri hələ də öz həllini gözləyir, ancaq hələlik optimistik baxmaq olar. ƏDV-nin geniş biznes ictimaiyyəti tərəfindən ödənilməsi məsələsi hələ də gündəmdədir. Burada əlbəttə ki, vergi orqanları tərəfindən bu sahədə qanunvericiliyin bərabərlik prinsipinə uyğun olaraq tətbiqi önəmli məsələdir. İstənilən şəraitdə, sahibkarlar tərəfindən bu işlərin səhmana salınması mühüm əhəmiyyət kəsb edir. Bəzi hallarda, misal üçün, holdinqə daxil olan şirkətlərin sadələşdirilmiş əsaslarla işləməsi daha sərfəli ola bilərsə də, ancaq tez-tez unudulan məqam odur ki, ƏDV-nin ödənilməsi bəzi hallarda daha sərfəli ola bilər.

Əgər sahibkar onsuz da idxal zamanı 18% vergi ödəyirsə, bu məbləğ ya əvəzləşdirilməli (qeyri-sadələşdirilmiş vergi ödəyəcisi), yaxud sahibkarın xərcinə daxil olmalıdır (sadələşdirilmiş olan zaman). Aşağıdakı bu maraqlı misala nəzər yetirin:

 
 

Sadələşdirilmiş vergi olan hallarda: 

Siz mal idxal edirsiniz, onun dəyəri 800 manatdır. Siz həmişə həmin malı 1100 manata satmısınız, yəni marja 300 manat olubdur. İdxal edən zaman 18% ƏDV ödəyirsiniz – 800 x 0.18 = 144. Siz bu məbləği hər bir halda ödəmiş olursunuz.

Sizin ümumi xərcləriniz olur 800 + 144 = 944. Nəticədə sizin vergidən əvvəl qazancınız 1100 – 944 = 156 manat. Fərz edək ki, 156 manat marja sizə yenə də xeyir gətirir. Siz sadələşdirilmiş vergi ödəyicisi olduğunuz halda, siz 6% vergi ödəyirsiniz. Nəticədə siz 90 manat qazanmış oldunuz – yəni, 1100 – 800 – 144 – (1100 x 0.6) = 90.

 

Adi (sadələşdirilmiş olmayan) vergi olan hallarda:

Ancaq siz sadələşdirilmiş vergi ödəyicisi olmasanız və fərz edək ki, bu malı siz 1100 manata satmaq əvəzinə onu 932.20 manata satırsınız. Bu zaman alan şəxs sizə 932 + (932 x 0.18) ödəyir, əlavə olaraq 167.8 manat ƏDV ödəyir. Alan şəxs isə əvvəl sadələşdirilmiş vergi halında olduğu kimi malı 1100 manata almış olur.

Bu zaman sizin vergidən əvvəl gəliriniz 932 – 800 = 132 manat olur.

Xalis gəlirdən 20% vergi tutlduqdan sonra sizin xalis gəliriniz 132 – (132 x 0.2) = 107.4 manat olur.

Nəticədə siz həm ƏDV ödəmiş olur, həm də daha çox gəlir əldə etmiş olursunuz.

Bu misalda göstərilən rəqəmlər sadəcə nümunə məqsədi daşıyır. Əgər onlar sizə az gəlirsə, hər bir rəqəmin arxasına, misal üçün, 3 “0” (yəni ...000) əlavə edin.

 
 

Digər tez-tez problemli kimi görünən məsələ əmək müqavilələrindən irəli gələn vergilərin ödənilməsidir. Çoxları razılaşar ki, Azərbaycanda bir işçi üçün ödənilən məcburi ödənişləri – yəni vergilər və sosial ödənişlər – bazar şəraitinə uyğun deyil və həddən artıq çoxdur. Bu məsələnin asan həlli olmasa da, yenə də bir sıra faktorları nəzərə almaq olar. Misal üçün, elə işçilər ola bilər ki, onların işi daimi xarakter daşımaya bilər. Üstəlik belə işçilərə ödənilən məbləğlər onları fəaliyyətinin nəticəsində asılı ola bilər. Misal üçün, satış və marketinqlə məşğul olan işçilərin həm iş saatları, həm də onlara ödənişlər dəyişkən ola bilər. Bu cür işçiləri xidmət müqaviləsi əsasında işə cəlb etmək olar. Əlbəttə bu cür müqavilələrin qanuni olması üçün müvafiq iqtisadi əsas (və ya, İngilis dilindən tərcümə etsək “iqtisadi tərkib” – economic substance) olmalıdır, əks halda onlar sadəcə vergidən yayınmaq cəhdi olar. Vergi məsələlərində, əlbəttə ki, əsası qeyri-rəsmi vergi inzibatçılığının aradan qaldırılmasıdır. Xüsusən, vergi ödəyiciləri tərəfindən xərclərin lazımi qaydada rəsmiləşdirilməsi məsələsi durur. Bu da sırf vergi orqanlarından asılı olan məsələdir, çünki burada problem sistematik xarakter daşıyır. Biz bu məsələnin tezliklə həll olunacağına ümid edirik. Həll olunduğu təqdirdə, yəgin biz Vergilər Nazirliyinin rəhbərliyinə dərin minnətdarlığımızı bildirən və onları tərifləyən birinci insanlar olacağıq.

