LAW OF THE AZERBAIJAN REPUBLIC

of November 30, 2018 No. 1356-VQD

About modification of the Tax code of the Azerbaijan Republic

Being guided by Item 15 of part 1 of article 94 of the Constitution of the Azerbaijan Republic, Millie decides Majlis of the Azerbaijan Republic:

Article 1. Bring in the Tax code of the Azerbaijan Republic (Collection of the legislation of the Azerbaijan Republic, 2000, No. 8, the book I, Article 583; 2001, No. 7, Article 454, No. 9, Article 576, No. 12, Article 734; 2002, No. 5, Article 249, No. 12, Article 707; 2003, No. 8, Article 425, No. 12, book I, Article 671; 2004, No. 1, Article 1, No. 11, Article 887, No. 12, Article 980; 2005, No. 2, Article 61, No. 8, Article 688, No. 12, Article 1081; 2006, No. 12, Articles 1005, 1026; 2007, No. 1, Article 4, No. 6, Article 597, No. 8, Article 745, No. 11, Article 1053, No. 12, Article 1192; 2008, No. 7, Article 602, No. 11, Article 960; 2009, No. 7, Article 506; 2011, No. 1, Article 14, No. 7, Articles 588, 603, No. 12, Article 1115; 2012, No. 6, Articles 500, 513, No. 7, Article 652, No. 9, Article 841, No. 12, Article 1226; 2013, No. 2, Article 91, No. 4, Article 366, No. 11, Article 1278, No. 12, Articles 1483, 1486, 1495; 2014, No. 2, Articles 94, 98, No. 6, Article 608, No. 7, Article 770, No. 8, Article 957, No. 10, Article 1158, No. 12, Article 1525; 2015, No. 1, Article 11, No. 12, Article 1433; 2016, No. 2, book I, Article 207, No. 3, Articles 396, 402, No. 5, Article 848, No. 6, Articles 973, 974, 1015, No. 7, Article 1245, No. 10, Article 1603, No. 11, Articles 1752, 1792, 1793, No. 12, Articles 2001, 2037, 2046; 2017, No. 2, Article 146, No. 5, Articles 695, 723, 737, No. 6, Article 1055, No. 7, Article 1304, No. 8, Article 1509, No. 12, book I, Articles 2219, 2251, 2270; 2018, No. 2, Article 149, No. 5, Article 863, No. 6, Article 1193, No. 7, book I, Articles 1414, 1427; The Law of the Azerbaijan Republic of October 1, 2018 No. 1246-VQD, 1250-VQD and of October 30, 2018 No. 1293-VQD) the following changes:

1.1. add Article 1.4 of the following content:

"1.4. Provisions of this Code on general bases of the taxation, rules of tax payment (excepting payment sources), the rights and obligations of taxpayers and the state tax authorities, and also other participants of the tax relations on the tax matters, to forms and methods of tax control, responsibility for violation of the tax legislation, rules of appeal of actions (failure to act) of the state tax authorities and their officials are applied also to fees on compulsory national social insurance and insurance on unemployment.";

1.2. Under Article 13:

1.2.1. replace in Article 13.2.7.2 of the word "and the adopted persons" with words ", adoptive parents and adopted, grandfathers, grandmothers and grandsons";

1.2.2. after the word "distribution" to add the word to the first paragraph of Article 13.2.15", including distribution of the property (assets) which is created by net profit in case of liquidation of the legal entity and also return within the share par value (shares) increased by net profit" in the second paragraph after the word of "profit" to add the word" (excepting the property which is created for the retained earnings account)" and after the word "costs" of the word" (except for the growing share par value (shares) for the retained earnings account)";

1.2.3. State Article 13.2.16.14-1 in the following edition:

"13.2.16.14-1. direct and indirect payments to persons founded (registered) in the countries with the preferential taxation, stipulated in Article the 128th of this Code, including branches and representations in other countries and also on bank accounts in the countries with the preferential taxation made by permanent missions of residents and nonresidents in the Azerbaijan Republic. For the purposes of this Article the main amount (without percent) the debt which is paid off on the obtained loans does not belong to profit at the Azerbaijani source. Provisions of this Article do not extend to the correspondent accounts opened by resident banks;";

1.2.4. State Article 13.2.65 in the following edition:

"13.2.65. the transfer price - the price determined in transactions between persons specified in Article 14-1.2 of this Code which shall correspond to the prices enshrined in comparable transactions between impartial persons on the same conditions;";

1.2.5. At the end of Article 13.2.71 to replace point with semicolon and to add Article 13.2.72 - 13.2.80 of the following content:

"13.2.72. electronic office - the individual electronic page created in information system of the body (structure) determined by relevant organ of the executive authority based on the contract between tax authority and the taxpayer in the form established by body (structure) determined by relevant organ of the executive authority, allowing to enter by means of the code password issued by tax authority and providing exchange of information between the taxpayer and tax authority;

13.2.73. the center of economic interests - the location of business entity (object) who in comparison with other business entities (objects), including with production sites, more participates in forming of the income of the taxpayer from its activities, irrespective of the location of the main monitoring bodies of the taxpayer including the location of production sites;

13.2.74. the capital - net assets value of the taxpayer after deduction from assets of all obligations;

13.2.75. obligatory marking - the codes of obligatory marking and other protective elements applied to goods for the purposes of tax control over import, production, sale and turnover of these goods, determined by the body (structure) determined by relevant organ of the executive authority;

13.2.76. excise stamp - the control brand pasted on paper on excise goods for the purpose of implementation of tax control over import, production, sale and turnover of these goods;

13.2.77. innovative activities - the activities directed to creation and accomplishment of new or advanced goods (works, services), engineering procedure on the basis of implementation of research and development works and their results for the purpose of receipt of economic or social benefit;

13.2.78. the MSP cluster company - the legal entity answering to criteria, the established body (structure) determined by relevant organ of the executive authority and the keeping development of micro, small and medium entrepreneurship to which with approval of body (structure), determined by relevant organ of the executive authority, the certificate of the MSP cluster company is granted;

13.2.79. The participant of cluster of MSP - the legal entity or physical person which signed the contract with MSP cluster for activities in MSP cluster, keeping development of micro, small and medium entrepreneurship to which the body (structure) determined by relevant organ of the executive authority grants the certificate of the participant of cluster of MSP;

13.2.80. startup - the business activity answering to criteria, the established body (structure) determined by relevant organ of the executive authority, keeping development of micro, small and medium entrepreneurship, and performed on the basis of innovative initiative by persons to whom the body (structure) determined by relevant organ of the executive authority issues the certificate "Startup";

1.3. exclude from Articles 13.2.62 (in the first case), 13.2.63, 16.1.11-7 (in the first case), 50.1.13 (in the first case) and 176.4 (in the first case) the words "delivery note invoice or";

1.4. Under Article 14:

1.4.1. replace in Article 14.3 the word "Market" with the words "the market, except for the transactions performed between persons, stipulated in Article 14-1.2 of this Code";

1.4.2. State Articles 14.3.3 and 14.3.5 in the following edition:

"14.3.3. if the price level applied by taxpayers to goods (works, services) of one property or sort taking into account requirements of Article 14.6.1 of this Code within 30 days for more than 30% differs (below and above) from price level, developed in the market in case of the corresponding transactions on the same goods (works, services);";

"14.3.5. in need of determination of the amount of the monthly rent for the purposes of the real estate taxation (except for the dwelling stock which is not used for the purposes of business activity);";

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