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DTA-01 form and filling procedure

DTA-02 form and filling procedure

DTA-03 form and filling procedure

DTA-04 form and filling procedure

DTA-05 form and filling procedure  

 

Approved by Resolution # 1717050000009300
of 12 June 2017 of the Collegium of the
Ministry of Taxes of the Republic of Azerbaijan

 

REGULATIONS FOR ADMINISTRATION OF INTERNATIONAL AGREEMENTS

FOR THE AVOIDANCE OF DOUBLE TAXATION BETWEEN THE REPUBLIC OF

 AZERBAIJAN AND OTHER STATES

 

1. General provisions

"Regulations for administration of international agreements for the avoidance of double taxation between the Republic of Azerbaijan and other states" (hereinafter referred to as the Regulations) has been designed with the aim of ensuring implementation of 14th section of "Directions of 2016 tax reforms" approved by Presidential Decree # 2257 on August 22, 2006 on approval of “Directions of 2016 tax reforms” and “Improvement of tax administration" and establishes the norms for ensuring the enforcement of international agreements which were signed between the Republic of Azerbaijan and any foreign state, and took effect in accordance with appropriate domestic procedures, on avoidance of double taxation with respect to taxes on income and property.   


2. Key definitions

2.0. For the purposes of these Regulations:

2.0.1. "International agreement" means an interstate or intergovernmental agreement of the Republic of Azerbaijan for the avoidance of double taxation.

2.0.2. "Other contracting state" means the foreign state which has concluded an international agreement with the Republic of Azerbaijan.

2.0.3. Relevant tax authority:

1. With regard to the non-resident who exercises its activity in the Republic of Azerbaijan through the permanent establishment, it is the tax authority in which such establishment is registered;

2. With regard to the unregistered non-resident taxpayer in the Azerbaijan Republic, it is the tax authority in which person paying the income (tax agent) is registered.   

2.0.4. "State of residence" means the state where, in accordance with the provisions of international agreement, the taxpayer is deemed as a resident for the purposes of taxation.

2.0.5. "Person paying the income (tax agent)" means the person who pays income to the non-resident and obliged to calculate the taxes stipulated in the Tax Code of the Republic of Azerbaijan for that income, withhold it from the non-resident, and transfer to its destination;

2.0.6. "Resident" means the person who for tax purposes is deemed as resident of the Republic of Azerbaijan in accordance with the Tax Code and provisions of international agreement.

2.0.7. "Non-resident" means the person who for tax purposes is deemed as resident of the other contracting state in accordance with the provisions of international agreement. 

2.0.8. Other definitions used herein shall have the meanings specified in relevant normative legal acts.

2.0.9. “Certificate of residency” means the document confirming the residency status in the Republic of Azerbaijan or other state for tax purposes.


3. Issuance of certificate of residency

3.1. Certificate of residency shall be issued by tax authority of the Republic of Azerbaijan to the resident of the Republic of Azerbaijan for purposes of applying the international agreement.

3.2. Person who intends to receive the certificate of residency shall apply to the tax authority by filling out the Form on "Certificate of residency" (hereinafter referred to as the DTA-01 Form) (Annex 1) in soft or hard copy.

3.3. Person claiming the certificate of residency, by using DTA-01 Form, shall provide the foreign state and its relevant authority or person who will receive that certificate with full and detailed information on the purposes of requesting the certificate of residency. The applicant shall not be issued the certificate in case of unavailability of due information. If the certificate of residency is applied for the purpose of tax exemption or lower tax rate provided for in an international agreement with respect to any income in the other contracting state, the DTA-01 Form shall contain the date and number of the agreement which constitutes the basis for the income, as well as the amount of earned income in a relevant currency (if available).  

3.4. Individuals, who earn income in a foreign state and apply for the certificate of residency, shall submit the DTA-01 Form to the tax authority in which they are registered.

3.5. Unregistered individual, applying for a certificate of residency, may submit the DTA-01 Form to the tax authority at his/her place of residence or location. According to the Tax Code, if that person is required to be registered for tax purposes, the certificate of residency is issued after such registration. 

