Legislative alert: Legal updates

Transcription

1 19 November 2015 An up-to-the-minute guide to developments in the legislation of the Republic of Azerbaijan Legislative alert: Legal updates In this issue we would like to bring to your attention a brief overview of the latest amendments to the legislation concerning the following: Suspension of Inspections related to entrepreneurial activities; Changes to special permit (license) obtaining procedures; Enactment of Intergovernmental Agreement on FATCA between Azerbaijan and the USA; Amendments to the exemptions from customs payments for the non-entrepreneurial goods imported by individuals; Amendments to the Code on Administrative Offences of the Republic of Azerbaijan; New law regulating citizens appeals; Suspension of tax inspections in respect of certain category of the taxpayers. Suspension of inspections related to entrepreneurial activities The Law on Suspension of inspections related to entrepreneurial activity (the Law ) became effective. Pursuant to the Law all inspections related to entrepreneurial activity, subject to certain exceptions, are suspended for the period of 2 years starting from 1 November The Law envisages that suspension is not applicable with respect to the tax audits, as well as inspections carried out by the Prosecutor General s Office in connection with investigation of corruptionrelated crimes. Furthermore, the Law stipulates that inspections related to the cases posing significant threat to the life and health of population, state security and economic interests (the Permitted Inspections ) are also allowed to be conducted within this period provided that they are included in the list determined by the respective executive body. In this regard, the President of the Republic of Azerbaijan adopted the Decree defining the list of the Permitted Inspections in respect of private companies and individual entrepreneurs. Please find below the list of such Permitted Inspections: a) Inspections held by the Ministry of Health to audit the compliance of medicines with quality, safety and sanitaryhygienic rules; b) Inspections held by the Ministry of Agriculture to check compliance with phytosanitary and veterinary requirements and rules; c) Inspections held to determine cases of illegal incut to natural gas, water supply, electricity or heating networks; d) Inspections held by the Ministry of Finance to check the activity of insurers, re-insurers or insurance intermediaries; e) Inspections held by the Central Bank of Azerbaijan with respect to credit organizations, as well as their subsidiaries; and

2 f) Inspections held by the Ministry of Emergency Situations to check compliance with: - technical safety rules during storage and circulation of radioactive, explosive and other dangerous substances or equipment, mining works, waterworks, works on oil and gas industrial facilities and other specifically dangerous areas; and, - construction, technical and fire safety of works being carried out and objects being exploited. Based on the aforementioned Decree, inspections not falling under the list reflected above may be held only in emergency cases posing significant threat to the life and health of population, state security and economic interests in accordance with the special procedure upon consent of the Ministry of Economy and Industry. Suspension of production or sale of goods, as well as other restrictive measures with respect to entrepreneurial activities may be carried out only upon approval of the Ministry of Economy and Industry (regardless of whether it is a Permitted Inspection outlined under items a - f above or an exceptional emergency case inspection). Changes to special permit (license) obtaining procedures The President of the Republic of Azerbaijan adopted the Decree changing special permit (license) obtaining procedures. Pursuant to the Decree the Ministry of Economy and Industry is responsible to issue special permits (licenses) for all types of entrepreneurial activities the special permit (license) is required for. Under the Decree the Ministry of Economy and Industry should perform respective duties on granting of such licenses via ASAN Service centers. Previously, a person had to apply to a particular state authority depending on the type of entrepreneurial activity the special permit (license) is obtained for. However, the aforementioned procedures are not applicable to the state security related licenses. It is worth mentioning that the Decree entered into force on 20 October 2015 and the first licenses under the new procedures have already been issued. Furthermore, the President ordered to the Ministry of Economy and Industry to prepare proposals on reducing the number of types of entrepreneurial activities requiring obtaining of the special permit (license) and defining the list of the licenses related to the state security.