Yekun

Bir sıra çətinliklərə baxmayaraq biz xüsusən yerli biznesləri “ağ” işləməyə həvəsləndirmək istərdik. Orta və uzun müddətli perspektivdə, bunun çox müsbət nəticələrinin meydana çıxacağına əminik.

 
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I will “sue” you in arbitration court…

 

In this short note we address some of the issues a party to cross-border agreement might consider when drafting a dispute resolution clause.


Arbitration is not a court

International arbitration has been around for quite some time, but at times it strikes us odd how business people and even lawyers misunderstand some of arbitration’s basic concepts.

It goes without saying, arbitration is not a “court” and it does not have a permanent location, unless parties choose one or it is set by default under certain rules.  We say this because in agreements we see reference to “arbitration court”.  If we can understand that arbitration is not a “court” (at least in the sense we have all used to it), that would certainly open a way for us to understand the flexible and contract nature of this dispute resolution mechanism.

In our practice the confusion between arbitration and court have led to negative consequences (“negative” depends on a party’s position).  One is being uncertain whether you want your dispute being handled via arbitration or in court.  The 1958 New York Arbitration Convention says that a court, when looking at a claim, must refer the dispute to arbitration, if the parties have agreed on arbitration, provided, among other things, the agreement is not “inoperative or incapable of being performed”.  A lot depends on local laws and court practices, but if a party confuses the court as to the exact choice of dispute resolution mechanism (arbitration vs court), the court might as well just consider arbitration agreement useless.

Location of Dispute Resolution

Obviously, parties can agree on the place of arbitration – that is the physical location where hearings would take place, or jurisdiction of foreign court.  To be sure, many jurisdictions allow parties to agree on jurisdiction of foreign courts in cross-border transactions.  For instance, in a contract between a party from Azerbaijan and UK, parties may agree to submit their disputes to jurisdiction of Azerbaijani courts.

Often the issue comes up as to where dispute resolution would take place.  There are number of factors (and not just one) parties must consider before they choose the dispute resolution venue.  A UK company might think English courts are more effective, and therefore, they better choose English courts.  Alternatively, arbitration is better than courts in Azerbaijan, so better choose arbitration in London.  But these are not always effective for a company.

We believe, at least in the context of Azerbaijan, in cases where the amount of dispute is less likely be significant, it is better to choose jurisdiction of courts where would-be defendant’s (respondent’s) assets are.  It is usually much cheaper and more effective to enforce court decision against the defendant’s assets.   This is partly because after a plaintiff obtains a court decision (or decision of a foreign arbiter), that decision must be enforced.  In some countries enforcement of foreign court judgments or even arbitral awards could be a complicated and expensive process.

Arbitration is usually not cheap, so you want to go for arbitration in cases where amount of claim is likely be significant.

 
Foto: Abbas Atilay

Azerbaijan’s Regulations on Agriculture: What Foreign Companies Need to Know

A summary of Azerbaijan's laws and regulations on agriculture. Useful to those foreign companies interested in investing in agriculture-related business in Azerbaijan.

 

Over the years, the government of Azerbaijan has been keeping special attention on agriculture. In particular, most small government loans, which are issued through National Fund for Support of Entrepreneurship, have been issued to agro businesses. The government owned “Agrolizinq” OJSC leases agriculture related equipment to agro businesses on preferential terms. Further, the President of Azerbaijan declared the year of 2015 the Year of Agriculture.

