Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Azerbaijan 2015
Phase 1: Legal and Regulatory Framework
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Published on October 30, 2015
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 120 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.
Azerbaijan’s legal and regulatory framework generally requires availability, access and exchange of all relevant information in tax matters in accordance with the international standard. however, the Phase I review identified the need for improvement in certain aspects of legal and regulatory framework. In this regard, Azerbaijan should ensure that an appropriate mechanism is put in place to ensure the ownership information for bearer shares that could have been issued by joint stock companies prior to 15 July 2015. Azerbaijan should also ensure that all entities maintain accounting records for a period of at least 5 years and maintain underlying documentation. On access to information, Azerbaijan should clarify its laws to remove any obstacles in accessing information and ensure that the its competent authority’s access powers are in line with the international standard. At present, Azerbaijan’s network of EOI mechanisms covers 101 jurisdictions and Azerbaijan is continuing to negotiate further agreements to extend their EOI network. The response of Azerbaijan to the recommendations in this report, as well as the application of the legal framework to the practices of its competent authority will be considered in detail in the Phase 2 Peer Review of Azerbaijan which is scheduled to commence in the fourth quarter of 2015. For further information on the exchange of information practice of Azerbaijan and to read the full report click here.