For the purposes of execution of the Decree of the President of the Republic of Azerbaijan for application of the Law of the Republic of Azerbaijan on «Approval and enforcement of the Tax Code of the Republic of Azerbaijan and relevant legal regulations» and the Tax Code of the Republic of Azerbaijan, approved by the specified Law No. 393 on 30 August 2000, the Cabinet of Ministers of the Republic of Azerbaijan decrees:

1. To approve the «Rules for the refund of overpaid taxes, contributions to compulsory state social insurance and unemployment insurance, interests and financial sanctions to the taxpayer» (attached).

2. This Decree shall enter into force since the date of its signing.

Approved
by the Decree No. 313
of the Cabinet of Ministers
of the Republic of Azerbaijan
of July 16, 2019

Rules
for refund of overpaid taxes, contributions to compulsory state social insurance and unemployment insurance, accrued interests and financial sanctions

1.1. These Rules has been developed in accordance with Article 87.4 of the Tax Code of the Republic of Azerbaijan (hereinafter referred to as the Tax Code), Article 9-1.2 of the Law of the Republic of Azerbaijan "On Social Insurance" and Article 7-1 of the Law of the Republic of Azerbaijan "On Unemployment Insurance" and determine the rules for the return of amounts improperly collected from the taxpayer or the insured person or taxes overpaid by him, contributions to compulsory state social insurance and unemployment insurance, accrued interest, and the same financial sanctions applied for violation of tax laws and legislation on compulsory state social insurance, simultaneously, in accordance with Article 199.12 of the Tax Code of the Republic of Azerbaijan, - property tax paid for property whose privatization has been completed (hereinafter referred to as overpayments to the budget).

1.2. Definitions used in these Rules shall mean the following:

1.2.1. authorities that ensure the receipt of budget funds - customs authorities in relation to road tax, VAT and excise taxes, of which collection is attributed to the authority of the customs authorities, tax authorities - in relation to other taxes, contributions to compulsory state social insurance and unemployment insurance, accrued interest, and also financial sanctions applied for violation of tax legislation and legislation on compulsory state social insurance;

1.2.2. budget - the state budget of the Republic of Azerbaijan in relation to taxes, accrued interest and applied financial sanctions, the budget of the State Social Protection Fund under the Ministry of Labor and Social Protection of the Population of the Republic of Azerbaijan providing social security and protection - in relation to contributions to compulsory state social insurance, accrued interest and the financial sanctions applied and the budget of the Unemployment Insurance Fund - in relation to insurance unemployment contributions and accrued interest.

2. The rights of the taxpayer or an insured person to return the overpayment to the budget

2.1. The taxpayer has the right, within 3 (three) years after the end of the tax reporting period, to demand the return of the amount of tax, accrued interests and financial sanction incorrectly collected from it or overpaid, or to charge them for other taxes, percent of financial sanctions and administrative fines arrears or assignment, with the consent of taxpayer, to payments for further obligations within 5 (five) years after the end of the tax reporting period.

2.2. The insured person has the right, within 5 (five) years after the end of the reporting period, to demand the return of the amount of unemployment insurance contributions incorrectly collected from him or overpaid and accrued interest, or charge them into account of payment of debts on administrative fines applied for evading contributions to unemployment insurance and violation of legislation on unemployment insurance, or charge them, with the consent of the insured, into account of payments for further obligations in connection with unemployment insurance.

2.3. The restriction established in paragraphs 2.1 and 2.2 of these Rules in connection with the term does not apply to the contribution to compulsory state social insurance, accrued interest and financial sanctions established for violation of the legislation on compulsory state social insurance.

2.4. If a taxpayer or an insured person filed a lawsuit against taxes assessed by the tax authority, unemployment insurance contributions, accrued interest and financial sanctions for violating tax laws, then the period from the date of filing this complaint to the date of adoption of the final decision of court, as well as the time periods set forth in Articles 38.7.1, 38.7.2, 38.7.4 and 38.7.5 of the Tax Code, shall not be included in the time period established for the requirement in paragraphs 2.1 and 2.2 of these Rules.

2.5. Property tax paid for state property of which privatization was completed is subject to refund from January 1, 2019 to January 1, 2022 under the conditions specified in Article 199.12 of the Tax Code, and taking into account Article 199.13 of the Tax Code on the basis of a taxpayer application or with his consent is charged to account of the performance of subsequent tax obligations.

2.6. Simplified tax paid by persons engaged in passenger and freight transportation by motor-vehicle transport, regardless of whether they operated in a given month or not, as well as tax paid by individuals engaged in the types of activities specified in Article 218.4.4 of the Tax Code, regardless they functioned during the validity period of “Receipts for the payment of a fixed amount on simplified tax” do not return and do not refund taxes of next periods (month, quarter, half year and year).

