Financial Crime World

Financial Sanctions and Penalties in Azerbaijan: A Look at the Tax Code and Administrative Offenses

Introduction

Financial sanctions and penalties are a crucial aspect of Azerbaijan’s tax system, designed to encourage taxpayers to comply with their obligations and prevent evasion. In this article, we will examine the key provisions related to financial sanctions and administrative charges under the Tax Code and the Code of Administrative Offenses.

Financial Sanctions Under the Tax Code

Failure to Submit Tax Reports

According to Article 57.1 of the Tax Code, a taxpayer who fails to submit tax reports in a timely manner or provides a reference instead of a tax return when there is no business activity or taxable transactions during the specified period shall be subject to a financial sanction of 40 manats. This decision is made by the head (deputy head) of the tax authority.

Failure to Pay Taxes

Additionally, if a taxpayer fails to pay taxes or current tax payments within the stipulated period, as outlined in Articles 59.1 and 59.2 of the Tax Code, they shall be subject to an interest rate of 0.1% per day on the amount of tax or current tax payment for each day of delay. This interest is applied to the entire overdue period, but not exceeding one year.

Administrative Charges Under the Code of Administrative Offenses

Failure to Submit Tax Reports

Taxpayers who fail to submit tax reports on activities carried out within international agreements that Azerbaijan is a party to, production sharing agreements approved by legislation, major export pipelines, and other such agreements to the Ministry of Taxes without a valid reason within the period specified in Article 461.1 of the Code of Administrative Offenses shall be subject to a penalty of 50 manats.

Failure to Declare State Duty Collection

According to Article 461.2 of the Code of Administrative Offenses, officials who fail to declare state duty collection to the Ministry of Taxes in cases and in a manner specified by the Law of the Republic of Azerbaijan “On State Duty” shall also be subject to a penalty of 50 manats.

Furthermore, according to Article 467 of the Code of Administrative Offenses, officials responsible for collecting state duty who commit infractions such as improper deduction or untimely or incomplete payment to the state budget shall be subject to penalties ranging from 500 to 700 manats.

Conclusion

In conclusion, financial sanctions and administrative charges are an essential part of Azerbaijan’s tax system, aimed at ensuring compliance with tax obligations and preventing evasion. Taxpayers and officials must adhere to the provisions outlined in the Tax Code and the Code of Administrative Offenses to avoid these penalties.