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VAT payers obliged to submit an Information Form by January 31

Pursuant to the Law of the Republic of Azerbaijan “On Amendments to the Tax Code of the Republic of Azerbaijan” of 29/11/2019, VAT payers shall compile an Information Form on accounts receivable and accounts payable on received advances to January 1, 2020 and submit them to the tax authority by January 31, 2020.

The purpose of the submission of the form is to take into account the amendments made in Article 166 of the Tax Code of the Republic of Azerbaijan regarding the timing of the VATable transaction, and to prevent recalculation of taxes calculated prior to January 1, 2020 by ensuring correct calculation of taxes on transactions. The form shall be submitted by VAT payers until January 1 of this year, and those who have been deregistered since January 1. VAT payers registered after January 1 are not required to submit Information Form.

Speaking at a briefing at the Ministry of Taxes, Emil Rahimov, Head of the Main Department for Economic Analysis and Accounting Control, said that the Information Form shall be compiled and submitted in paper or electronic form to the tax authority. The paper form shall be submitted to the tax authority where the taxpayer is registered. For filing the Information Form in an electronic form, taxpayers can use the newly introduced electronic service on the Internet Tax Administration Portal. To this end, a new application form has been launched in “Online Clerical Work and e-VHF” section of the Internet Tax Administration. By saving time, taxpayers can electronically submit the Information Form to the tax authority using the enhanced signature (ASAN).

However, the monitoring conducted reveals that the submission status of the Information Form by taxpayers is not satisfactory and that the rules required at the time of filing are not followed.

In the event of failure to submit the appropriate form (or when submitted without any indication), the taxpayer shall be considered to have no accounts receivable and accounts payable on received advances in respect of goods, works and services filed by January 1, 2020. In addition to changes in legislation related to the timing of taxable transactions for VAT purposes, monthly information on transactions carried out by taxpayers accounts registered on VAT purposes shall be submitted electronically by banks to the tax authority by the 10th of next month following the end of each month for the purpose of determining tax liabilities in accordance with the requirements of Article 76.1-1 with new content added to the Tax Code. This case may result in recalculation of taxes as at this time there will be difficulties with the tax authority to determine whether the proceeds are related to previous transactions. Furthermore, considering the changes to the legislation, the balance of accounts receivable by January 1, 2020 shall be specified and reflected in the declaration since the newly approved VAT declaration form provides for a separate section on the movement of accounts receivable.

The Ministry of Taxes reiterates that taxpayers are required to submit the Information Form by January 31, 2020 to avoid recalculation of taxes, to preclude additional administrative burdens and financial risks as there will be difficulties with the tax authority to determine whether the proceeds are relevant to transactions made before 01/01/2020.