COVID - 19 GUIDELINE ON SUPPORT MEASURES TO BUSINESS
COVID-19 Information for Azerbaijan
The World Health Organization declared COVID-19 a pandemic on March 11, 2020, causing huge impact on people’s lives, families and communities. Coronavirus infection (COVID-19) continues to spread rapidly around the world. The long incubation period of the virus, the rate of spread, and the fact that the vaccine has not yet been found are prompting the governments to take more serious measures.
Azerbaijan confirmed its first positive case of COVID-19 on February 28, 2020. The government has adopted a package of measures aimed at reducing the negative impact of COVID-19 outbreak on the national economy, the entrepreneurship and banking sectors, as well as strengthening the social protection of the people. On February 27, an operational headquarters under the Cabinet of Ministers was created to prevent danger that the coronavirus pandemic could cause, to implement preventive and urgent measures. The Operational Headquarters under the Azerbaijani Cabinet of Ministers conducted the measures on social isolation that applied countrywide from March 14. These measures included banning of wedding, mourning ceremonies and other mass gatherings, closure of cultural facilities, theatres, museums, cinemas, entertainment centers, sport centers and other related facilities, prohibition of patient visits by relatives in all medical establishments, specific guidelines for cafes, restaurants, shops, malls, public transportation and etc. Starting March 17, as preventive measures on the spread of coronavirus infection (COVID-19), entry to Baku and Sumgayit cities as well as to Absheron region was limited. International travel is restricted and entry into Azerbaijan has been restricted from all foreign countries. On March 31, Azerbaijan declared special quarantine regime. People are required to stay in private houses and apartments, permanent or temporary places of residence until April 20.
At the same time, Azerbaijan government takes measures to help entrepreneurs deal with the sizeable impact of this pandemic. On March 19, the President of the Republic of Azerbaijan signed a decree on a number of measures to reduce the negative consequences of coronavirus (COVID-19) pandemic and the impact of volatility caused by this infection in the world energy and stock markets on Azerbaijan's economy, macroeconomic stability, employment and business entities in the country. According to the decree, $1 billion AZN from the state budget was allocated to the Cabinet of Ministers for financing these measures. Besides it, Coronovirus Support Fund was established on the initiative of the President of the Republic of Azerbaijan.
Below is a guidance to provide you with the latest tax and legal news arising in the result of governmental responsive measures to COVID-19 in territory of the Republic of Azerbaijan.
On mechanisms for financial support of entrepreneurs in business sectors affected by coronavirus (COVID-19)
On March 19, the President of the Republic of Azerbaijan signed a decree on a number of measures to reduce the negative consequences of coronavirus (COVID-19) pandemic and the impact of volatility caused by this infection in the world energy and stock markets on Azerbaijan's economy, macroeconomic stability, employment and business entities in the country. The Cabinet of Ministers approved Action Plan for implementation of Article 10.2 of that Decree on April 4, 2020. The implementation of the measures to be executed by the Ministry of Economy according to the Action Plan is divided into 3 stages:
- payment of a certain part of the salary of employees working in the sectors affected by COVID -19;
- provision of financial support to individual (micro) entrepreneurs;
- granting tax incentives for business areas affected by COVID -19.
Payment of a certain part of the salary of employees working in the areas affected by COVID-19
This measure envisages the provision of 215 million manat in financial support to entrepreneurs to pay part of the salaries of 300,000 employees (with employment contracts) working in the areas and clusters affected by the pandemic.
Under salary payment mechanism, the certain part of the salaries and relevant social insurance fees payable to employees will be transferred to the bank accounts of employers in a short period of time based on the applications submitted by taxpayers through the electronic offices available in the www.e-taxes.gov.az. Payment will be made in following manner:
All registered taxpayers will be notified by receiving "Pandemic Financial Support Program" to taxpayers’ electronic cabinet and SMS to their mobile phones. Taxpayers must electronically fill out the application form in the relevant subsection of "Application for salary” under "Pandemic Financial Support Program".
Taxpayers must include information about the number of employees in the affected area and their salary fund. This information will be automatically checked by the register database. If the system does not detect discrepancies, the information is automatically accepted and a notification is sent to the taxpayer. Payments to taxpayers will be made in two stages, including months of April and May. The average monthly salary in the country (712 AZN) will be taken as the main criterion when paying a certain part of the salary of employees.
