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13.5. Other Anti-Avoidance Rules

Tax Information Exchange Agreements (TIEAs)

Tax Information Exchange Agreements (TIEAs) provide for the exchange of information on tax matters and Azerbaijan has concluded TIEA with Argentina.

Financial Account Information Reporting and Exchange

Azerbaijan acceded to the OECD Mutual Assistance Convention as amended and the convention entered into force for Argentina on 1 September 2015. Effective September 2018, Azerbaijan has signed the Common Reporting Standard (CRS) Multilateral Competent Authority Agreement and adopted measures to implement the automatic exchange of financial account information with the global standard for exchange of information developed by the OECD under the Common Reporting Standard (CRS).

Further, Azerbaijan concluded an Intergovernmental Agreement (IGA) with the United States on 5 November 2015 to improve international tax compliance and to implement the U.S. Foreign Account Tax Compliance Act (FATCA).

Jurisdictions with Preferential Tax Regimes

From 1 January 2017, dealings with jurisdictions with preferential tax regimes attract greater scrutiny.

Firstly, dealings with persons established in such jurisdictions are subject to the transfer pricing rules, regardless of the actual relationship between the parties (see Sec. 13.4.). Secondly, direct or indirect participation in entities established in such jurisdictions triggers the application of the CFC rules (see Sec. 13.3.).

Effective 1 January 2017, payments of any nature made to persons established in a preferential tax jurisdiction are deemed to be Azerbaijan-sourced and are subject to withholding tax. Effective 1 January 2019, payments made to branches and representative offices of companies registered in preferential tax jurisdictions and any bank transfers to companies in preferential tax jurisdictions are deemed as Azerbaijan-sourced income and are subject to withholding tax (see Sec.5.5. and Sec. 8.2.2.).

The list of jurisdictions so classified is to be determined each year by means of an Executive Order or Presidential Decree. The Presidential Decree of 11 June 2019 lists the following jurisdictions as ones with preferential tax regimes:

Andorra Anguilla Antigua and Barbuda Aruba
Bahamas Barbados Belize Bermuda
British Virgin Islands Cape Verde Cook Islands Cayman Islands
Dominica Fiji Gibraltar Grenada
Hong Kong Jersey Liberia Liechtenstein
Marshall Islands Monaco Montserrat Niue
Panama Palau Samoa St. Kitts & Nevis
St. Lucia St. Vincent & the Grenadines Taiwan Thailand  
The Maldives Trinidad and Tobago Turks & Caicos US Virgin Islands
Vanuatu         |