The Ministry of Agriculture of Azerbaijan is the main regulatory body. It forms and implements the state policy in agriculture. It includes national and regional programs, social sectors, rural infrastructure, land reclamation, water economy, irrigation, research programs in plant growing and cattle-implementation, veterinary services, product processing, sustainability in biological diversity, realization of unified scientific policy in agriculture etc. The Ministry registers of veterinary drugs and other medications.

The primary crops produced in Azerbaijan are grapes, cotton, tobacco, citrus fruits and vegetables. Livestock, wheat, rice, dairy products, wine and alcohol also make up a considerable part of farm products.

Land Regulations

In Azerbaijan land had been privatized in 1996 with the adoption of the Law On Land Reforms, dated July 16, 1996. The Parliament adopted new Land Code in 1999. Following are some of the key principles of land ownership and use in Azerbaijan:

- In terms of ownership land can be government owned, municipality owned or privately owned. Most agricultural land either municipality owned or privately owned. From time to time municipalities auction sale or leasing of agricultural land through organized auctions.

- Foreign persons (individuals or legal entities) may not own land in Azerbaijan. They may either lease land or own it indirectly through a local legal person – i.e., they can be a shareholder in a local legal person, which owns the land.

- Land are categorized based on their designation of use. There are, for instance, land for industrial use and residential use. There are also land for agriculture use. Only the Cabinet of Ministers of Azerbaijan may change the land designation. Generally, changing designation of a land is a long and cumbersome process, unless the project has the government backing.
Tax benefits

Natural persons’ income derived directly from production of agricultural products is free from income tax (Section 102.1.11 of the Tax Code). Starting from January 1, 2014 and for the period of 5 years from then profit of companies from activities in agricultural production is exempt from profit tax (Section 106.1.14 of the Tax Code).

Legal and physical persons, who are eligible for simplified tax are exempt from tax – i.e., they are except from simplified tax (Section 219.1.7 of the Tax Code). These taxpayers are also exempt from VAT from trading in agricultural products, and the property tax from property that they use for agricultural production (Sections 164.1.18 and 199.9 of the Tax Code). This exception is effective for five years starting from January 2014.

The land tax for agricultural land is calculated as 0.06 AZN for 1 conditional point. Conditional points are determined by the Ministry of Agriculture by administrative regions taking into account the allocation, geographical location and quality of agricultural lands (Section 206 of the Tax Code)

Insurance

In 2002 the government adopted the Law On Incentivizing Insurance in Agriculture to boost development of insurance in agriculture sector. The Law aims to cover (i) agricultural plant products that are not genetically modified, (ii) agricultural livestock, domestic birds, wild animals with fur, bee families, (iii) buildings, equipment, devices, vehicles for use in agriculture etc. These are to be insured from natural catastrophes, such as fire, hail, flood, storm, frost, thunderstorm, earthquake, landslide, drought in arid lands. Non-genetically modified agricultural products, agricultural livestock, domestic birds, rabbits, wild animals with fur, bee families are to be insured from expansion or attack of harmful pests, epidemics. Buildings equipment, devices, vehicles of agricultural allocation are to be insured from accidents.

If the insured procures insurance for the property but does not use the insurance amount during three consecutive years, the insured is entitled to discount of 10% for the fourth year, 20% for the fifth year, and 30 % for each subsequent years after that.

The insurance amount is 70% of the product value of (i) group, 80% of the product value of (ii) group, and full value of property of (iii) group.

 
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Setting Up Joint Ventures in Azerbaijan

 

Azerbaijani market is generally open for foreign businesses[1].  A foreign company wanting to enter the Azerbaijani market does not have to partner with a local person.  If for business reasons the company does not need to establish a joint venture, there are couple of options.  We assume that all or substantial of the business activity is carried out in the territory of Azerbaijan.

Registered (Equity) JV

Perhaps most popular and widely used, especially outside the oil and gas industry, form of a registered joint venture (JV) is a limited liability company (LLC).  Most privately held companies in Azerbaijan are established in the form of an LLC[2].   The partners join to set up an LLC in which each holds a certain shares.  LLCs must be registered with the Azerbaijani Ministry of Taxes.

When setting up a joint venture the parties need to carefully consider the terms of LLC’s charter.  Charter of an LLC is the LLC’s constitutional document, which regulates, among other things, governance in the LLC.  The charter must be registered with the Ministry of Taxes.  In addition to the charter, we typically recommend that partners enter into shareholders or similar agreements.  These agreements should govern the matters, which for either practical or regulatory reasons, cannot be included in the LLC’s charter.

