This decision was approved by the Cabinet of Ministers of the Republic of Azerbaijan with Decision No. 381, dated September 3, 2024.
According to Articles 85.1 and 85.2 of the Tax Code, payment deadlines for each tax are defined. Any changes to these established payment deadlines can only be made according to the rules outlined in the Tax Code, and the taxpayer must pay interest if the deadlines for tax payments (including current tax payments) are violated, as per the rules and conditions defined in the Tax Code.
Article 85.10:
When the conditions stipulated in Article 85.6 of the Tax Code are met, the payment period for the tax obligation can be extended by the tax authority’s decision, depending on the taxpayer’s choice, according to the following rules:
- 85.10.1: A deferral of no more than 6 months for the payment of the debt;
- 85.10.2: A deferral of no more than 6 months during the calendar year for the payment of current tax debts;
- 85.10.3: A deferral of up to 1 year for the payment of the debt based on an agreed-upon installment plan. The payment schedule must be formalized through an agreement between the tax authority and the taxpayer.
Initially, under the “Rules for Determining the Taxpayer’s Ability to Pay Tax Liabilities” (hereinafter referred to as the “Rules”), the taxpayer’s free funds for tax payment purposes are determined by subtracting the average monthly expenses from the average monthly income, and then adjusting with the balance in the taxpayer’s current accounts or cash on hand (in national or foreign currency) as of the date of the request. If the taxpayer’s tax debt exceeds 1.3 times their available funds, this is considered as the taxpayer’s inability to pay the tax debt at once, and the payment period will be extended according to the rules in Articles 85.10.1 to 85.10.3 of the Tax Code.
There are some specific nuances in the Tax Code provisions:
85.10-1:
If 75% of the deferred debt is paid within the deferred period, upon the taxpayer’s request, the period set in Article 85.10.1 can be extended for no more than 1 year, and the period set in Article 85.10.3 can be extended for no more than 2 years, based on a decision from the higher tax authority.
85.10-2:
If the payment period for the tax obligation is extended by the tax authority’s decision, measures for debt collection will not be implemented during the extended period, and no interest will be charged, except in the cases specified in Article 85.9-1.4 of the Tax Code.
85.10-3:
If the taxpayer incurs a new tax liability during the deferral period, this new liability must be paid according to the general rules of the Tax Code.
Calculation of Available Funds:
The average monthly income and expenses used for calculating available funds are determined according to the following rules, based on Sections 2.1.1 and 2.1.4 of the Rules:
- 2.1.1: For income (profit) taxpayers, the total income and total expenses (excluding depreciation expenses) shown in the profit tax return for the previous reporting year, which has undergone a desk audit, are divided by 12 (or by the number of months the taxpayer operated in the previous year if they did not operate the full year) to determine the average monthly income and expenses.
- 2.1.2: For simplified tax payers, the total sales (including off-sales) and expenses shown in the simplified tax return for the previous quarter are divided by 3 (or by the number of months the taxpayer operated during the quarter) to determine the average monthly income and expenses.
- 2.1.3: For new taxpayers in the reporting period, the average monthly income and expenses are calculated based on the actual performance indicators (the taxpayer must submit a certificate reflecting these indicators in the appropriate form, along with supporting documentation for their expenses).
- 2.1.4: For new taxpayers in the reporting period, the accuracy of the income and expenses for the simplified taxpayer is verified using data sources available in the tax authority (such as electronic invoices, purchase acts, control cash register receipts, bank account transactions, import-export operations, and other official data sources).
References:
https://e-qanun.az/framework/57967
https://e-qanun.az/framework/46948#_edn573 (Tax Code Article 85)