Provision of financial support to individual (micro) entrepreneurs
The financial support mechanism to individual (micro) entrepreneurs will cover only entrepreneurs who have paid taxes, mandatory state social insurance contributions and unemployment insurance contributions for year of 2019. Payment of financial support will be made as follows:
All registered taxpayers will be notified by sending "Pandemic Financial Support Program" to the taxpayers’ electronic cabinet and SMS to their mobile phones. Taxpayers must fill in the application information about their tax regime (being a 2 percent simplified taxpayer, operating with a fixed receipt, engaging in transportation activities, or being a payer of income tax (micro)). This information will be automatically checked by the register database.
If the amount of payment of an individual (micro) entrepreneur to the state budget in 2019 is less than 250 AZN, the entrepreneur will be provided with financial support in the amount of 250 AZN.
If there is an order in the bank accounts of a individual entrepreneur in connection with his debt to the state budget or extra-budgetary state funds, it will be ensured that the transferred funds are not frozen or written off.
Granting tax incentives to the business sectors affected by COVID-19
The following tax benefits and holidays are planned to be provided to business entities operating in the pandemic-affected sectors: exemption of micro-enterprises from paying simplified tax for a certain period of time;
- exemption from property and land tax for a specific term;
- exemptions from taxpayers' profit (income) tax in the certain amount and for certain period;
- reduction of simplified tax for those engaged in catering activities, and exemption from profit (income) tax for profit (income) taxpayers;
- exemption of some taxpayers from value added tax for the certain period;
- exemption from current tax payments for the relevant period of concessional activities;
- extension of the deadline for payment of profit (income) tax according to the results of 2019;
- considering of donations made by individuals and legal entities to the Coronavirus Support Fund as deductible expenses for profit (income) tax purposes;
- exemptions from current tax payments on profit and property tax for certain period;
- value-added tax (VAT) exemption for some food and medicinal products, as well as the raw materials that are necessary for making such products.
- subjecting of value added tax at the rate of zero (0) percent for the provision of voluntary services provided by the taxpayers in connection with the prevention of the epidemic.
DEADLINES FOR SUBMITTING TAX RETURNS
Annex 2 to the Decree of the Cabinet of Ministers of the Republic of Azerbaijan #120 dated March 30, 2020 defines the areas of activity permitted under the special work regime and restricts activities in other areas not mentioned in the list. Based on that decision, the deadline for submission of tax declarations and payment of taxes in connection with the special quarantine period (March 31 - April 20, 2020) is determined as follows by the State Tax Service under the Ministry of Economy of the Republic of Azerbaijan:
• Permitted activities - deadline for submission of annual reports for profit and property tax for 2019 and monthly reports for February 2020 and payment of taxes by taxpayers is April 6 ,2020;
• Restricted activities - deadline for submission of annual reports for profit and property tax for 2019, monthly reports for February and March 2020 and quarterly reports for the first quarter of 2020, as well as submission of a relevant certificate on current tax payments and payment of taxes, including current tax payment is April 21, 2020.
The list of permitted activities during the quarantine regime are confirmed within Annex 2 to the Decree of the Cabinet of Ministers of the Republic of Azerbaijan #120 dated March 30, 2020.
SOCIAL PAYMENTS FOR UNEMPLOYED CITIZENS
According to the Decree on "Conditions and procedure for payment of lump sum amounts to individuals registered as unemployed due to the application of a special quarantine regime during the coronavirus (COVID-19) pandemic" of the Cabinet of Ministers of the Republic of Azerbaijan dated April 7, 2020, another key support tool in the social protection sphere is lump-sum payments in the amount of minimum subsistence level wage - 190 AZN to 200,000 unemployed citizens of the country. The payment is considered for two months - April and May.
Registration of unemployed is carried out through the portal www.e-sosial.az. To enter the portal, it is enough to enter the FIN-code of the identification card. The principle of targeting, as well as the family income of applicants will be taken into account during the issuance of a one-time payment.
MIGRATION ISSUES DURING COVID-19
Taking into account the special quarantine regime applied in our country as a result of the spread of coronavirus infection (COVID-19), the State Migration Service take following measures to simplify the registration process of foreigners and stateless people in the territory of the Republic of Azerbaijan:
- Temporarily waiver of requirement for submission of notarized documents- during electronic applications made to the State Migration Service with regard to obtaining (extending period of) work permits, as well as permits for temporary and permanent residence, applications of persons who cannot submit the relevant documents that should be notarized or approved in an equal way will be accepted without such approval, as well. This privilege is valid until April 30, 2020. The mentioned documents can be requested later if necessary.
- Electronic submission of documents - The State Migration Service encourages applicants to submit necessary documents for obtaining/extension of temporary residence and work permits electronically through https://eservice.migration.gov.az.
