In series:Global Forum on Transparency and Exchange of Information for Tax Purposes: Peer Reviewsview more titles
Published on November 04, 2016
This report contains the 2014 “Phase 2: Implementation of the Standards in Practice” Global Forum review of Azerbaijan.
The Global Forum on Transparency and Exchange of Information for Tax Purposes is the multilateral framework within which work in the area of tax transparency and exchange of information is carried out by over 130 jurisdictions which participate in the work of the Global Forum on an equal footing.
The Global Forum is charged with in-depth monitoring and peer review of the implementation of the standards of transparency and exchange of information for tax purposes. These standards are primarily reflected in the 2002 OECD Model Agreement on Exchange of Information on Tax Matters and its commentary, and in Article 26 of the OECD Model Tax Convention on Income and on Capital and its commentary as updated in 2004, which has been incorporated in the UN Model Tax Convention.
The standards provide for international exchange on request of foreseeably relevant information for the administration or enforcement of the domestic tax laws of a requesting party. “Fishing expeditions” are not authorised, but all foreseeably relevant information must be provided, including bank information and information held by fiduciaries, regardless of the existence of a domestic tax interest or the application of a dual criminality standard.
All members of the Global Forum, as well as jurisdictions identified by the Global Forum as relevant to its work, are being reviewed. This process is undertaken in two phases. Phase 1 reviews assess the quality of a jurisdiction’s legal and regulatory framework for the exchange of information, while Phase 2 reviews look at the practical implementation of that framework. Some Global Forum members are undergoing combined – Phase 1 plus Phase 2 – reviews. The ultimate goal is to help jurisdictions to effectively implement the international standards of transparency and exchange of information for tax purposes.
The Phase 2 review rates Azerbaijan as overall largely compliant with the international standard. Azerbaijan’s legal framework generally ensures that ownership, accounting and banking information are available and can be obtained in line with the standard. However, the Phase 1 review of Azerbaijan in 2015 identified a need for improvement in certain aspects of legal and regulatory framework including availability of ownership information on legacy bearer shares, minor gaps in the requirement for maintaining accounting information, certain obstacles and lack of clarity on access powers of tax authorities etc. In practice, the regulatory and administrative mechanism of Azerbaijan ensure that all relevant entities and arrangements in Azerbaijan maintain and report ownership and accounting information as required by the standard. The report notes that Azerbaijan has a well-established Exchange of Information system, processes and procedures to manage the exchange of information requests. During the review period, Azerbaijan has provided information to all its treaty partners within the prescribed timelines. Nevertheless, the gaps in the legal framework have not been addressed by Azerbaijan. Therefore, the phase 2 report retains the Phase 1 review recommendations. Further, the Phase-2 review recommends monitoring effective implementation of newly introduced legal obligations on nominees and on joint stock companies. Azerbaijan welcomed the review and expressed its strong commitment to acting on the recommendations made in the report. For further information on the exchange of information practice of Azerbaijan and to read the full report click here.