Newsletter - December 2019

24 January 2020

Legal Act: Order on the implementation of renewable energy pilot projects

Authority: President of the Republic of Azerbaijan

Enactment Date: 05 December 2019

Effective date: 05 December 2019

  • For the implementation of pilot projects related to the construction of renewable energy sources (wind and solar power plants), relevant Commission is created and the Minister of Energy of the Republic of Azerbaijan is appointed chairman of the commission.
  • The Commission is responsible for:
  • Preparation of proposals on allocation of land for implementation of projects;
  • Preparation of proposals regarding state guarantees provided to investors;
  • Ensuring the preparation of a contracts for the purchase of electricity and connection of power plants to the power grid, as well as a state guarantee contract for the implementation of projects and other necessary contracts with the assistance of an international consulting company.

Legal Act: Law on the procedure for using the right of legislative initiative by citizens of the Azerbaijan Republic.

Authoriy: Milli Majlis

Encatment date: 04 December 2019

Effective date: 05 December 2019

The following issues are regulated by this Law:

  • Right of citizens of the Republic of Azerbaijan to legislative initiative;
  • Requirements for a bill (decision) submitted by citizens on a legislative initiative;
  • Creation and registration of an initiative group on the use of initiative rights;
  • Procedures for collecting signatures of citizens to support the project, verification and confirmation of these signatures;
  • Presentation and discussion of the project in Parliament;
  • The procedure for the project recall.

Legal Act: Law on n minimum living wage in the Republic of Azerbaijan for 2020

Authority: Milli Majlis

Enactment date: 16 December 2019

Effective date: 01 January 2020

According to the law, by 2020 the minimum living cost will be AZN 190 within the country, AZN 201 for employment capable population, AZN 157 for retired persons and AZN 170 for children.

Legal Act: Law on the limit of the demand criteria in the Republic of Azerbaijan for 2020

Authority: Milli Majlis

Enactment date: 16 December 2019

Effective date: 01 January 2020

According to the Law,  the limit of the demand criteria has been approved in the amount of AZN 160 in order to assign targeted state social assistance for 2020.

Legal Act: Decree on amendments to the Decree of the President of the Republic of Azerbaijan On ensuring the activities of the Agency for the development of small and medium-sized businesses of the Republic of Azerbaijan

Authority: President of the Republic of Azerbaijan

Enactment date: 16 December 2019

Effective date: 17 December 2020

According to the amendments, the authorized capital of the Agency for the Development of Small and Medium Businesses of the Republic of Azerbaijan (Agency) has been determined in the amount of AZN 10,126,118.

In addition, Article 5.2, which determines the composition of the Agency’s Supervisory Board, has been removed.

Legal Act: Law on amendments to the Law on Courts and Judges

Authority: Milli Majlis

Enactment date: 18 December 2019

Effective date: 01 March 2020

According to the amendments, the Article 79-1 shall be added to the Law.

This article is aimed at creating an unified judicial practice by the Supreme Court and provides for the following:

  • The purpose of establishment of the unified judicial practice is to ensure a uniform application by courts of substantive and procedural law in the administration of justice;
  • In case of identification of systemic violations in the application of the norms of law, the Plenum of the Supreme Court considers the issue and takes appropriate decisions so that such violations are not committed;
  • The Supreme Court will organize and conduct monitoring for at least 1 year in order to eliminate identified shortcomings in the activities of the courts;
  • Monitoring results will be taken into account when evaluating the activities of judges by the Judicial Legal Council;
  • The Supreme Court shall formulate the unified judicial practice on the application of law through decisions of the judicial collegiums and the Plenum of the Supreme Court on individual cases under consideration, as well as explanations of the Plenum of the Supreme Court on judicial practice.

Legal Act: Law on amendments to the Code of Administrative Offenses

Authority: Milli Majlis

Enactment date: 18 December 2019

Effective date: 01 March 2020

According to the amendments, the dissemination of information without a corresponding mark on the age limit, as well as the involvement of children in the production of harmful information products for them through infromation intended for children,

-      entails imposition on individuals of penalty in amount of  AZN 500-1000, official persons in amount of AZN 1500-2500, legal persons in amount of AZN 3000 – 4000.

Legal Act: Law on amendments to the Tax Code

Authority: Milli Majlis

Enactment date: 28 December 2019

Effective date: 01 January 2020

The law amends seventy-five (75) articles of the Tax Code of the Republic of Azerbaijan.

Significant amendments to the Tax Code are outlined below:

1.    The accrual method will no longer be applied for defining date of VATable transactions, but rather cash method will be used. From the new year for VAT purposes, the time of VATable transactions will be considered the date of appropriate payment (for cash transactions) and date of actual transactions for non-cash transactions (such as barter, in-kind payments, etc.);

2.    The date of a taxable transaction for non-residents VAT will be considered the date of actual payment to such non-resident.

3.    Electronic VAT invoices will be cancelled and electronic delivery notes will be applied depending on the type of transaction;

4.    A number of new definitions, such as, “fictitious (non-substantiated) transaction”, “fictitious (non-substantiated) transaction beneficiary”, “venturous taxpayer”, “transnational corporation group” were included into the Tax Code.

