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RESOLUTION OF THE CABINET OF MINISTERS OF THE AZERBAIJAN REPUBLIC

of September 3, 2024 No. 381

About approval "Procedure for determination of capability of the taxpayer to repay tax debt"

Being guided by the paragraph the eighth article 119 of the Constitution of the Azerbaijan Republic, for the purpose of ensuring execution of subitem 2.2.4 of the Presidential decree of the Azerbaijan Republic of December 28, 2023 No. 2439 "About application of the Law of the Azerbaijan Republic of December 5, 2023 No. 1033-VIQD "About modification of the Tax code of the Azerbaijan Republic" and settlement of number of the questions following from this", the Cabinet of Ministers of the Azerbaijan Republic DECIDES:

Approve "Procedure for determination of capability of the taxpayer to repay tax debt" it (is applied).

Approved by the Resolution of the Cabinet of Ministers of the Azerbaijan Republic of September 3, 2024, No. 381

Procedure for determination of capability of the taxpayer to repay tax debt

1. General provisions

1.1. This Procedure is developed based on the second offer of article 85.6.2 of the Tax Code of the Azerbaijan Republic (further - the Tax code) and regulates the questions connected with determination of capability of the taxpayer who addressed for prolongation of completion date of the tax liability to repay tax debt.

1.2. The concepts used in this Procedure have the values provided by the Tax code and other regulatory legal acts.

2. Determination of capability of the taxpayer to repay tax debt

2.1. The average monthly income and expenses of the taxpayer are determined by tax authority in the following procedure:

2.1.1. the average monthly income and expenses of the taxpayer are determined by the division of the amounts reflected in quality of total income and total expenses (excepting depreciation expenses) in the declaration on tax on the income (profit) provided by the taxpayer on the income (profit) according to accounting method, chosen for the previous accounting year and on which cameral tax audit is carried out, on 12 (if the taxpayer functioned previous reporting year not in full, then on the number of months of functioning);

2.1.2 the average monthly income and expenses are determined based on the simplified tax declaration provided by the payer of the simplified tax for the previous reporting quarter and on which cameral tax audit, by division of amount of the production received for the provided goods (works, services), including non-operating incomes is carried out, and the expenses determined based on the issue documents submitted by the taxpayer on 3 (if the taxpayer functioned in the previous reporting quarter not in full, then on the number of months of functioning);

2.1.3. the average monthly income and expenses of the taxpayer who recently began activities during the accounting period are determined by calculation of the average monthly income and expenses based on indicators of the actual activities (the taxpayer shall provide with creation of the reference reflecting indicators of the actual activities, in the form of the corresponding declaration (the income, profit or the simplified tax declaration) and appendix to the circulation of the issue documents submitted by the taxpayer on the payer of the simplified tax) and division on the number of months of functioning;

2.1.4. for the purpose of refining of reliability of the income and expenses of the taxpayer who recently began activities during the accounting period, expenses of the payer of the simplified tax information sources which are available in tax authority are used (electronic the invoice, the electronic act of purchase, checks of control cash registers, means on bank accounts, including official data on cash flow on bank accounts and export-import transactions, etc.).

2.2. In the cases provided by subitems 2.1.2 and 2.1.3 of this Procedure in the presence at tax authority of data on expenses of the taxpayer the documents connected with these expenses from the taxpayer are not required.

2.3. If the taxpayer addressed before cameral tax audit of the declaration of the taxpayer respectively about the income, profit and (or) the simplified tax declaration for the previous accounting period or before the expiration of the conducting cameral tax audit established by the Tax code and also before submission of declarations whereas the corresponding declarations were subject to representation, the tax authority makes the decision on refusal in prolongation of completion date of the tax liability, and is reported to the taxpayer about need to address again after permission of the specified cases.

2.4. After deduction of average monthly expenses from the average monthly income by addition of balance to it in treasury (cash desk) of the taxpayer, the current or other accounts in national or foreign currency (with reduction to positive difference between the average monthly income and average monthly expense) for date of the address the tax authority determines available funds of the taxpayer for the purposes of repayment of tax debt.

2.5. If based on the documents submitted according to the Tax code it is determined that the taxpayer incurred the expenses which are not connected with business activity and also the expenses which are not subtracted from the income according to the Tax code, the amount of available funds in proportion increases.

2.6. If the tax debt of the taxpayer exceeds the 3-fold size of its available funds determined according to Items 2.4 and 2.5 of this Procedure in 1,, this circumstance is regarded as inability of the taxpayer to one-timely pay tax debt, and completion date of the tax liability is prolonged by the decision of tax authority depending on the choice of the taxpayer according to the procedure, specified in articles 85.10.1-85.10.3 of the Tax Code.

2.7. Irrespective of other provisions of this Procedure, in case of debt on the VAT because of the advance payments paid to the public legal entity performing within projects of recovery and reconstruction of the territories exempted from occupation at the expense of the funds allocated from the government budget and off-budget state funds and also designing, construction, operation, recovery, repair and reconstruction of highways, bridges, tunnels and other road constructions of the Azerbaijan Republic, to the public legal entities who are under its supervision, the organizations (departments) which do not have the status of the legal entity, to their economic societies, branches and representations, this circumstance is regarded as inability of the taxpayer to one-timely pay tax debt.

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