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Amendments to the Law of the Republic of Azerbaijan “On Currency Regulation"

On 16 January 2016 the Parliament of the Republic of Azerbaijan passed into law a number of important amendments to the law of the Republic of Azerbaijan “On Currency Regulation” (the “Amendment Law”). The Amendment Law should come into force after signature by the President of the Republic of Azerbaijan. The key changes and their potential impacts for organisations are summarized below.

According to the amendments, a 20% compulsory levy should apply to money transfer out of the Republic of Azerbaijan by resident and non-resident natural persons and legal entities for the purposes of acquisition abroad of:
-    Securities (except for banks and insurance companies);
-    land and real estate; and
-    for direct investment (except for banks and insurance companies).

Money transfers made by natural persons to their parents and close relatives in the amount exceeding US$50,000 within one calendar year will also be subject to the levy, applicable to any funds in excess of US$50,000. However subject to the provision of  supporting documents, money transfer for the purposes of medical treatment, education, execution of court decisions and decisions of foreign law enforcement bodies in foreign contrives should not be subject to the 20% levy.

Finally, transfer of monies by resident legal entities to their overseas branches and representative offices exceeding the amount of US$50,000 (or an equivalent thereof in any other currency) within one calendar year will be subject to the 20% levy, applicable to the amount exceeding US$50,000.

It is still not clear which of the government bodies will be in charge of monitoring the collection of the 20% levy and how the payment of the 20% levy will reconcile with the tax legislation. By discussing with the Central Bank of the Republic of Azerbaijan we have found out that it is expected that the monitoring over the transfer operations may be carried out by the Financial Monitoring Service under the Central Bank of the Republic of Azerbaijan, and the collection of levy may be carried out by the Ministry of Taxes. We will keep you updated on when the law comes into force and we know more details concerning the implementation of the above amendments.

For more detailed information on any above issues, please contact Aygun Abbasova at: +994 12 4978948 or  
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