Azerbaijani Ministry of Taxes warns banks

Baku, Azerbaijan, Jan.14

By Maksim Tsurkov - Trend:

The Ministry of Taxes of Azerbaijan has warned banks to increase attention to the fulfillment of all obligations under FATCA - the law on US residents Foreign Account Tax, banking circles told Trend.

In particular, the agency is obliged to promptly provide all necessary information about accounts and transactions, including money transfers held by US citizens residing here. And, to be more precise, the banks must provide this information to the Ministry of Taxes on those accounts.

In case of failure of any obligations or delays in provision of reports, the banks will be sanctioned, according to the source.

It should be noted that banks began issuing special forms to customers (self-assessment questionnaire) to fill in when opening an account, during money transfers, opening a deposit account, etc. This is done in order to identify individuals, which are US residents, given the seriousness of this issue, because in case of negligence or other shortcomings banks may suffer large losses.

In this regard, it is suggested to appoint a responsible person for the implementation of these commitments in the banks at the management level, at the level of deputy chairman at least.

Earlier, Azerbaijan and the IRS agreed on conclusion of the intergovernmental agreement for the implementation of the country's banks FATCA - the law on taxation of foreign accounts of US residents. Starting from July 2014, banks in all countries should connect to the IRS system and inform them about these accounts. Otherwise, their relationship will be sanctioned: tax from the payments in favor of the bank's any passive income from US assets in the amount of 30 percent of their volume. As of 2017, it will provide the same collection of revenue from the sale of securities and even transit payments.

Azerbaijan was included in the IRS list of cooperating countries in mid-May, and the deadline for registration of Azerbaijani financial institutions in the system of the American tax authority has been extended until 31 December 2014.

The final text of the Azerbaijan-U.S. intergovernmental agreement, the completion of all the necessary domestic procedures and signing will be held immediately by the end of 2014, and the additional document regulating the practical organization of the exchange of information, provision of privacy and other issues, as expected will be signed by the end of September in 2015.

In 2014, the article 76.2-1 was added to the Tax Code. The article reads as follows:

"Under Azerbaijan's international agreements with other states, the information on financial operations carried out by individuals and legal entities of these states in Azerbaijan, is transferred directly or indirectly to the authorized body of those states in the volume and manner defined by the relevant body of the executive authority."

The article 60.1.4 was also included into the Tax Code. This article envisages financial sanctions for violation of article 76.2-1 - i.e. a fine of 30 percent on transactions on such accounts, or 400 AZN for each such account even if there has not been any activity.

Privileges to determine the scope and order of the transmitted information are transferred to the Cabinet of Ministers, and the Ministry of Taxes of Azerbaijan was appointed the authority with the help of which this transfer will be carried out.

The number of Azerbaijani banks registered in the system today reached 43 out of 44 operating in the country.

Naxcivanbank, Kauthar Bank, Bank Respublika, VTB Bank (Azerbaijan), AGBank, Bank BTB, Rabitabank, Bank of Azerbaijan, Unibank, YapiKredi Bank Azerbaijan, Bank Silk Way, AccessBank , Bank Standard, Ekspressbank, DekaBank, NBC Bank, AFB Bank, Azerbaijan Senaye Banki, as well as the Baku branch of Bank Melli Iran, International Bank of Azerbaijan (IBA), Bank Technique, Zaminbank, Bank Avrasiya, Azer Turk Bank, Muganbank, Caucasian Development Bank, Kapital Bank, Pasha Bank, Gunay Bank, DemirBank, Xalq Bank, Turan Bank, Nikoil Bank, AtaBank, Ganjabank, Bank of Baku, Azerbaijan Kredit Bankı, Parabank, United Credit Bank, Atrabank and Amrahbank, Kredobank, Euro Bank have already joined with the IRS in implementing FATCA.

Furthermore, subsidiaries of Azerbaijani banks in Georgia - Caucasus Development Bank - Georgia joined the system in July. Two subsidiaries of Azerbaijani banks - International Bank of Azerbaijan - Georgia and PASHA Bank Georgia have been registered earlier.

Azerpoct Ltd., the national postal operator of Azerbaijan, the Baku office of the Baker Tilly British auditing and consulting company, Baku Interbank Currency Exchange, the National Depository Center, Pasha Heyat, Gala Heyat and Ateshgah Heyat insurance companies, ADB Broker, Yapı Kredi Invest, Xalq Kapital, UniCapital, BOB Broker, Texnika Kapital Management, Pasha Kapital brokers, as well as the Invest-AZ, Trust Asset Management, AzFinance Asset Management, International Transaction System companies have also joined the system.

Edited by CN

Follow the author on Twitter: @MaksimTsurkov

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