3.6. If applicant’s residency is approved in the Republic of Azerbaijan after the tax authority reviews his/her application, under the Form (Annex 2) attached hereto, a coded certificate of residency is drawn up in the electronic information system of the Ministry of Taxes and it is electronically signed and emailed by the tax authority to applicant's address upon approval by authorised person of relevant structural unit under the Charter of the Ministry of Taxes (hereinafter referred to as the “relevant structural unit”).  

3.7. Applicant is entitled to request issuance of signed and sealed hard copy of certificate from the tax authority. In this case, at applicant’s choice, signed and sealed hard copy of certificate shall be posted to applicant’s address or collected from the tax authority in person.

3.8. Where the other contracting state requires the approval of residency only in a form as prescribed by the guidelines of that State, the tax authority shall approve the residency in a form acceptable to that State. For this purpose, the applicant shall specifically point this out in the DTA-01 Form and enclose the form of the foreign state together with its notarized translation into Azerbaijani language. In this case, the tax authority confirms the residency of applicant both in the original copy approved by that other state and in its translated copy to Azerbaijani language.

3.9. In the event of an agreement on recognition of electronic signatures between the other contracting state and the Republic of Azerbaijan, the certificate of residency electronically signed by the authorized person of the tax authority shall be sent directly to the relevant person or state authority of other contracting state.

3.10. Tax authority refuses the issuance of a certificate of residency in the following cases:

3.10.1. If, according to Article 13.2.5 of the Tax Code and provisions of the international agreement, the person is not deemed as resident;

3.10.2. If DTA-01 Form contains distorted information.

Notification of refusal (Annex 9) that indicates the grounds for refusal is issued in the electronic information system of the Ministry of Taxes and sent to applicants in soft and hard copies at their choice.  

3.11. Applicant who receives the notification of refusal concerning the certificate of residency may reapply to the tax authority.

 

4. Confirmation of tax amount payable in the other contracting state and deducted from the tax calculated in the Republic of Azerbaijan

4.1. With a view to deducting the taxes paid in the other contracting state from the tax calculated in the Republic of Azerbaijan in accordance with Article 127 of the Tax Code of the Republic of Azerbaijan and provisions of international agreement, the resident shall submit the filled out soft or hard copy of the Form for “Deduction of the tax paid in the foreign state from the tax calculated in the Republic of Azerbaijan” (hereinafter referred to as DTA-02 Form) (Annex 3) to the tax authority with which the resident is registered.

4.2. The DTA-02 Form shall be submitted by resident individuals and resident legal entities, by enclosing the documents certifying the tax payment in the other state, together with income tax return and corporate tax return, respectively.

4.3. In the case of electronic application, original supporting documents submitted in soft copy shall be kept by the taxpayer and submitted to the tax authorities during tax control procedures for relevant reporting period.

4.4. When tax authority performs desk audit of tax returns, it shall verify on the basis of DTA-02 Form and supporting documents, whether the tax paid in the foreign state and deducted from the tax calculated in the Republic of Azerbaijan, has been included in the tax return in an accurate manner or not.  

 

5. Application of exemption or lower tax rate provided for in the international agreement with respect to a non-resident

5.1. Where the international agreement provides for tax exemption of non-resident from any income derived from a source in Azerbaijan or imposition of lower tax rate, the non-resident may benefit from this by submitting the filled out soft or hard copy of the Form on “Applying withholding tax exemption or lower tax rate under international agreements with respect to income derived by non-resident in the Republic of Azerbaijan” (hereinafter referred to as the DTA-03 Form) (Annex 4) to the tax authority at which the person paying income to non-resident is registered.

5.2. Non-resident shall fill out and submit the DTA-03 Form for each person paying the income (tax agent) separately.

5.3. The DTA-03 Form shall be submitted by the date of income payment and the form shall be accompanied, along with certificate of residency which supports residency of non-resident in other contracting state, by the copies of all supporting documents (contracts, invoices, shareholding, debentures, copyrights, etc.) which are duly certified according to provisions of paragraph 8 hereof and constitute the basis for paying the income and certifying actual possession thereto by the person earning that income.