3. Application and documents required to refund the overpayment to the budget

3.1. A taxpayer shall apply for refund of overpaid taxes, accrued interests and financial sanctions (Appendix No. 1) subject to subclause 1.2.1 of these Rules to the relevant tax or customs authorities, an application for the refund of property tax paid for state property, of which privatization ended (Appendix No. 2) - to the tax authority, and an insured person - with an Application for the refund of overpaid contributions to compulsory state social insurance and unemployment insurance interest accrued thereon, as well as financial sanctions applied for violation of the law on compulsory state social insurance (Appendix No. 3) - to the tax authority.

3.2. An application for refund of overpayments to the budget shall be submitted to the authorities that ensure the receipt of funds to the budget which the taxpayer or an insured person is registered with.

3.3. If international double taxation avoidance treaties to which the Republic of Azerbaijan is a party stipulate a lower tax rate or full exemption from taxes, then a resident of a foreign state shall submit to the authorities that ensure the receipt of taxes to the budget which the tax agent is registered with an application for a refund the amount of tax withheld at the source of payment on the basis of Article 125 of the Tax Code, with the application of the documents specified in the rules of administration of international native treaties on double taxation avoidance signed between the Republic of Azerbaijan and other countries.

4. Actions of authorities that ensure the receipt of funds to the budget to refund overpayments to the budget

4.1 Authorities that ensure the receipt of funds to the budget shall fulfill the following in connection with the following overpaid taxes, accrued interests and financial sanctions applied:

4.1.1. pay the taxpayer overpayments to the budget for the refund of other taxes, interest, financial sanctions and debts on administrative fines;

4.1.2. with the consent of the taxpayer pay overpayments to the budget for payments against subsequent obligations;

4.1.3. with the exception of the cases provided for in clause 4.8 of these Rules, draw up an opinion in the manner established in clause 4.9 of these Rules, in order to ensure the return to the taxpayer within 45 days at the written request of the taxpayer of the remaining amounts of overpayments to the budget;

4.1.4 customs authorities shall provide the return of excessively collected road taxes in cash in order to ensure the movement of the vehicle without delays at the border crossing point.

4.2. Tax authorities perform the following in connection with overpaid contributions to compulsory state social insurance, accrued interest and financial sanctions applied:

4.2.1. pay overpayments to the budget to repay other debts in connection with contributions to compulsory state social insurance, accrued interest, financial sanctions applied for violation of legislation on compulsory state social insurance and administrative fines;

4.2.2. pay overpayments to the budget to repay debt in connection with unemployment insurance contributions and debts on administrative fines applied for evading unemployment insurance contributions and violating unemployment insurance legislation;

4.2.3. with the consent of the insured, they transfer overpayments to the budget for payments on further obligations in connection with compulsory state social insurance;

4.2.4. draw up an opinion in the manner prescribed by clause 4.9 of these Rules, in order to ensure return within 45 days upon written request of the an insured person of the remaining amounts of overpayments to the budget.

4.3. In connection with overpaid unemployment insurance contributions and accrued interest, the tax authorities perform the following:

4.3.1. pay overpayments to the budget to pay arrears on administrative fines applied for evading unemployment insurance contributions and violating unemployment insurance legislation;

4.3.2. pay overpayments to the budget to repay debts on for compulsory state social insurance contributions, accrued interest, financial sanctions for violating legislation on compulsory state social insurance contributions and administrative fines;

4.3.3. with the consent of an insured person, repay overpayments to the budget for payments for further obligations in connection with unemployment insurance;

4.3.4. draw up an opinion in the manner prescribed in clause 4.9 of these Rules, in order to ensure return within 45 days upon written request of the insured person of the remaining amounts of overpayments to the budget.

4.4. It is not allowed to reimburse amount of debts on taxes, accrued interests and financial sanctions at the expense of overpayments on taxes, accrued interests and financial sanctions on the amount of arrears on contributions to compulsory state social insurance and unemployment insurance, to reimburse overpayments on contributions on compulsory state social insurance and unemployment insurance.

4.5. The 45-day period or the 20-day period set for the return of overpayments to the budget, provided for in the first sentence of clause 4.8 of these Rules, covers the period from the day the taxpayer or an insured person submits an application in respect thereof and the period provided for in the second sentence of clause 4.8 of these Rules - from the day the taxpayer submits an electronic statement in respect thereof until the day the funds are withdrawn from the treasury account of the authorities that ensure the receipt of funds in the budget (in relation to contributions to compulsory state social insurance and unemployment insurance - from the treasury account of the State Social Protection Fund under the Ministry of Labor and Social Protection of the Population of the Republic of Azerbaijan and the Unemployment Insurance Fund accordingly).

