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LAW OF THE AZERBAIJAN REPUBLIC

On December 7, 1999 No. 772-IG

About bases of finance of municipalities

(as amended on 30-10-2018)
Article 1. Purpose of the Law

This Law establishes the principles of forming and use of finance of municipalities, bases of process of forming of the local budget and power of municipalities in these areas and their relations with relevant organs of the executive authority.

Article 2. Legislation on bases of finance of municipalities

The relations arising in connection with forming and use of finance of municipalities are regulated by the Constitution of the Azerbaijan Republic, this Law, the laws of the Azerbaijan Republic "About the status of municipalities", "About the budget system", "About banks and banking activity in the Azerbaijan Republic" and other regulatory legal acts.

Article 3. Economic bases and principles of forming of finance of municipality

1. Economic bases of finance of municipality are constituted by municipal property, municipal lands, the local budget and off-budget funds, the production, serving and other economic activity of municipality.

2. Forming and use of financial resources of municipality are based on the principles of self-government, independence, publicity and coordination of local interests with interests of the republic.

Article 4. Local budget

1. The local budget is the financial resources created and used for realization of the principles of self-government according to the status of municipality, implementation of the municipal powers established by the Constitution and the laws of the Azerbaijan Republic.

The local budget, being the local authority budget, is not component of the government budget.

2. In the course of regulation of the local budget municipalities according to the legislation have the right to receive means from the government budget.

3. In the course of creation and execution of the local budget the general principles of the budget system established by the legislation and the budget classification applied in the Azerbaijan Republic are used.

4. Fiscal year begins on January 1 and comes to the end on December 31.

Article 5. Independence of the local budget

1. Independence of the local budget is provided with availability of own sources of the income and exclusive right of municipality to dispose of means of the local budget.

2. Intervention of bodies of legislative and executive power of the Azerbaijan Republic in the budget activities of municipalities is not allowed, except as specified, provided by the laws of the Azerbaijan Republic.

3. The municipality at discretion disposes of the free remaining balance of the budget formed by the end of financial year.

4. The municipality according to requirements of economic laws independently constitutes, discusses, claims, performs the local budget and exercises control of its execution.

Article 6. Interbudget relations and relations with public authorities

1. The state guarantees independence of local budgets and does not bear responsibility for their obligations. The state guarantee is based on the following:

1.1. Creation of conditions for development of the production sphere and service industry on the basis of investment and monetary policy;

1.2. In case of impossibility of financing of local programs of social and economic development for the income account local byudzhetaopredeleniye of additional sources of the income taking into account opportunities of the government budget or allocation from the government budget of grants and subventions for covering of deficit of the local budget.

2. If bodies of legislative and executive power assign additional powers to municipalities, they provide them with necessary financial resources for implementation of these powers.

3. If the decisions made by executive bodies will be resulted by reducing the income or increase in expenses of local budgets, the amounts of the corresponding reducings or increases are compensated by the bodies which made these decisions.

4. The municipality in stipulated by the legislation procedure provides to statistical bodies and relevant organ of the executive authority information concerning execution of the local budget.

Article 7. Income of the local budget

1. Treat the income of the local budget:

1.1. Land tax of physical persons in the cases provided by articles 206.1-1 and 206.3 of the Tax Code of the Azerbaijan Republic;

1.2. The assessed tax from physical persons;

1.3. The tax of trade on construction materials of local value;

1.4. Tax on profit of the companies and the organizations which are in municipal property;

1.5. payment for placement of the advertizing carrier on the real estate belonging to municipality;

1.6. Resort duty, hotel duty, duty on the parking of cars, the means received for the account of the places of the parking organized on municipal roads and other local taxes and payments established by the law;

1.7. Grants, subventions and loans paid from the Government budget of the Azerbaijan Republic;

1.8. The income arriving according to the legislation of the Azerbaijan Republic from privatization and transfer to the lease and use of municipal property, means arriving from lotteries and also other income gained from activities of municipalities;

1.9. Financial aid and grants of physical persons and legal entities, international organizations and funds;

1.10. Financial resources for payment of the expenses resulting from actions of the state value and decisions of state bodies.

1.11. The percent and sanctions accrued on the local (municipal) taxes and payments in the procedure established by the legislation.

2. Calculation, payment specified in subitems 1.1-1. 4, 1.6 these Articles of the local taxes and payments and procedure for provision of privileges, and also upper limits of their rates are set by the law, need of their application and specific rates are determined by decisions of municipalities.

Payment amount for placement and distribution of advertizing on real estate, being in municipal property, specified in subitem 1. 5, it is established according to article 35 of the Law of the Azerbaijan Republic "About advertizing".

The grants specified in subitem 1.7 of this Article and subvention which are selected to local budgets from the government budget are issued according to the procedure, established by articles 32.2.2 and 34.4 of the Law of the Azerbaijan Republic "About the budget system".

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