Capital Legal Services in The Legal500

Capital Legal Services in The Legal500

Capital Legal Services is delighted to announce that the firm has been recognized as ‘a new local firm that’s equipped to compete with international law firms’ in The Legal500. Additionally, Elnur Eyvazov, the lawyer at Capital Legal Services was named as one of two “Next Generation Lawyers” in Azerbaijan by The Legal500.

The Legal 500 analyzes the capabilities of law firms across the world, with a comprehensive research program. The Legal 500 assesses the strengths of law firms worldwide, the results of which can be viewed using the “Rankings” tab at the top of the page of The Legal500.

Exemption from the state duties

On 14 October 2016 the President of Azerbaijan signed the Law on amendment to the Law “On state duty” (hereinafter “Amendment”). Amendment was adopted based on the Law “On Implementation of Investment Projects on Construction and Infrastructure Objects on the basis of Special Financing”.
Amendment covers resident and non-resident legal entities, their branches and permanent representations.

According to the Amendment investors implementing investment projects based on “Build – Operate – Transfer” model are exempt from paying the state duties.

On Grant

On 8 December 2016 the President of Azerbaijan signed the Decree on amendment to the “List of organizations which may issue grant to the legal entities and physical persons of the Republic of Azerbaijan based on their fields of activity funded from the budget of the Republic of Azerbaijan” (hereinafter “Decree”).

According to the Decree, the Ministry of Agriculture of the Republic of Azerbaijan has been added to the list of organizations which may issue grant to the legal entities and physical persons.

On Credit Bureaus

On 7 December 2016 the President of Azerbaijan signed the Decree in order to ensure application of Law “On Credit Bureaus” No. 384-VQ, dated 28 October 2016.
The Law regulates the activities of Credit Bureaus established as a limited liability company or joint-stock company. The Credit Bureaus are subject to a license requirement and engaged in gathering, storage, analysis and sharing of data on the credit history of the subjects of such credit history.

Credit organizations, insurance companies, mobile operators, notaries, courts and investigators may obtain the credit histories from the Credit Bureaus.

“Build – Operate – Transfer” model

On 7 December 2016 was adopted Rule regarding “Build-Operate-Transfer” model approved by the Decree of the President of Azerbaijan (hereinafter “Rule”). The Rule was adopted based on the Law “On Iimplementation of Investment Projects on Construction and Infrastructure Objects on the basis of Special Financing” (hereinafter “Law”).

The Rule regulates the following issues:

• Conditions on implementation of the investment projects on construction and infrastructure objects by investors within the “Build-Operate-Transfer” model (hereinafter “BOT” model);
• Requirements to the investors in accordance with type of construction and infrastructure objects;
• Features and conditions of agreements on implementation of investment projects;
• Determination of goods’ and services’ cost purchased as a result of investment contribution.

For the purpose of the Rule, investor includes resident and non-resident legal entities, their branches and representative offices. The investors are selected through bids or direct invitation to participate in an investment project.
According to the “BOT” model investment expenses of investment projects on construction and infrastructure objects stipulated by the Law (including future income) are paid to the investor by consumers or Ministry of Economy of Azerbaijan.

Agreement for engagement in “BOT” model maybe signed for a period not exceeding 49 years.

On the avoidance of double taxation

The Government of Azerbaijan signed conventions and relevant protocols for the avoidance of double taxation with respect to income taxes (hereinafter “Treaties”) with the Government of Sweden on 10 February 2016 and the Government of Malta on 29 April 2016.

The purpose of the Treaties is:

• Avoidance of double taxation;
• Prevention of fiscal evasion.

On 30 September 2016 the President of Azerbaijan signed Laws No. 309-VQ and 310-VQ on approval of the Treaties signed with the Governments of Sweden and Malta respectively.

The Government of Azerbaijan has signed the international treaties for the avoidance of double taxation with 51 states, including Sweden and Malta. The international treaties signed with 47 states are in the force.

Simplification of customs clearance

The Cabinet of Ministers of the Republic of Azerbaijan (Cabinet of Ministers) adopted Decision No.409 dated 11 October 2016 regarding amendments to the Rules “On declaring the goods and transport facilities passed across the customs border” (Amendments). Amendments were adopted based on the Rules “On using of the “Green corridor” and other gating systems for passing the goods and transport facilities through the customs border” (Rules).

According to the Amendments the number of cases subject to simplified import declaration increased. Hence, prior to the Amendments simplified import declaration was submitted to the customs authorities in following cases:

• when the goods were passed through the customs border by electric transmission lines;
• when the goods were placed under the temporary storage special customs procedure.
Besides the above-mentioned cases, the Amendments provides for the submission of the electronic simplified import declaration using the green, blue, yellow and red gating systems (Gating systems) for passing the goods and transport facilities through the customs border before the goods and transport facilities are taken to the customs territory.
Based on the Rules, the Cabinet of Ministers adopted Decision No.408 dated 11 October 2016 regarding amendments to the Rules “On implementation of customs supervision” (Decision). According to the Decision, the appliance of the gating systems is implemented based on the simplified customs declaration.
The main purpose for appliance of the simplified import declaration and gating systems is simplification of customs clearance.