5.4. When the application is made electronically, supporting documents can be uploaded via the Internet Tax Office portal of the Ministry of Taxes only if the applicant has appropriate authentication tools (login, password, user name, enhanced electronic signature, etc.) for accessing the Internet Tax Office portal.

5.5. If claimed exemption or lower tax rate shall be applied with respect to the non-resident, the tax authority, to which such claim is made, fills out the letter of consent form (Annex 5) attached hereto in the electronic information system of the Ministry of Taxes and upon approval by authorized person of relevant structural unit of the Ministry of Taxes, electronically signs and sends the letter to both the applicant and the person paying the income (tax agent) at the same time. The applicant may request signed and sealed hard copy of the letter of consent from the tax authority. In such case, such letter of consent shall, at applicant’s choice, be either posted to or collected by applicant from the tax authority in person.   

5.6. While paying income to the non-resident, the person paying the income (tax agent) may apply the exemption or lower tax rate stipulated in the international agreement only upon receipt of both the letter of consent provided for in subparagraph 5.5 hereof from the tax authority with which the person paying the income (tax agent) is registered and original copies of all documents submitted to tax authority by non-resident who derives the income. Until receipt of aforesaid letter of consent, application of exemption or lower tax rate with respect to payments made to non-resident is not allowed.   

5.7. Where the DTA-03 Form is not submitted to the tax authority or not submitted in a timely manner or the letter of consent is not received by the time of payment due to any other reasons, the person paying the income (tax agent) shall, as provided by the Tax Code of the Republic of Azerbaijan, levy the withholding tax on payment to non-resident. This being the case, the overpaid withholding tax shall be refunded to non-resident in the manner specified in paragraph 7 herein.

5.8. Original copies of documents submitted by non-resident shall be kept by the person paying the income (tax agent) and submitted to tax officials for corresponding period of tax control procedures.

5.9. If, upon revision of the form, the tax authority does not consider the application of exemption or lower tax rate legally acceptable, via electronic information system of the Ministry of Taxes, upon approval by authorized person of relevant structural unit of the Ministry of Taxes, the relevant notification of refusal (Annex 9) by indicating the grounds for such refusal, is sent to the applicant in soft and hard copy.   

 

6. Confirmation of taxes paid by the non-resident in the Republic of Azerbaijan

6.1. When non-resident pays taxes in the other contracting state, for the purpose of consideration of taxes paid in the Republic of Azerbaijan, the non-resident may apply for confirmation of tax amounts paid in the Republic of Azerbaijan by filling out and submitting the soft or hard copy of the Form on “Confirmation of taxes paid by the non-resident in the Republic of Azerbaijan” (hereinafter referred to as the DTA-04 Form) (Annex 6) to the relevant tax authority of the Republic of Azerbaijan.

6.2. The DTA-04 Form shall be accompanied by copies of all supporting documents (contracts, payment orders, etc.) related to income derived in the Republic of Azerbaijan and taxes payable (charged) with respect thereto duly certified in accordance with paragraph 8 hereof. 

6.3. The DTA-04 Form may be submitted to the tax authority with which the employer is registered by both the employer (separately for each non-resident employee) and the non-resident employee himself/herself. In this case, authorised copies of all supporting documents related to non-resident's salary and other similar payments, also related to withholding the taxes from these payments and their transfer, shall be enclosed to the form in accordance with paragraph 8 hereof.    

6.4. When the application is made electronically, supporting documents may be uploaded via the Internet Tax Office portal of the Ministry of Taxes only if the applicant has appropriate authentication tools (login, password, user name, enhanced electronic signature, etc.) for accessing the Internet Tax Office portal.  

