Following amendments and changes have been made to Tax Code with regard to bank operations

Following amendments and changes have been made to Tax Code with regard to bank operations.

(new amendments and changes are applied from January 1, 2017)

 1.  Upon transferring of money by residents of the Republic of Azerbaijan to the account created in the e-purse which belongs to a non-resident, the Bank, which performs the operation, withholds the tax at the source of payment from that resident in the amount of 10 percent of the transferred amount. (Tax Code  125.1-1.) 

For example, if by means of the card of Yapı Kredi Bank Azerbaijan, or by transferring the money to the purse Skrill.com there will be placed an amount equal to 100 AZN, then a tax in the amount of 10% of the total amount (i.е. in the amount of 10 AZN) will be withheld and an amount of 110 AZN will be deducted from the account. 

 2. When issuing money means on their bank accounts to legal entities and private entrepreneurs in cash, the Bank must withhold the tax at the source of payment (tax rate 1%) (Tax Code 150.3-3.)

Exceptions: International organizations, diplomatic representations, special tax payers who are regulated by international agreements, notaries. 

 3. İf the buyer of works and services according to e-trade procedures, and also the participant of the lotteries, other competitions and contests which are organized in the electronic form outside the Republic of Azerbaijan is the person who is not registered in the tax body, 18% VAT accrued by the Bank which performs the payment, is paid to the budget at the buyer’s expense. (Tax Code 169.3)

Person, not registered in tax bodies-Other persons, with the exception of legal entities and private entrepreneurs

For example, when purchasing services (except hotels, air tickets and transport) through the internet from any foreign site by means of the card of Yapı Kredi Bank Azerbaijan, for example, when placing advertisement on facebook, 18% VAT will be deducted from the total amount, i.e. when making a payment in the amount of 100 AZN there will be additionally withheld a tax in the amount of 18%  (18AZN) and totally an amount of 118 AZN will be deducted from the account. Besides, we would like to note that VAT is not applied to the amount when purchasing goods, things. 

4. When the revenue (award) from holding lotteries, other competitions and contests is paid by the legal entity and private entrepreneurs-residents, the persons making the payment must withhold the tax at the source of payment, and if the revenue is paid by non-residents who do not have permanent representation in the Republic of Azerbaijan, that tax should be withheld by the Bank in which the person receiving that revenue has his/her account (Tax Code 150.1.11)

5. From February 1, 2016 in the period of 7 (seven) years annual interest yields paid according to deposits of private persons by the local bank and the branch of the foreign bank operating in the Republic of Azerbaijan, and also dividends, discounts (the difference occurred as a result of placing of bonds below par) and interest yields paid by the issuer per investment securities are exempted from the tax.(Tax Code 102.1.22)

Detailed information:http://www.taxes.gov.az/modul.php?name=pages&page=183