Currency regulation and repatriation of profit

Foreign exchange

Foreign exchange transactions are governed by the Law “on Currency Regulation”. The Central Bank of Azerbaijan (the “Central Bank”) administers the overall enforcement of currency regulation. Various aspects of foreign currency regulation also cover precious metals and foreign securities, among other matters. 

Azerbaijan’s currency control legislation distinguishes between residents and non-residents. The definition of resident includes private individuals having a permanent place of residence in Azerbaijan and legal entities established in accordance with Azerbaijani legislation. Branches and representative offices of foreign entities established in Azerbaijan do not fall within the definition of a resident. Currency operations are divided into routine currency operations and operations involving the movement of capital. Routine currency operations include: 

* Transfers for the payment of goods and services under import/export contracts;

* Transfers in connection with the financing of export/import transactions with a term not exceeding 180 days;

* Transfers of dividends, interest, and other income from deposits, investments, credits and other operations; and

* Non-commercial transfers, for example including transfers of inheritances, wages, pensions or alimony. 

Operations involving the movement of capital include the following:

* Foreign direct investment;

* Purchase of securities;

* Payments for ownership and other rights to immovable property; and

* Making deposits to foreign banks.

Any other currency operation not deemed to be a routine currency operation.

No licensing of currency operations involving the movement of capital is required at present for residents if for the purposes of direct investment, the acquisition of securities, real estate purchase or the transfer of currency to the resident’s deposit account in a foreign bank. There is no specific limitation as to the amount allowed for transfer.

Both residents and non-residents are permitted to hold offshore bank accounts without restriction, may deposit their funds offshore, and are not required to sell foreign currency proceeds or submit a report upon the withdrawal of foreign currency, subject to a routine procedure involving the obtaining of a duplicate of registration certificate from the Ministry of Taxes (e-application is available). Non-resident legal entities may purchase foreign currency on the domestic foreign currency market for routine currency operations and in other cases stipulated by legislative acts. 

Import/Export of Foreign Currency in cash by Individuals 

Resident and non-resident individuals are treated equally with regard to the import of foreign currency in cash form. There are no limitations on the amount of foreign currency an individual may bring into Azerbaijan, provided that the amount is declared to the Azerbaijani customs authorities. In cases where the amount of cash exceeds USD 50,000, within seven days the Azerbaijani customs authorities are required to provide the Central Bank of the Republic of Azerbaijan, the financial monitoring authority and the Ministry of Taxes of the Republic of Azerbaijan with information regarding the date on which the cash was brought in, the person bringing it and information on the country the cash was brought from. 

Residents may import hard currency in cash form into the Republic of Azerbaijan without any limitations, but with appropriate custom clearance through the customs authorities. 

Residents may import hard currency into the Republic of Azerbaijan up to the equivalent of USD 10,000 with appropriate documentation (“Passenger Customs Return”). For the import of hard currency in an amount exceeding the equivalent of USD 10,000, customs clearance is implemented by the customs authorities through the Passenger Customs Return and a Clearance Bill. The same rules are applicable to non-residents. 

Residents may export hard currency in an amount up to the equivalent of USD 10,000 without any documentation, except a declaration to the customs authorities. Non-residents, however, are required to submit certain documents if the amount exceeds USD 1,000. If the USD 10,000 threshold is exceeded, supporting documentation must be provided in any event. 

Alternatively, non-residents are allowed to import hard currency into the Republic of Azerbaijan without any limitations with the appropriate declaration to the customs authorities and to export up to the previously declared amount.

Foreign companies and individuals may have both Azerbaijani manat and foreign currency accounts in a local bank. All settlements within Azerbaijan, including payments of employee salaries, must be made in Azerbaijani manats, with few exceptions. Permission from the Central Bank is required to conduct certain transactions in foreign currency. 

From 1 January 2006, new the Azerbaijani manat was introduced to replace the old manat (AZM). The exchange of banknotes was accompanied by the re-denomination of the currency, at a rate of 1 to 5,000. The international abbreviation for the new manat is AZN.