On Joint Technology Park

The Cabinet of Ministers of the Republic of Azerbaijan adopted Decision No.370, on 27 September 2016 (Decision) based on the Decree of the President On approval of Model Regulation on technology park.

The Decision approved the Rule of organization and management of joint technology park (Rule).

The Rule regulates organization and management of joint technology park (Joint Technopark). The main objective of the Rule is attracting private and foreign investors to the sphere of innovations and high technologies.

The Rule applies to the state-owned, municipal and private lands with the aim of participation of investors in establishment of Joint Technopark on these lands. Joint Technoparks can be both specialized and of mixed profile.

For participation in establishment of Joint Technopark, investor applies with the investment proposal and necessary documents in the following procedure depending on the owner of land:

1. Referring to the state-owned lands:
• to the state executive body or state enterprise (State authority);
• to the state science and education enterprise for establishment the Joint Technopark near the state science and education enterprises (Education enterprise);

2. Referring to the municipal lands:
• to the relevant municipality;

3. Referring to the private lands:
• to the private owner.

Evaluation of investor’s proposal referring to the state-owned lands is conducted by the evaluation commission (Commission) created in the State authority and Education enterprise. In case of positive opinion of Commission under the Education enterprise on investor’s proposal, proposal is submitted to the President of the Republic of Azerbaijan after the submission to the Cabinet of Ministers of Azerbaijan. In case of positive opinion of Commission under the State authority on investor’s proposal, proposal is submitted to the President of Azerbaijan directly.

The decision about establishment of Joint Technopark referring to the state-owned lands is adopted by the President of the Republic of Azerbaijan, referring to the municipal lands by the relevant municipality, referring to the private lands by the private owner.

In case of positive decision on establishment of Joint Technopark, management of Joint Technopark is realized by the management organization according to the participation’s share of investor and state/municipality/private owner depending on the owner of land.

On exporting promotion of non-oil products

The Cabinet of Ministers of the Republic of Azerbaijan adopted Decision No. 401 on 6 October, 2016 (Decision) based on the Decree of the President regarding Additional measures on exporting promotion of non-oil products.

The Decision will enter into force from 1 March 2016 to 31 December 2010.

The Decision approved the list of non-oil products on which exporting promotion is applied. The Decision also approved the Rule on payment of exporting promotion to the persons exporting non-oil products (Rule) and Coefficients applied to the exporting promotion base amount depending on the type of products (Coefficients).

The Rule regulates payment rules of exporting promotion to Persons exporting non-oil products (Persons) by means of the state budget.

In accordance with the Rule, determination of exporting promotion amount is calculated on the basis of exporting promotion base amount and Coefficients approved by the Decision:

exporting promotion base amount x coefficient of product =
= exporting promotion amount

The exporting promotion base amount is three percent of exporting product’s customs value. The exporting product’s customs value is recorded in customs declaration.

The payment of exporting promotion is realized and paid in Azerbaijani manats by the Ministry of Finance of the Republic of Azerbaijan via applications of the Persons to the Ministry of Economy of Azerbaijan.

On rates of custom duties on export-import operations

The Cabinet of Ministers of the Republic of Azerbaijan adopted Decision No. 367 on September 23, 2016 (Decision) regarding changes in the decision “On rates of custom duties on export-import operations in the Republic of Azerbaijan”.

The Decision will be effective on 1 November 2016 and will be in force for two years.

The Decision regulates customs duties of certain goods imported to Azerbaijan. The Decision provides for calculating of import customs duties by the units of measure in USD, not by the customs value (insurance and transport expenses) of these goods.

The Decision applies to the following goods items and listed goods items are calculated based on the following units of measure:

• Meat and edible meat by-products – 1 kg;
• Milk and dairy products, chicken egg, pure honey, food products of animal origin, which was not classified elsewhere – 1000 pieces;
• Vegetables and some edible root crops and tuber crops – 1 kg;
• Edible fruits and nuts; rinds of citrus fruits or crusts of melon – 1 kg;
• Salt, sulfur, ground and stone, plastering materials, lime and cement – 1 kg;
• Wares of stone, gesso, cement, asbestos, mica and similar materials – 1 m2/1kg;
• Ceramics – 1 kg/1000 pieces/1 m2.

The following goods items are exceptions and calculated by the customs value in percent:

• Food processing of vegetables, fruits, nuts or other parts of plants – 15%, but provided that 1 liter is not less than 0,7 USD;
• Alcohol drinks, soft drinks and vinegar – 15%, but provided that 1 liter is not less than 0,7 USD.

Decision is not applied to the all goods of goods items.