3 Enactment of the IGA on FATCA between Azerbaijan and the USA The Intergovernmental Agreement (the IGA ) on FATCA between Azerbaijan and the USA, signed in Baku on 9 September 2015 entered into force. The IGA covers key points of the domestic reporting and reciprocal automatic information exchange issues. The IGA also envisages due diligence obligations of the Financial Institutions for identifying and reporting on reportable new and preexisting financial accounts. Amendments to the exemptions from customs payments for the non-entrepreneurial goods imported by individuals Pursuant to the Decree of the President of the Republic of Azerbaijan issued on 22 October 2015 the import of goods with total customs value of up to USD 10,000 through the customs border by the individuals is exempted from the customs payments. Additional exemption is provided for goods with the customs value of up to USD 2,000 for each accompanying underage person. The exemption is not applicable in respect of the goods intended for industrial or commercial use, excise goods, vehicles and some traveler s personal items. It should be mentioned that previously exemption was provided in respect of the goods with a total customs value of up to USD 1,500 (and the additional USD 500 for each accompanying underage person). Amendments to the Code on Administrative Offences of the Republic of Azerbaijan According to the amendments to the Code on Administrative Offences of the Republic of Azerbaijan effective from 4 November 2015, use of plot of land by the legal entities with any other purposes than defined by its intended purpose is subject to fine in the amount of AZN 3,000. It should be mentioned that previously the responsibility was envisaged only in respect of the leased land and the fine was defined in the amount of AZN 35.

4 New law regulating citizens appeals The Law on citizens appeals was published on 15 November 2015 (the New Law ) and, respectively, the Law on procedures for review of appeals by citizens dated 10 June 1997 lost its force. Comparing with the repealed law the New Law envisages more detailed mandatory rules and procedures that should be followed by the state authorities and companies owned by the state (fully or partially) in course of appeals processing (i.e. accepting, considering and responding). In addition, the New Law also stipulates the rules on accepting the appeals presented by means of the electronic correspondence, phone calls and during the live stream on television and radio shows. It should be mentioned that pursuant to the New Law the legal entities performing functions of social importance listed by the Cabinet of the Ministers, as well as the private companies and individual entrepreneurs providing services in education, medicine, culture and social areas under the respective legal acts or agreement should also follow the requirements of the New Law in course of citizens appeals processing. Suspension of tax inspections in respect of certain category of taxpayers During the board meeting of the Ministry of Taxes held on 25 October 2015 it was communicated by the Minister that the onsite tax inspections and operating control should be suspended in respect of the entrepreneurs being simplified taxpayers having annual turnover less than AZN 120,000. Such suspension is not applicable to the control over conclusion of labor agreements, application of excise for sales of products subject to excise tax and chronometer inspection observations for determination of turnover. As it was stated in the communication of the Ministry of Taxes the suspension will affect 70,000 taxpayers. Since the text of the decision was not published it is not evident whether it has been formalized in any official order. In addition, at the moment it is not clear for which period the respective inspections are suspended.

5 Contacts We hope that you will find this overview helpful. For more detailed information, please contact the following specialists: Arzu Hajiyeva Partner, Tax & Law Ilya Murzinov Head of Law, Tax & Law Zaur Gurbanov Manager, Tax & Law EY Assurance Tax Transactions Advisory About EY EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities. EY works together with companies across the CIS and assists them in realizing their business goals. 4,800 professionals work at 21 CIS offices (in Moscow, St. Petersburg, Ekaterinburg, Kazan, Togliatti, Vladivostok, Yuzhno-Sakhalinsk, Almaty, Astana, Bishkek, Baku, Kyiv, Tashkent, Tbilisi, Minsk and other locations). EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com Ernst & Young (CIS) B.V. All Rights Reserved. Contacts This publication has been carefully prepared, but it necessarily contains information in summary form and is therefore intended for general guidance only, and is not intended to be a substitute for detailed research or the exercise of professional judgment. EY can accept no responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication. On any specific matter, reference should be made to the appropriate adviser. Almaty +7 (727) Astana +7 (7172) Baku +994 (12) Kazan +7 (843) Kyiv +380 (44) Minsk +375 (17) Moscow +7 (495) St. Petersburg +7 (812) Tashkent +998 (71) Tbilisi +995 (32)