6.5. If, after reviewing, the tax authority approves the information provided in the DTA-04 Form, it fills out the Reference on "Paid taxes" (Annex 7) attached hereto in the Electronic Information System of the Ministry of Taxes and, upon approval by authorized person of relevant structural unit of the Ministry of Taxes, electronically signs it and sends to the applicant. For the purposes of these Regulations, tax amount credited at the expense of payments from taxpayer's personal account sheet shall also be deemed as the tax paid and shall be included in the reference on taxes paid by the non-resident.    

6.6. Applicant may request the signed and sealed hard copy of the reference from tax authority. In this case, at applicant’s choice, the signed and sealed hard copy of the letter of consent shall either be posted to or collected by the applicant from tax authority in person.

6.7. In case of the agreement on recognition of electronic signatures between the other contracting state and the Republic of Azerbaijan, the authorized person of the tax authority may also send the electronically signed reference on paid taxes directly to the competent authority of the other contracting state.   

6.8. If, after reviewing the form, tax authority decides to turn down the application, via the electronic information system of the Ministry of Taxes, the tax authority shall, upon approval by the authorized person of relevant structural unit of the Ministry of Taxes, send notification of refusal (Annex 9) to applicant in soft and hard copies by indicating the grounds for refusal.  

 

7. Refund of taxes overpaid by the non-resident in the Republic of Azerbaijan

7.1. Notwithstanding the fact that the international agreement provides for the tax exemption of non-resident's any income derived from the source in the Republic of Azerbaijan or non-resident's taxation at a lower rate, when the form referred to in paragraph 5 hereof is not submitted or not submitted in a timely manner or when, for any other reasons, the tax paid by the non-resident exceeds that of stipulated in the international agreement, the non-resident may claim the refund of overpaid (overcharged) tax amounts by submitting the soft or hard copy of the Form on “Refund of taxes overpaid by non-resident in the Republic of Azerbaijan” (hereinafter referred to as the DTA-05 Form)(Annex 8).  

7.2. Non-resident shall fill out and submit the DTA-05 Form for each person paying the income (tax agent) in separate manner.   

7.3. For the purposes of the refund of overpaid taxes to non-resident, the DTA-05 Form shall be accompanied with the attested copy of certificate of residency which attests the residency of non-resident in the other contracting state, the copies of all supporting documents which prove payment of income and confirm effective ownership of person on derived income, as well as actual payment (charging) of relevant taxes therefrom, in a manner stipulated in paragraph 8 herein.

7.4. If the form is submitted electronically, the applicant shall have relevant authentication tools (login, password, user name, enhanced electronic signature, etc.) in order to access and upload supporting documents to the Internet Tax Office portal of the Ministry of Taxes.

7.5. If, after reviewing the form, tax authority confirms the refund of claimed tax amounts to non-resident, it shall also be approved by the authorized person of relevant structural unit of the Ministry of Taxes and then, pursuant to procedures established by Decision # 48 of the Cabinet of Ministers of the Republic of Azerbaijan dated to February 23, 2001 on "Regulations about the refund of overpaid taxes, interest rates, and financial sanctions to the taxpayer", the tax authority  composes the “Opinion letter on the refund of overpaid taxes” and sends it to the applicant and local branches of the Ministry of Finance of the Republic of Azerbaijan (hereinafter referred to as the financial authority).

7.6. If, after reviewing the form, the tax authority deems the refund of claimed tax amounts to the non-resident unlawful, it shall fill out the notification of refusal (Annex 9) by indicating the grounds for such refusal in the Electronic Information System of the Ministry of Taxes and then, upon approval by the authorized person of relevant structural unit of the Ministry of Taxes, send it to applicant in soft and hard copies. If, upon revision of the form, the tax authority does not consider the refund of claimed tax amounts to the non-resident legally acceptable, via electronic information system of the Ministry of Taxes, upon approval by authorized person of relevant structural unit of the Ministry of Taxes, the relevant notification of refusal (Annex 9) by indicating the grounds for such refusal is sent to the applicant.     

7.7. Procedures, terms, and other relevant matters with regard to refund of overpaid taxes to non-residents by financial authorities, shall be governed by regulations provided for in subparagraph 7.5 hereof.