4.6. Unless otherwise provided by the Tax Code, in the cases where overpayments made by the taxpayer to the budget for taxes, accrued interest and applied financial sanctions are applied for the refund of other taxes, financial sanctions of interest, the authorities that ensure the receipt of funds to the budget, at the request of the taxpayer, issue him an extract from personal card and reconciliation report, and send him a notice once a quarter within 20 days after the end of the quarter as well.

4.7. Unless otherwise provided by the Tax Code, in the case of assignment of overpayments to the budget for contributions to compulsory state social insurance to repay other debts on compulsory state social insurance, accrued interest, applied financial sanctions and administrative fines, as well as unemployment insurance debts and administrative fines debts applied for evading unemployment insurance contributions and violating the unemployment insurance law, or assigning unemployment insurance overpayments to repay debts on administrative fines applied for evading unemployment insurance contributions and violating unemployment insurance laws, debts on compulsory social insurance contributions, accrued interest, applied by financial sanctions and administrative fines, the tax authorities, at the request of the insured person shall issue him an extract from his personal card and a reconciliation certificate, and shall send him a notice once a quarter within 20 days after the end of the quarter.

4.8. A portion of the taxable amount refunded during the reporting period that exceeds the calculated tax amount shall be returned to a taxpayer for which at least 50 percent of taxable turnover is taxed at the zero (0) rate during the reporting period, within 20 days from the date of submission of an application to the authorities that ensure the receipt of funds to the budget.

For other taxpayers, a portion of the taxable amount refunded during the reporting period that exceeds the calculated tax amount shall be returned within at the latest 4 (four) months from the submission of an application in electronic form by the taxpayer of an application to the authorities that ensure the receipt of funds to the budget.

4.9. Authorities that ensure the receipt of funds to the budget draw up an opinion on the return of taxpayer overpayments or the insured to the budget in 4 (four) copies.

4.10. 2 (two) copies of the drawn up an opinion on refund of tax overpayments (Appendix No. 4) and a copy of the application within 25 days or in the case provided for in the first sentence of Clause 4.8 of these Rules - within 12 days, and in the case provided for in the second sentence of Clause 4.8 of these Rules - within 3 (three) months from the date of receipt of the taxpayer’s application shall be sent by the structures of the authorities that ensure the receipt of funds to the budget in Baku city to the Ministry of Finance of the Republic of Azerbaijan ; by local organizations of the authorities that ensure the receipt of funds to the budget- to the appropriate local financial authority, which is subject to refund of overpayment; 1 (one) copy - to the taxpayer, having overpayments to the budget, and 1 (one) copy remains with the authority that ensure the receipt of funds to the budget.

4.11. 1 (one) copy of the opinion drawn up by the tax authorities on the refund of overpayments on contributions to compulsory state social insurance and unemployment insurance (Appendix No. 5) and a copy of the application within 20 days from the date of receipt of the policyholder’s application are sent to the authority on social security and protection, 1 (one) copy - to the relevant local financial authority in the manner prescribed by Clause 4.10 of these Rules, and 1 (one) copy - to the insured person who has overpayments to the budget, and 1 (one) copy remains with the tax authority.

4.12. Actual amounts of overpayments returned as a result of the opinion drawn on the basis of official information of the financial authorities in relation to the return of taxes, accrued interest and applied financial sanctions, and the authorities social security and protection, in relation to the return of contributions to compulsory state social insurance and unemployment insurance, accrued interest and financial sanctions applied for violation of the law on compulsory state social insurance, shall be reflected in the personal account of the taxpayer or an insured person and shall be taken into account in reports on budget revenues.

4.13. If an taxpayer’s overpayments are assigned to the budget for taxes, accrued interest and applied financial sanctions for the refund of other taxes, interest financial sanctions and administrative fines, the authorities that ensure the receipt of funds to the budget shall submit relevant information to the relevant financial authority in the manner provided for in Clause 4.10 of these Rules, after the end of the quarter until the 10th day of the next month.

