Interest and penalties

There are certain interest and penalties that apply for a failure to comply with the tax legislation. For example, interest on outstanding tax liabilities accrues at a rate of 0.1 percent per day of delay. The following penalties may also be applicable:

Offence

Financial sanctions

Carrying out operations taxable for the

purpose of VAT without appropriate VAT

registration

50% of total VAT payable to the budget

for the whole period of carrying out

activity without VAT registration

Failure to file declarations

AZN 100

Understatement of tax liability

50% of understated tax

Payments from petty cash while tax

sanctions or penalties have been

imposed on bank accounts by the tax

authorities

50% of expenses

paid from petty cash

50% of expenses

paid from petty cash

 

 

Failure to obtain the certificate-duplicate

from the tax authorities

 

100% of money transferred to accounts

opened in non-resident banks and other

non-resident credit institutions for

business purposes without obtaining

a certificate-duplicate from tax

authorities

Failure to remit VAT amounts in

accordance with the procedure

determined by the Tax Code and a

relevant executive authority

50% of the outstanding VAT amount

 

Engaging employees to work prior to a relevant employment agreement coming into the effect in accordance with the Labor Code

AZN 1000 for each such person

 

*The statute of limitation period for a tax law violation is set as three years. More detailed information on the Production Sharing Agreements may be obtained from the Oil & Gas (including regulatory environment of the industry) article of this publication.