 

8. General provisions for submitting the application forms on implementation of international agreement to tax authorities and the revision 

8.1. When application forms set forth in subparagraphs 3.2, 4.1, 5.1, 6.1, and 7.1 hereof are received in soft or hard copy, relevant notification is sent to the applicant (Annex 10).

8.2. According to these Regulations, received forms shall be reviewed by tax authorities within 20 (twenty) business days.

8.3. If additional time is needed for the investigation of received application form, by indicating the grounds the review of form may also be extended to a period not exceeding 20 (twenty) business days. If so, the applicant shall be notified no later than the date of such extension.

8.4. In case of any doubt about the accuracy of information provided in the form or the authenticity of supporting documents, the tax authority may apply to relevant structural unit of the Ministry of Taxes for making an inquiry to competent authorities of other states for verification. Where this is the case, the review period for the form shall be extended by the time of response to enquiry by foreign state and upon such extension, the applicant shall be duly notified about the extension no later than 2 (two) business days.

8.5. In the event of errors made by applicant while filling out the Form, within 2 (two) business days upon the date of detection of such errors, the Form containing the underlined errors shall be sent back to the applicant for correction. In such case, execution of application is terminated and a 20-day execution period is reapplied upon receipt of updated application.

8.6. For the purpose of DTA-05 Form, the certificate of residency approved by tax authorities of non-resident’s state of residence shall include the period for overpaid taxes. With reference to the DTA-03 Form, the certificate of residency shall be deemed effective for one-year period as of the date of its approval.

8.7. Once the application is approved, depending on the nature of the case, the applicant shall be provided with certificate of residency, letters of consent, or the reference stipulated herein, but if refused, the applicant shall be sent a letter of response which comprehensively explains the reasons for such refusal.

8.8. Applicant shall not be required to provide information or documents irrelevant to the nature of the application.

8.9. Supporting documents issued by competent authority of the other contracting state in accordance with national legislation and administration of that State and enclosed to the application form, shall be submitted upon being legalized by the Ministry of Foreign Affairs of the Republic of Azerbaijan or the consulates of the Republic of Azerbaijan abroad.

8.10. Regardless of the subparagraph 8.9 hereof, when the other contracting state accedes to 1961 Hague Convention on "Abolishing the requirement of legalization for foreign public documents” and when this Convention applies to the Republic of Azerbaijan and such other state, legalization of supporting documents shall not be required. In this case, documents shall be apostillized by such State’s competent authority under Hague Convention.

8.11. Irrespective of subparagraphs 8.9 and 8.10 hereof, when the other contracting state joins Chisinau Convention on "Legal assistance and legal relations in civil, family and criminal matters" signed on October 7, 2002 by member states of Commonwealth of Independent Countries (CIS) and when that Convention is applied between the Republic of Azerbaijan and such other state, the documents duly issued and sealed (by using the seal with the image of state emblem) by the competent authority or person of such State shall be accepted without legalization and apostille.

8.12. If other international agreements, to which both the Republic of Azerbaijan and other contracting state are parties, prescribe provisions which are different from those stated in subparagraphs 8.9, 8.10, and 8.11 hereof, the formalization of documents shall comply with those provisions.

8.13. If documents attached to application form are in foreign language, then their notarized translation into Azerbaijani language shall also be enclosed.

8.14. If, according to the requirements of these Guidelines, the application form submitted to the tax authority is signed and submitted by the authorized agent of the applicant, then the copy of the power of attorney notarized in the Republic of Azerbaijan for attesting the power of authorized agent to represent the applicant, shall also be attached to the form.   

8.15. During the application of these Guidelines, peculiarities of agreements on production sharing, main pipelines, and other similar agreements, also the documents relative to application thereof, shall be taken into account.

8.16. Soft copies of all certificates of residency, letters of consent, and statements issued by the tax authority under subparagraphs 3.6, 5.5, and 6.5 hereof, respectively, shall be kept in electronic database of the Ministry of Taxes for subsequent applications and future tax control procedures.