An LLC typically has 3 governing bodies: general meeting, supervisory council (or similar supervising authority) and executive body.  Having a supervisory council is not necessary – it is optional.  Under Azerbaijani law certain matters, e.g., liquidation or reorganization, distribution of dividends, approval of annual balance etc., fall within the exclusive authority of the general meeting.  Only the general meeting is authorized to decide these matters.  Outside this “exclusive authority” and few other requirements, there are no limitations on allocation of authorities among the LLC’s corporate bodies.  Partners in JV typically want to establish control mechanism to oversee the executive body of the JV.  For instance, requiring that a transaction above certain value be approved by the general meeting or supervisory council.  These mechanisms can be included in the LLC’s charter.

In terms of allocation of cash flow rights, dividends must be distributed in proportion to share percentage in the LLC’s capital.  If, for instance, partner A has 30% and partner B has 70% in the capital of the LLC, dividends must be distributed in that proportion – i.e., 30/70%.  While most of the time JV partners are happy with this kind of arrangement, some, however, may want more flexibility in allocation of cash flow rights.  Shareholders or similar agreements may be helpful, however, additional tax obligations may arise from allocation of dividends not in proportion to shareholdings.

Exiting the JV is not particularly difficult.  A partner may either sell its shares in the JV or withdraw by demanding from the LLC value of its share.  While selling a share provides easier exit route, Azerbaijani law does not govern withdrawal in detail.

Contractual JV

JV partners may set up a contractual joint venture – they do not register a joint company, but instead sign agreement on joint operations.  The agreement must be detailed to govern, among other things, decision making, distribution of profits, allocation of costs and withdrawal.  Contractual joint ventures are widely used among companies engaged in oil and gas industries.

For practical reasons, even if the partners do not form a joint company, if they are engaged in day-to-day operations in Azerbaijan, they have to have some form of legal presence in Azerbaijan.  For instance, either one or both parties may register a branch office in Azerbaijan.

Azerbaijani law does not specifically provide for or govern contractual joint venture agreements.  Instead, these agreements would be governed by general contractual provisions of relevant laws, most importantly the Civil Code of Azerbaijan.  A local lawyer’s assistance is necessary in case of contractual joint ventures, as these agreements must not contradict mandatory requirements of Azerbaijani law.

One of the key issues in contractual JVs is the use of bank accounts.  It is important that parties decide how they would use bank accounts that would be used for receiving payments in connection with the joint business.  In Azerbaijan only the entities with registered legal presence may open bank accounts.  In other words, if a foreign company has not registered any office in Azerbaijan, it will not be able to open a bank account with any local bank.  In case of contractual joint venture parties may open a joint bank account.  Disposal of funds from such account can be done with consent of the JV partners.

Tax Matters

Generally income from business activities in Azerbaijan is subject to 20% of profit tax.  This tax is calculated from the net profit, which is the difference between income and deductible expenses and exclusions.  There is also value added tax at the rate of 18%.  VAT is born by the end-user of the product or service.  Dividend distributions are subject to 10% of dividend withholding tax.

In case of registered JV (as discussed above) in addition to 20% of profit tax, there will also be 10% of tax on dividends, which the JV decides to distribute to its shareholders.  As a result, there is double taxation of income, which is finally distributed to the JV partner. The Azerbaijani Tax Code provides that (i) further distribution of dividends is not subject to dividend tax, and (ii) in case the receiver of dividends is the “factual owner” (essentially, beneficial owner), the dividends are not subject to any other tax – i.e., they are subject to profit tax in the hands of the person, who receives dividends.  It is not clear who is considered “beneficial owner” for the purposes of the second type of exemption.  This matter can be subject to dispute.

In case of contractual JV, the contractual JV fulfills its VAT payment obligations and partners pay taxes on the profit, which they receive from their joint business.  Therefore, there can be tax benefit in contractual JV depending on the circumstances.

Given Azerbaijani tax regulations are generally not clear on some of the key issues concerning JVs, it is always best to ask advice from the professional before making any final arrangements.

This material is not and is not meant to constitute a legal advice.  Each case is different.  You must seek professional advice on your particular case.      

[1] Some limitations maybe in regulated industries, such as banking and insurance

[2] For more information on forms of legal entities in Azerbaijan please see the material in the following link: http://remells.com/files/Investing_and_Business_In_Azerbaijan_2014.pdf

 

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.