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Legal regulation of the tax system of Azerbaijan.
Tax- a compulsory, individual and non-refundable payment made to the state or local budget in the form of collection of monetary means from taxpayers with the purpose of providing the financial basis to the state and municipal activities.
This Code shall establish the tax system of the Republic of Azerbaijan, general principles of taxation in the Azerbaijan Republic, rules for determining, payment and collection of taxes, the rights and responsibilities of taxpayers and State tax authorities, as well as other parties to taxation procedures, tax control forms and methods, liability for tax law violations and the procedures for lodging complaints against unlawful actions (failure to take actions) committed by tax agencies and officials thereof.
This Code establishes the general principles of taxation and taxes for Nakhichevan Autonomy Republic and municipalities.
Definitions and rules determined in this Code shall be established for the purposes of tax payment and used only within the scope of taxation and tax control regulated by this Code and other legislative acts established on its basis.
Tax Legislation of Azerbaijan Republic:
The Constitution of Azerbaijan Republic, this Code, and those legal standards adopted in compliance herewith, shall comprise the tax legislation of Azerbaijan Republic.
Any article of law adopted on the basis of this Code or for the purposes of its execution shall not contradict with the provisions of this Code.
Should tax legislation contradict any legislation in other areas, with the exception of provision stipulated by Article 2.7. of this Code, the provisions of tax legislation shall apply.
Taxation and tax control issues cannot be included into the legislative acts, other than tax legislation, with the following exceptions:
1) Provisions concerning administrative offences in relation to tax issues, stipulated by the Code of the Azerbaijan Republic for Administrative Offences;
2) Provisions concerning tax crimes included in the Criminal Code of the Azerbaijan Republic;
3) Provisions concerning the priority of tax obligations included in the legislation on bankruptcy and insolvency;
4) Provisions on taxes contained in budget legislation;
5) Provisions governing state maintenance allocation and guarantees on taxes;
6) Provisions stipulated by agreements or laws on production sharing, main pipeline and other similar agreements and laws;
7) Provisions stipulated by the legislation on oil and gas operations of export direction and special economic areas.
Should any international treaty to which the Republic of Azerbaijan is a party provide for regulations that differ from those contained in this Code and legislative acts established on taxes, the provisions of said international treaties shall govern.
If international treaty with the intention of avoiding double taxation to which Azerbaijan Republic is the party applied by any person, who is not the resident of the state that entered into such treaty for the purpose of obtaining tax privileges, provisions of article 2.5. of this Code shall not be applied for the purposes of tax privileges to the resident of the state that is the party to such treaty.
If production sharing or main pipeline agreements approved by the legislation before this Code is entered into force or after its enforcement, as well as other laws and agreements of a similar nature, including the legislation on oil and gas, contain provisions that differ from those stipulated by this Code and other legislative acts on taxes then provisions of such agreements and laws shall be applied.
In the event of required changes to the Tax Code of the Azerbaijan in connection with definition of tax policy, tax administration and tax rates within the next year state budget draft, the drafts of these laws to the proper authority of executive power before May 1, and from the side of the proper authority of executive power shall be submitted to the Milli Mejlis of the Azerbaijan Republic no later than by May 15 of current year
Basis for establishment of taxes and their collection:
1-Legislation on taxes is based on the universality, equality and fairness of taxation
2-Taxes shall have an economic base.
3- It is not allowed to establish taxes that will limit everybody’s constitutional rights and freedom
4- It is not allowed to establish taxes that will break the single economic system of Azerbaijan Republic (in particular those that will directly or indirectly limit the free movement on the territory of Azerbaijan Republic (of goods and services) and monetary means, or otherwise limiting the legal activities of taxpayers).
5- Nobody can be forced to pay the tax of one nature from the profit (income) for more than one time.
6- The taxes shall not be of discriminatory nature and shall not be established based on the political, ideological, ethnic, confessional or other existing differences between taxpayers.
It is prohibited to establish different tax rates based on the form of ownership, citizenship of physical persons or origin of capital.
It is allowed to establish different rates of customs duties for commodities imported into the territory of Azerbaijan Republic, dependant on commodity’s country of origin in accordance with this Code and customs legislation.
7- Taxes in the Azerbaijan Republic shall be established only by this Code; changes or cancellations shall be implemented by making the changes in this Code.
8- No person can be obliged to pay taxes, that have indications of taxes established by this Code but not established by it or taxes that were established in the order different to that specified by this Code
9- The tax legislation shall be formulated in the order that will allow everyone to know what taxes, in which order, when and how much he shall pay.
10- The tax system shall stimulate the activities of entrepreneurs and investors.
11- All contradictions and obscurities in the tax legislation shall be interpreted for taxpayer’s advantage.
12- Natural and legal persons shall have a free access to regulating legislative acts on taxes.
Analysis of the functioning of the tax system.
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