5.    Taxpayers meeting the following criteria will be registered in a centralised manner:

•     Natural monopolies;

•     Enterprises with special tax treatment;

•     Taxpayers with average employees of 251 and above;

•     Taxpayers with an average annual residual value of fixed assets of more than AZN 5 mln.

6.    It will be required to seperately maintain tax accounting of income and expenses for tax exempt transactions (along with taxable transactions);

7.    Duration of exemptions/benefits for entities receiving income from industrial and technological parks have been increased. As such, the exemptions from income tax, land and property taxes for residents of these parks are extended for additional 3 years and become 10 years in total;

8.    The deadlines are also set for submitting an electronic delivery note by a tax agent:

•     Delivery of goods - date of delivery of goods;

•     Provision of goods without prepayment - within 5 days from the date of issuance of the supporting document on the delivery of the goods;

•     Performance of work and provision of services - within 5 days from the date of performance of work and provision of services.

9.    The tax authorities of the Republic of Azerbaijan and other tax authorities have the right to conduct joint tax audits with a taxpayer operating in Azerbaijan or another state, in cases as stipulated in the interstate and intergovernmental agreements of the Republic of Azerbaijan concluded with foreign states and international organizations.

10. When purchasing goods from individuals who are not registered with the tax authority, an electronic delivery note must be drawn up in the form established by the Ministry of Economy of the Republic of Azerbaijan, no later than 5 days from the date of purchase of these goods. An electronic purchase act will be considered a document confirming the purchase of goods, if printed and signed by a natural person who is not registered with the tax authority. Electronic purchase act will be a document proving/confirming receipt of goods.

11. Persons involved in the construction of buildings will no longer be considered as simplified tax payers. They will be payers of income and value added taxes; 

12. The followings shall be exempted from simplified tax:

  • Dividends paid to persons accounting for income and expenses, not registered for VAT and having founders or shareholders of a resident enterprise with a transaction volume of up to AZN 200,000 in any month (months) for 12 consecutive months;
  • Income of individual from sale of residences (dwelling) who is registered at the place of residence for at least 3 calendar years;
  • Income received from write-off of tax debts to the State Budget;
  • Export promotions paid in the prescribed manner at the expense of the State Budget;
  • Compensation paid to individuals and legal entities in accordance with the law of the Republic of Azerbaijan on “Land acquisition for state needs";
  • Individuals alienating privately owned living space more than 30 square meters;
  • The full value of the gift, material assistance and inheritance received by a taxpayer from family members;
  • Assets issued during a divorce between a husband and wife or between a former husband and wife;
  • Income from the sale of agricultural products for a period of 10 years from January 1, 2014;

13. Sale of animal and poultry meat (with the exception of processed meat), fodder and feed additives used in livestock and poultry farms, will be exempt from VAT for a period of 4 years effective from January 1, 2020;

14. Excise taxes on all alcoholic beverages, tobacco products and energy drinks, except for cognac and cognac materials, have been increased.

Legal Act: Law on amendments to the Law on State Forensic Examination Activities

Authority: Milli Majlis

Enactment date: 18 December 2019

Effective date: 01 March 2020

In accordance with the amendments, a new legal institution has been created - a private forensic examination, and corresponding requirements has been established for those who wish to act as a forensic expert.

Thus, persons wishing to act as a forensic expert must obtain a forensic expert certificate issued by the relevant executive authority. This certificate may be revoked by the authority in cases provided by law. Data about the persons who received the certificate is immediately recorded in the Forensic Experts Registry. Persons not included in the Register are prohibited from engaging in forensic examination activities. Forensic experts are subject to certification no more than once every five years.

Legal Act: Law on amendments to the Law on Health Insurance

Authority: Milli Majlis

Enactment date: 03 December 2019

Effective date: 26 December 2019

The amendments were made to the Law on Health Insurance related to the Mandatory Health Insurance will come into force as of January 1, 2020. Basic information about the various categories of insured persons and the amount of insurance premiums determined by law are shown in the table below.

Insured Person

Paid by / from

Insurance Premium

  • Сitizens of the Republic of Azerbajian;
  • Citizens of the Republic of Azerbaijan receiving refugee status;
  • Foreigners and stateless persons under the auspices of the Office of the UN high Commissioner for refugees in the Republic of Azerbaijan.

State Budget

AZN 90 per person for one calendar year

Employed population

Employee

Employer

2% +

0.5% of the

amount over

AZN 8,000 -   by the employee

2% +

0.5% of the

amount over

AZN 8,000 by the employer

Individuals performing on the basis of civil contracts
Insured person’s income

2% + 1% of the income amount over AZN 8,000

Individual entrepreneurs
Insured person’s minimum monthly wage

4% 






According to the amendments, mandatory insurance premiums are also determined with the following amounts and rates:

  • motor petrol, diesel fuel and liquid gas – AZN 0,02 per litre;
  • vodka, strong drinks and strong beverage materials – AZN 0,2 of excise rate imposed by the tax payers per litre;
  • alcoholic beer and other beverages containing beer – AZN 0,2 of excise rate imposed per litre;
  • tobacco products – AZN 1,5 of the excise rate imposed per 1000 pieces;
  • energy drinks – AZN 0,1 of the excise rate imposed per litre;