4.14. If an insured person’s overpayments are assigned to contributions to compulsory state social insurance to refund other debts on contributions to compulsory state social insurance, accrued interest, applied financial sanctions and administrative fines, as well as debts on unemployment insurance contributions and debts on administrative fines applied for evading unemployment insurance contributions and violation of unemployment insurance legislation for overpayments on unemployment insurance – to refund debts on administrative fines applied for evading contributions to unemployment insurance and violation of unemployment insurance legislation, as well as debts on contributions to compulsory state social insurance, accrued interest, applied financial sanctions and administrative fines, tax authorities shall submit this to the appropriate financial authority and the authority ensuring social security and social protection, relevant information in the manner prescribed by clause 4.10 of these Rules, after the end of the quarter until the 10th day of the next month.

4.15. In all cases of wrong refund of certain amounts to a taxpayer or an insured person, the authority that ensures the receipt of funds in the budget, in order to receive the funds refunded erroneously, requires the refund of these amounts in the prescribed manner.

5. Actions of financial authorities and social security and protection authorities to refund overpayments to the budget

5.1. Financial authorities and social security and protection authorities shall accept the opinions issued by authorities that ensure the receipt of funds to the budget.

5.2. In the cases where it is required to refund centralized income, one copy of the opinions submitted to the local financial authorities, and a copy of the application within 5 (five) days or in the cases provided for in clause 4.8 of these Rules, shall be submitted within 3 (three) days to the Ministry of Finance of the Republic of Azerbaijan.

5.3. Depending on the registration of the taxpayer with the authorities that ensure the receipt of funds in the budget, and the assignment of taxes in accordance with budget legislation to local and centralized revenues, financial authorities shall ensure a non-cash return of funds. Regardless of registration of an insured person with the social security and protection authority, the social security and protection authorities, which own the treasury account, to which funds were received, shall ensure non – cash refund is effected.

5.4. Financial authorities within 5 (five) days shall notify the authorities that ensure the receipt of funds in the budget, about refund of overpayment. The social security and protection authorities shall notify the tax authority and financial authority about refund of overpayments on contributions to compulsory state social insurance and unemployment insurance within 5 (five) days.

5.5. State budget revenues are reduced by the actually refunded amount of overpayments to the budget for taxes. Revenues of the State Social Protection Fund under the Ministry of Labor and Social Protection of the Population of the Republic of Azerbaijan and the Unemployment Insurance Fund are reduced, respectively, by the actually refunded amount of overpayments, respectively, on contributions to compulsory state social insurance and unemployment insurance.

6. Responsibility of the authorities that ensure the receipt of funds to the budget and financial authorities for refund of overpayments to the budget

6.1. From the date of submission by a taxpayer or an insured person an application for the refund of overpayments to the budget until the amounts are refunded (except for the tax paid for a property, of which privatization was completed in accordance with Article 199.12 of the Tax Code) to the authorities that ensure the receipt of funds to the budget, for each day of delay (including the day of payment) a taxpayer or an insured person an interest of 0.1 percent of corresponding amount is paid. Payment of such interests is assigned to decrease in budget revenues.

6.2. If, within 45 days from the date a taxpayer or an insured person submits to the authorities that ensure the receipt of funds to the budget, application for refund of overpaid amounts or, in the case established by the first sentence of Clause 4.8 of these Rules, within 20 days, and in the case established by the second sentence of Clause 4.8 - within 4 (four) months, the amount will be refunded, the interest shall not be paid to the taxpayer or the insured person.

6.3. If delay in refunding overpayments to the budget occurs due to non-compliance by the taxpayer or the insured person with the existing rules, then the interest is not paid for the overdue period.

Annex No. 1
to the "Rules for refund of overpaid taxes, contributions to compulsory state social insurance and unemployment insurance, accrued interests and financial sanctions»

Application
for the refund of overpaid taxes, accrued interests and financial sanctions

Annex No. 2
to the "Rules for refund of overpaid taxes, contributions to compulsory state social insurance and unemployment insurance, accrued interests and financial sanctions»

Application
for refund of the tax paid for a state property of which privatization was completed

Annex No. 3
to the "Rules for refund of overpaid taxes, contributions to compulsory state social insurance and unemployment insurance, accrued interests and financial sanctions»

Application
for refund of overpaid contributions to compulsory state social insurance and unemployment insurance, interests accrued thereon, and financial sanctions applied for violation of legislation on compulsory state social insurance

Annex No. 4
to the "Rules for refund of overpaid taxes, contributions to compulsory state social insurance and unemployment insurance, accrued interests and financial sanctions»

Opinion on the refund of taxpayer’ tax overpayments

Annex No. 5
to the "Rules for refund of overpaid taxes, contributions to compulsory state social insurance and unemployment insurance, accrued interests and financial sanctions»

Opinion on the refund of an insured person's overpayments on contributions to compulsory state social insurance and unemployment insurance