LAW OF THE AZERBAIJAN REPUBLIC

of December 21, 2012 No. 509-IVQD

About introduction of amendments to the Tax Code of the Azerbaijan Republic

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

I. In the Tax Code of the Azerbaijan Republic (Collection of the legislation of the Azerbaijan Republic, 2000, No. 8, I book, 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, I book, 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, of Article 588, of 603, No. 12, Article 1115;2012, No. 6, of Article 500, of 513, of 652, No. 9, Article 841) to make the following changes:

1. In Article 13.2.14.7 after the words "transactions" to add the word", and also services of insurance agent and insurance broker in connection with these transactions".

2. Add with Article 13.2.16.17-1 of the following content:

"13.2.16.17-1. payments in connection with activities in the Azerbaijan Republic in the field of culture, art, theater, cinema, radio, television, music, the fine arts, sport, engineering, architecture, architecture and science.".

3. In Article 13.2.17 to replace figure "100" with figure "500".

4. In Article 13.2.37 after the word of "profit" to add the word" (the income from individual entrepreneurs)";

5. Add with Articles 13.2.43 - 13.2.51 of the following content:

"13.2.43. Sports gamblings - the games held by the operator of sports gamblings, based on preliminary forecasting of outcome of sports meets or events in sports meets and provisions to the participants who made the correct assumptions, cash bonuses (prize) based on previously declared criteria;

13.2.44. The operator of sports gamblings - the legal entity accredited according to the procedure, the stipulated in Clause 53-1 Law of the Azerbaijan Republic "About physical culture and sport" for the purpose of carrying out sports gamblings;

13.2.45. The seller of sports gamblings - the person performing activities according to the agreement signed with the operator of sports gamblings, and providing all communication between participants of gambling and the operator of sports gamblings in contact with the central system of totalizator;

13.2.46. The third party - the resident or the nonresident concerning whom tax authorities make the cameral or exit check which is directly connected with provision of goods (works, services) in activities of the taxpayer;

13.2.47. Tax risks are probability of approach for the taxpayer of financial losses owing to the wrong determination of the tax liabilities for any reason;

13.2.48. Minimization of tax risks - reducing or elimination of negative impacts on full or partial implementation of tax charges of the taxpayer;

13.2.49. The agreement on tax partnership - the agreement of intent which is voluntarily concluded between tax authority and the taxpayer for the purpose of minimization of tax risks.

13.2.50. The large taxpayer - the taxpayer corresponding, at least, to one of the following criteria for the purposes of of this Code (except for state-financed organizations):

13.2.50.1. if in each of the previous 3 years residual cost of the fixed assets which are in property on the end of the year exceeds

2.500.000 the manat and the previous three-year annual average turnover (excluding VAT) exceeds 1.250.000 manat;

13.2.50.2. if the amounts determined by this Code within the last 3 tax years of all taxes and other non-tax payments are exceeded by 500.000 manat for every year;

13.2.50.3. the taxpayers carried according to the legislation of the Azerbaijan Republic to natural monopolists or subjects holding dominant position in the market including their affiliated managing societies - residents of the Azerbaijan Republic.

13.2.51. The companies with special tax regime - the taxpayers acting within agreements or the laws on the equity Section of production, on the main export pipeline and other similar agreements and the laws approved by the law including the laws on oil and gas, oil and gas activities for the purpose of export and special economic zones and which are determined by special rules of charge and tax payment during certain period for the purpose of the taxation and tax control, and also the diplomatic and similar representations of foreign countries which are in the territory of the Azerbaijan Republic, consular establishments and other official representations.".

6. In Article 14.3.4 to replace semicolon with point and to add with Article 14.3.5 of the following content:

"14.3.5. according to Article 124.4. of this Code with need of establishment of the amount of the monthly rent for the purposes of the taxation of real estate (except for housing stock)".

7. In Article 15.1.13 after the word "after" to add the word "with adherence to deadlines, specified in Article 50-1.2 of this Code".

8. Add with Article 15.1.15-1 of the following content:

"15.1.15-1. file in tax authorities petition which form is determined by relevant organ of the executive authority, for the conclusion of "The agreement on tax partnership" for the purpose of minimization of tax risks;".

9. In Article 16.1.1 after the words "taxes" to add the word", and also the percent added according to this Code, the applied financial sanctions and other obligatory payments".

10. In Article 16.1.6 after the word "documents" to add the word", and also in case of conducting financial accounting in electronic format such information upon the demand of tax authority with creation of possibility of direct or remote access to data on the electronic media or electronic media of the branches".

11. In Article 16.1.8.3 after the word "sale" to add the word", the activities for sports gamblings performed by the operator and the seller".

12. Add with Articles 16.1.11-1 and 16.1.11-2 of the following content:

"16.1.11-1." According to article 17 of the Law of the Azerbaijan Republic "About consumer protection" to provide installation and use of POS-terminals for implementation of cashless payments;

16.1.11-2. provide freezing of money in the amount of 105% of in addition added amount on account transactions on the current and other accounts in national or foreign currency, during consideration in court of the claim to the accrued or reaccrued taxes, percent, and also the applied financial sanctions by results of cameral or exit tax audit by tax authorities and the introduction in legal force of the judgment in connection with the made complaint (except as specified the consent of the taxpayer to payment of the specified means).

13. In Article 16.3 after the word "corresponding" to add the word "in the form established by executive body" and to add this Article with part two of the following content:

"If it is determined that the taxpayer actually performed activities during temporary suspension of business activity or other taxable transactions, submission to tax authority of reports on the periods of temporary suspension of business activity or other taxable transactions with the direction to the taxpayer of the notification is required.".

14. In Article 23.1.2. exclude the word "also", after the word "to receive" to add the word", and also in case of conducting financial accounting in electronic format, to require for the purpose of electronic audit of provision of information which is stored on electronic media of the taxpayer and electronic media of its branches, creations of possibility of direct or remote access to such data".

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