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What penalties will be imposed on market property owners?
What penalties will be imposed on market property owners?
As of January 1, 2025, amendments to the Tax Code provide for the application of financial sanctions in two specific cases regarding rental units located in marketplaces. Expert Anar Bayramov provides his commentary on the issue.
First Case This is regulated by Article 58.2-1 of the Tax Code. According to the amendment to this article, with the exception of agricultural produce markets and agricultural cooperative markets, a financial sanction will be imposed if information (a certificate) confirming that a business entity (facility) operating in the market is registered with the tax authority (including the taxpayer’s name and TIN) is not displayed at the entrance of the business. The penalty will be 40 manats for micro-entrepreneurs, non-profit organizations, and individuals not engaged in entrepreneurial activity, and 400 manats for other persons.
Example 1: During operational tax control, the tax authority determines that a taxpayer operating as a small business entity in the "Sədərək" shopping center has not posted at the entrance of their facility the certificate indicating tax registration (including the taxpayer’s name and TIN). In this case, the tax authority may impose a financial sanction of 400 manats in accordance with Article 58.2-1 of the Tax Code.
Second Case This refers to financial sanctions applied by the tax authority to market owners (or market operators, if the market is under management). According to newly added Article 58.15-2 of the Tax Code, if the provisions of Article 16.1.11-15 are violated—again excluding agricultural produce markets and agricultural cooperative markets—the following financial sanctions will apply to market owners (or operators):
2,000 manats for the first violation within a calendar year, 4,000 manats for the second violation, 6,000 manats for three or more violations.
It should be noted that under Article 16.1.11-15 of the Tax Code, market owners (or operators) leasing property must allow the lessee (the business entity/facility) to operate only after they have been registered with the tax authority.
Example 2: During operational tax control, the tax authority finds that a taxpayer operating in “Gəmi Mall” has not registered their businessfacility with the tax authority. In this case, the tax authority will impose a financial sanction on “Gəmi Mall” in accordance with Article 58.15-2 of the Tax Code.
The financial sanctions described in both cases will come into force nine months after the law is adopted.
In addition, the scope of the 1,000-manat financial sanction under Article 57.3 of the Tax Code has been expanded. According to the amendment, failure to submit the information form required by Article 16.1.11-17 within the specified timeframe, or submission of distorted information, will result in a 1,000-manat penalty.
It should also be noted that Article 16.1.11-17 of the Tax Code requires market owners (or operators, where applicable) to submit electronically, by the 20th day of the month following each quarter, a report—approved by the relevant government authority—on taxpayers whose lease agreements have been terminated and are no longer operating, as well as those who continue to operate in the rented spaces.
The amendment to Article 57.3 will also come into effect nine months after the law is adopted.
As of January 1, 2025, amendments to the Tax Code provide for the application of financial sanctions in two specific cases regarding rental units located in marketplaces. Expert Anar Bayramov provides his commentary on the issue.
First Case This is regulated by Article 58.2-1 of the Tax Code. According to the amendment to this article, with the exception of agricultural produce markets and agricultural cooperative markets, a financial sanction will be imposed if information (a certificate) confirming that a business entity (facility) operating in the market is registered with the tax authority (including the taxpayer’s name and TIN) is not displayed at the entrance of the business. The penalty will be 40 manats for micro-entrepreneurs, non-profit organizations, and individuals not engaged in entrepreneurial activity, and 400 manats for other persons.
Example 1: During operational tax control, the tax authority determines that a taxpayer operating as a small business entity in the "Sədərək" shopping center has not posted at the entrance of their facility the certificate indicating tax registration (including the taxpayer’s name and TIN). In this case, the tax authority may impose a financial sanction of 400 manats in accordance with Article 58.2-1 of the Tax Code.
Second Case This refers to financial sanctions applied by the tax authority to market owners (or market operators, if the market is under management). According to newly added Article 58.15-2 of the Tax Code, if the provisions of Article 16.1.11-15 are violated—again excluding agricultural produce markets and agricultural cooperative markets—the following financial sanctions will apply to market owners (or operators):
2,000 manats for the first violation within a calendar year, 4,000 manats for the second violation, 6,000 manats for three or more violations.
It should be noted that under Article 16.1.11-15 of the Tax Code, market owners (or operators) leasing property must allow the lessee (the business entity/facility) to operate only after they have been registered with the tax authority.
Example 2: During operational tax control, the tax authority finds that a taxpayer operating in “Gəmi Mall” has not registered their businessfacility with the tax authority. In this case, the tax authority will impose a financial sanction on “Gəmi Mall” in accordance with Article 58.15-2 of the Tax Code.
The financial sanctions described in both cases will come into force nine months after the law is adopted.
In addition, the scope of the 1,000-manat financial sanction under Article 57.3 of the Tax Code has been expanded. According to the amendment, failure to submit the information form required by Article 16.1.11-17 within the specified timeframe, or submission of distorted information, will result in a 1,000-manat penalty.
It should also be noted that Article 16.1.11-17 of the Tax Code requires market owners (or operators, where applicable) to submit electronically, by the 20th day of the month following each quarter, a report—approved by the relevant government authority—on taxpayers whose lease agreements have been terminated and are no longer operating, as well as those who continue to operate in the rented spaces.
The amendment to Article 57.3 will also come into effect nine months after the law is adopted.