Azerbaijan tightens control over use of electronic invoices (Exclusive)

Business Materials 31 January 2019 18:33 (UTC +04:00)

Baku, Azerbaijan, Jan. 30

By Matanat Nasibova – Trend:

The Ministry of Taxes of Azerbaijan has tightened control over the use of electronic invoices and is working on the possibility of changing the inspection mechanism, Sahib Alakbarov, Deputy Minister of Taxes, told Trend.

He noted that amendments to the Tax Code, which entered into force beginning from this year, are mainly aimed at tightening measures against tax evaders. As such, the institution has seriously strengthened control over the use and application of electronic invoices.

"We began using electronic invoices for VAT payers since April 2017, and this was extended to all entrepreneurs from January 1, 2018. A year and a half is the approximate period of adaptation for the people to get used to all the changes, but unfortunately we still have some questions in this area. It is an important direction and is being worked out thoroughly. With this, control over the implementation of laws, including those envisaged in the Tax Code, will be tightened at the same time," Alakbarov said.

Control will be carried out as follows: if shortcomings and deficits will be found in the entrepreneurial activities, then, as per the law in force, applying any sanctions against these persons will not be permitted the first time.

"The first time they will receive a written warning, and only later they will face sanctions in the form of a fine. Moreover, the fines against violators will be toughened up starting from this year already, and the sum increased by many times. For example, should goods without appropriate documentation be detected the first time, the fines applied to them will increase by 10 percent, then by 20 percent, and then by 40 percent of the total value of the product in question for the third and subsequent times. These are very severe penalties," Alakbarov said.

The deputy minister also commented on the issue of conducting on-site tax audits.

"The tax authority cannot but carry out inspections; neither can it completely cancel them. But we are working on a mechanism for changing these audits, and move on to other methods, giving our preference to the remote method, electronic audits, and office audits. As of on-site inspections, changes have also taken place in this direction. As such, in just a year, we have reduced their number threefold. As in, we happen to check every 300th taxpayer. Last year, only one of the 300 taxpayers passed the audit. I suppose that, provided everything is fine with electronic invoices - and there are positive developments in this direction already -, then there will be no need to check people on the ground and take their time," said the deputy minister.

Alakbarov stressed that the changes in the Tax Code of Azerbaijan, which entered into force in 2019, are aimed at ensuring transparency in the work of each taxpayer, as well as creating optimal conditions for the development of the business environment.