On 16 December 2016 the President of the Republic of Azerbaijan signed the law On Non-Cash Settlements (the “Law”).
Below is a general summary of the Law.
Non-cash settlements are defined as follows:
- Settlements from one bank account to another bank account, including using various payment instruments (payment cards, payment instructions) and payment means (mobile telephones, computers and other equipment);
- Settlements using payment terminals;
- Settlements by making a transfer directly in cash to a seller’s bank account.
Non-cash settlements between two taxpayers may only be made using method 1) above, i.e., from one taxpayer’s bank account to another taxpayer’s bank account.
The following transactions must be made by non-cash settlement:
- Payment of taxes, state duties and fees, administrative penalties, financial sanctions and interest specified by law, debts in respect of leasing operations and the granting of credits;
- Payments made under the laws On Insurance Activity and On Obligatory Insurance;
- Service fees and other dues paid to state bodies, legal entities owned by the state and whose controlling block of participatory interests (shares) belongs to the state, budget organizations and public legal entities;
- Payment of salaries (including other payments made by employers), pensions, stipends, financial aid, allowances (including one-off allowances), compensation and contributions, except for the same paid by persons operating in a retail trade, catering or services business whose operations in any month (months) of a12 month period does not exceed AZN 200,000;
- Payment for stationary telephone lines and utilities expenses;
- Payment and refund of interest-free monetary resources (except for those paid by persons who are not taxpayers), other allocations;
- Using (expending) resources received under state procurement agreements;
- Payment of educational fees;
- Payments to tourist agents;
- Payments by VAT registered taxpayers and taxpayers operating in a trade and/or catering business whose taxable operations in any month (months) of a 12 month period exceeds AZN 200,000 in respect of transactions exceeding in a calendar month the total amount of AZN 30,000;
- Payments by taxpayers other than those mentioned in the bullet point above in respect of transactions exceeding in a calendar month the total amount of AZN 15,000.
Settlements with Physical Persons who are not Taxpayers
The following payments in respect of goods purchased from physical persons who are not taxpayers may be made in cash:
- Acceptance of agricultural products from producers of agricultural products;
- Acceptance of ferrous and non-ferrous metal scrap;
- Acceptance of paper, glass and plastic materials for recycling and other purposes;
- Acceptance of used tires for the purpose of recycling.
Responsibility for the Breach of the Law
Financial sanctions for the failure to perform non-cash settlement where a cash settlement is restricted is 10% of the total amount of the transaction, with a subsequent increase when repeated for a second time to 20% and for a third and greater number of times to 40%.
More financial sanctions relate to the failure to use cash registers in settlements with populations and other similar offenses.
The Law shall apply to VAT registered taxpayers and taxpayers whose taxable operations in any month (months) of a 12 month period exceeds AZN 200,000 from 1 January 2017, and with regard to other taxpayers from 1 April 2017.