Financial Crime World

Regulatory Requirements for Cryptocurrencies in Azerbaijan

Azerbaijan’s regulatory framework regarding cryptocurrencies is still evolving, but it has made significant progress in recent years. The country has a growing interest in blockchain technology and cryptocurrency, which has led to the development of various regulations and guidelines.

Overview of Regulatory Framework

The Republic of Azerbaijan does not have specific laws or regulations governing cryptocurrencies. However, this does not imply that crypto money is a legal tender in Azerbaijan. The country’s legislation refers to cryptocurrencies in one piece of legislation, which determines a specific related matter. The “Regulations on Margin Trading,” approved by the Central Bank of the Republic of Azerbaijan, defines a contract for difference (CFD) as a contract providing for payment of the difference between opening and closing prices of the position on buy/sell of the underlying asset to the contracting party.

Key Points

  • There are no specific laws or regulations governing cryptocurrencies in Azerbaijan.
  • Cryptocurrencies are not considered legal tender in Azerbaijan.
  • The country’s legislation refers to cryptocurrencies in one piece of legislation.

Cryptocurrency Activity in Azerbaijan

According to the Constitution of the Republic of Azerbaijan, everyone has the right to engage individually or together with others in entrepreneurial activity or other kinds of economic activity not prohibited by law. However, cryptocurrency activities are not specifically addressed in the legislation regulating e-commerce and currency regulation in Azerbaijan.

Key Points

  • The Constitution grants individuals the right to engage in entrepreneurial activity or other kinds of economic activity not prohibited by law.
  • Cryptocurrency activities are not specifically addressed in the legislation regulating e-commerce and currency regulation in Azerbaijan.

Taxation of Cryptocurrencies in Azerbaijan

Azerbaijan’s Tax Code regulates taxation of cryptocurrencies as e-commerce transactions. Buying cryptocurrencies from abroad is considered a taxable operation for Value Added Tax (VAT) purposes. Withholding Tax (WHT) should be deducted at 10% from the transferred amount when residents transfer money to an e-purse belonging to a non-resident.

Key Points

  • Cryptocurrency purchases are subject to VAT.
  • WHT is applicable on transfers of funds to non-residents.

Conclusion

While Azerbaijan does not have specific regulations governing cryptocurrencies, it is possible to engage in cryptocurrency activities such as bitcoin mining without violating the law. However, taxation of cryptocurrencies in Azerbaijan is regulated, and taxpayers must comply with VAT, WHT, and profit tax requirements.

Disclaimer

This article may not be referred to as legal advice or opinion, and Caspian Legal Center carries no liability for any damage resulting from actions taken by relying on the information specified herein. For legal opinions, advice, and recommendations, please contact us via [email protected] or call 00994 50 289 89 73.