The Tax Code of the Republic of Azerbaijan

Article 66. Illegal income
If income, classified as illegal not to be confiscated in accordance with legislation of the Republic of Azerbaijan, illegality of such incomes shall not affect its taxation.
Article 67. Procedure for determining the taxable base in certain cases
67.1. In the cases referredto in Articles37.4and50.1.1of theCode, as well as in cases when the documents required for implementation of on-site inspection were not submitted, did not allowed the access to the territory or premises (except living premises (areas)), does not maintain the accounting at all or in accordance with established procedures, in the event of destruction (loss) of accounting and reporting documents, as well as if it is impossible to determine tax articles for any other reason, the tax authority shall be entitled to calculate the tax amounts to be paid, using following matching information:
67.1.1. tax declarations submitted by the taxpayer to the tax authority for previous reporting periods;
67.1.2. official data on taxpayer income, including indirect incomes;
67.1.3. official data on taxpayers costs, including costs for purchasing of goods (movable property and real estate), works and services for individual consumption;
67.1.4. official data on tangible and intangible assets owned or used by the taxpayer;
67.1.5. official data on physical capacity of produced and (or) provided works (works, services) by the taxpayer;
67.1.6. official data on import and export operations of the taxpayer;
67.1.7. official data on funds located at taxpayer’s accounts, including the data on movements of funds on banking accounts;
67.1.8. any other information, received by the tax authority from known source.
67.2. Determination of the tax, which shall be subject to payment by the taxpayer, is provided on the basis of similar information, information held by tax authorities about the taxpayer, engaged in entrepreneurship, similar activities of the taxpayer with consideration of following indicators:
67.2.1. production of analogue on same kinds of products;
67.2.2. provision of analogue or same kinds of products, implementation of works and provision of services;
67.2.3. territory of the activity.
67-2. Taxation of legal persons and individual entrepreneurs who have received investment promotion certificate
67.3. If taxes are calculated on the basis of similar information and information on same taxpayer, the tax amount is defined by multiplying of the amount of income or costs, deducted from the taxpayer’s income, to the rate of the specific weight of the tax within the reporting period in the income or costs deducted from the income taxpayer, engaged in similar activities.
67.4. If similar information on the taxpayer can not be obtained, taxes are calculated on the basis of registration and reporting information of the taxpayer, engaged in similar activities.
67.5. If on the basis of similar information it is not possible to calculate the income tax of natural persons, working on contract basis, or if the work of natural persons is not documented, the tax authority calculates the amount of the income tax on the basis of mean monthly wage along the country over previous year.
67.6. If in the tax authority for calculation of tax there are several sets of similar information on the taxpayer, the tax is calculated on the basis of similar information, providing basis for calculation of tax at the highest amount.
67.7. In calculation of the tax on the basis of similar information overpaid taxes, interests and financial sanctions of the taxpayer are taken into consideration.
67.8. For taxpayers submitting to the tax authority the information on absence of entrepreneur activities, property, land and taxable operations in accordance with Article 16.2 of this Code, taxes are not calculated on the basis of similar information.
67.9. Upon the submission of declarations on taxes calculated on the basis of similar information, calculated taxes are re-calculated with consideration of declarations.
67.10. Taxation on the basis of similar information is performed in accordance with Article 65 of this Code.
67.11. If any operation is conducted between mutually connected persons, when determining the taxable income generated by people not connected with each other the tax authority may distribute incomes and costs between such persons.
67.12. If the person declares the receiving of amount which is not enough to cover his personal needs including the payment of property fees, the tax authority shall determine the income and taxes on the basis of costs incurred for previous periods, including credits and debts.
67.13. In cases when for the purposes of taxation barter operations are considered as sell of goods (works, services) at market prices, relevant operations shall be registered by electronic tax invoices.
When the amounts of barter operations in electronic electronic tax invoices are reduced, the tax authority determines the taxable base with consideration of market prices, calculates the amount of tax and applies sanctions stipulated for the violation of tax legislation of the Republic of Azerbaijan.
67.14. In the cases referred to in Article 67.1 of this Code, if definition of income or expense by the taxpayer is possible, the tax on profit (income tax) shall be calculated in accordance with Article 83.9 of this Code.