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Inclusion and removal of entrepreneurs from the list of risky taxpayers - new rules
Inclusion and removal of entrepreneurs from the list of risky taxpayers - new rules
The Cabinet of Ministers has adopted a Resolution on Amendments to the Resolution of the Cabinet of Ministers of the Republic of Azerbaijan No. 265 dated July 28, 2020 “On Approval of the Criteria for Risky Taxpayers, Including Risky Transactions”. The new document is now called “On Approval of the Taxpayer Risk Criteria and the Procedure and Conditions for Including a Taxpayer in the List of Risky Taxpayers and Removing it from That List”. Tax experts comment on the innovation.
According to the amendment, the document, prepared in accordance with Article 13.2.82 of the Tax Code, determines the taxpayer risk criteria and the procedure and conditions for including a taxpayer in the list of risky taxpayers and removing it from that list. Unlike the previous decision, from November 21, 2024, by the Cabinet of Ministers' Resolution No. 265, the criteria for risky taxpayers have been determined in 3 areas:
1. For the performance of works or the provision of services;
If the performance of works or the provision of services requires appropriate economic resources or if the existing economic resources are insufficient, or if the operation was performed without involving a subcontractor in the absence of such resources, the seller of this operation will be a risky taxpayer.
Economic resources are classified as follows:
1. Economic object;
2. Labor force;
3. Fixed assets;
4. Raw material resources;
5. Other economic resources, taking into account the characteristics of the type of activity.
2. On the presentation of goods;
The person who performs the presentation will be a risky taxpayer for that transaction due to the presentation of goods without obtaining them according to the following document:
1. On an electronic invoice;
2. On a purchase act of goods;
3. On cargo customs declarations (in relation to imported goods);
4. Goods registered as undocumented goods during a previously conducted operational tax control or mobile tax inspection;
5. Property registered in the official register acquired on the basis of notarized contracts;
6. Goods obtained during production (from demolition, production);
7. Fixed assets obtained during production (from demolition, production);
8. Fixed assets invested in the authorized capital.
3. On transactions without goods;
This case is noted as a result of the first and second paragraphs. That is, according to Article 13.2.81 of the Tax Code, transactions that are formalized for the purpose of obtaining profit (income) without actually providing goods, works and services are considered non-commodity transactions.
Rules and conditions for including a taxpayer in the list of risky taxpayers
Electronic invoices submitted by the seller and at the same time approved or deemed approved by the buyer (approved by the system within 5 days) will be analyzed by the tax authority within 15 business days. If the approved transaction meets at least one of the risk criteria provided for within 15 business days, a notification letter will be sent to both the seller and the buyer that the transaction is risky.
Within 5 business days after receiving the warning notification, the buyer must either cancel the transaction or provide information and documents confirming its authenticity. If the seller does not cancel the transaction or the explanation (documents) provided are not sufficiently complete or substantiated, the State Tax Service will make a decision on the risky taxpayer and send it electronically to the taxpayer's electronic cabinet within 1 (one) business day. In addition, a financial sanction will be applied to the seller in accordance with Article 58.15-1 of the Tax Code regarding a non-commodity transaction.
Rules and conditions for removing a taxpayer from the list of risky taxpayers
A decision is made to remove a taxpayer from the list of risky taxpayers in the following cases:
1. Based on the additional explanation provided by the taxpayer, information and documents confirming the authenticity of the transaction, information on the results of the time-based observations conducted, as well as transactions formalized by tax control, supporting documents or information from state bodies (institutions) confirming the authenticity of the transactions, it is found that there are no circumstances that would give grounds for considering the transactions risky;
2. When the financial sanction provided for in Article 58.15-1 of the Tax Code is paid in full by the risky taxpayer in relation to the non-commodity transaction carried out.
The Cabinet of Ministers has adopted a Resolution on Amendments to the Resolution of the Cabinet of Ministers of the Republic of Azerbaijan No. 265 dated July 28, 2020 “On Approval of the Criteria for Risky Taxpayers, Including Risky Transactions”. The new document is now called “On Approval of the Taxpayer Risk Criteria and the Procedure and Conditions for Including a Taxpayer in the List of Risky Taxpayers and Removing it from That List”. Tax experts comment on the innovation.
According to the amendment, the document, prepared in accordance with Article 13.2.82 of the Tax Code, determines the taxpayer risk criteria and the procedure and conditions for including a taxpayer in the list of risky taxpayers and removing it from that list. Unlike the previous decision, from November 21, 2024, by the Cabinet of Ministers' Resolution No. 265, the criteria for risky taxpayers have been determined in 3 areas:
1. For the performance of works or the provision of services;
If the performance of works or the provision of services requires appropriate economic resources or if the existing economic resources are insufficient, or if the operation was performed without involving a subcontractor in the absence of such resources, the seller of this operation will be a risky taxpayer.
Economic resources are classified as follows:
1. Economic object;
2. Labor force;
3. Fixed assets;
4. Raw material resources;
5. Other economic resources, taking into account the characteristics of the type of activity.
2. On the presentation of goods;
The person who performs the presentation will be a risky taxpayer for that transaction due to the presentation of goods without obtaining them according to the following document:
1. On an electronic invoice;
2. On a purchase act of goods;
3. On cargo customs declarations (in relation to imported goods);
4. Goods registered as undocumented goods during a previously conducted operational tax control or mobile tax inspection;
5. Property registered in the official register acquired on the basis of notarized contracts;
6. Goods obtained during production (from demolition, production);
7. Fixed assets obtained during production (from demolition, production);
8. Fixed assets invested in the authorized capital.
3. On transactions without goods;
This case is noted as a result of the first and second paragraphs. That is, according to Article 13.2.81 of the Tax Code, transactions that are formalized for the purpose of obtaining profit (income) without actually providing goods, works and services are considered non-commodity transactions.
Rules and conditions for including a taxpayer in the list of risky taxpayers
Electronic invoices submitted by the seller and at the same time approved or deemed approved by the buyer (approved by the system within 5 days) will be analyzed by the tax authority within 15 business days. If the approved transaction meets at least one of the risk criteria provided for within 15 business days, a notification letter will be sent to both the seller and the buyer that the transaction is risky.
Within 5 business days after receiving the warning notification, the buyer must either cancel the transaction or provide information and documents confirming its authenticity. If the seller does not cancel the transaction or the explanation (documents) provided are not sufficiently complete or substantiated, the State Tax Service will make a decision on the risky taxpayer and send it electronically to the taxpayer's electronic cabinet within 1 (one) business day. In addition, a financial sanction will be applied to the seller in accordance with Article 58.15-1 of the Tax Code regarding a non-commodity transaction.
Rules and conditions for removing a taxpayer from the list of risky taxpayers
A decision is made to remove a taxpayer from the list of risky taxpayers in the following cases:
1. Based on the additional explanation provided by the taxpayer, information and documents confirming the authenticity of the transaction, information on the results of the time-based observations conducted, as well as transactions formalized by tax control, supporting documents or information from state bodies (institutions) confirming the authenticity of the transactions, it is found that there are no circumstances that would give grounds for considering the transactions risky;
2. When the financial sanction provided for in Article 58.15-1 of the Tax Code is paid in full by the risky taxpayer in relation to the non-commodity transaction carried out.