- Automatic stay extensions for foreigners in Azerbaijan: applications of foreigners, who were registered upon place of stay within the country and whose staying period expired (and will expire) between March 16 – April 30, and could not leave the country due to the obvious reasons, have been considered accepted by the State Migration Service. Foreigner should make a one-time online payment of state fee to extend their migration status in Azerbaijan. Foreigners can obtain right to stay in the country based on decisions made only after the payment of the state fee:
- extension for 30 days – AZN 15 for minors, AZN 30 for others,
- extension for 60 days – AZN 30 for minors, AZN 60 for others.
- The issuance of visas through the “ASAN Visa” e-portal is suspended for 45 days under the decision of operational headquarters under the Cabinet of Ministers dated March 12, 2020. Foreign citizens intending to visit the Republic of Azerbaijan should apply to the relevant embassies and consulates of the Republic of Azerbaijan for obtaining visas.
UP-TO-DATE EMPLOYMENT GUIDANCE
Cabinet of Ministers of the Republic of Azerbaijan adopted a Decree “On the regulation of the working regime during the special quarantine period in the territory of the Republic of Azerbaijan” on March 31, 2020. Following labor related measures are decided to be done in order to prevent the spread of COVID-19 infection in the territory of the Republic:
- to give strict recommendations to employers to keep the salaries of the employees not engaged in works within the areas other than those permitted by the Decree;
- where possible, ensuring work from home in the form of distant work or telework;
- production calendar and working hours for 2020 remains unchanged during the special working regime;
- to abolish the Decree of the Cabinet of Ministers of the Republic of Azerbaijan No. 113 dated March 25, 2020 “On establishment of non-working days as a special labor regime in the territory of the Republic of Azerbaijan.”
As the result of abolishment of Decree 113, March 26-28 and March 30 -April 4, 2020 for the six-days working week and March 29 – April 3, 2020 for the five-days working week (which were determined non-working days by Decree 113) will be treated as working days and working hours based on production calendar will be 127 hours for March, 2020.
Considering the devastating decline in day to day business caused by current COVID-19 pandemic, employers intend to terminate employment agreements. According to Action plan, to prevent unjustified dismissal, staff reduction in the private sector, the work with employers and daily control over them, covering 664,000 employees of the private sector, will be ensured from April through May. The execution of this action is entrusted to the Ministry of Labor and Social Protection of Population.
UP-TO-DATE EMPLOYMENT GUIDANCE
As we have mentioned and provided list above, there are operation areas that should continue to carry out activity under special quarantine regime under the Decree of the Cabinet of Ministers of the Republic of Azerbaijan #120 dated March 30, 2020. Employees of legal entities, as well as individual entrepreneurs can visit their workplaces after the information on such employees and individuals is entered into the portal “icaze.e-gov.az”. Employers should provide their employees with such permission certification obtained from that portal. Portal is available from April 3, 2020, 10.00 a.m. Cases of entering false information to obtain a permit through the portal "icaze.e-gov.az" will be constantly investigated and will result in liability under the Administrative Offenses and Criminal Codes.
According to the Law of the Republic of Azerbaijan “On Amendments to the Code of Administrative Offenses of the Republic of Azerbaijan” and “On Amendments to the Criminal Code of the Republic of Azerbaijan” dated March 17, 2020, new articles have been added to the Code of Administrative Offenses (AOC) and to the Criminal Code (CC) in relation with the breach of quarantine, or anti-epidemics, sanitary and hygiene rules.
Article 211 of AOC considers that an administrative fine ranging from AZN 100 to 200 shall be imposed on individuals and from AZN 1,500 to 2,000 on officers, and from AZN 2,000 to 5,000 on legal entities for violating anti-epidemic, sanitary, hygiene and quarantine regimes.
According to Article 139-1 of CC, If the violation of anti-epidemic regime, and sanitary, hygiene and quarantine regimes causes spread of diseases or creates real danger of spread of diseases, the punishment in the form of fine in the amount ranging between AZN 2,500 – 5,000 or 3 years' custodial restraint or deprivation of freedom for the period of up to 3 years will be applied. If the same actions will lead to fatality or other grave results, the perpetrators will be sentenced to 3 - 5 years custodial restraint and 3 - 5 years imprisonment.
Pursuant to the Law of the Republic of Azerbaijan “On Amendments to the Law of the Republic of Azerbaijan On Medical Insurance” dated March 30, 2020, implementation of compulsory medical insurance extended till 2021.
According to the Law, a 50 % discount is applied to the amount of insurance fees paid from the part of the salary up to 8,000 manat in the fields that are non-oil and gas sector and belong to the private sector till January 1, 2022.
Additionally, the payment of compulsory medical insurance fees for the followings has been postponed until January 1, 2021:
- individuals working on labor contract basis, military servants, individuals appointed by the Milli Majlis of the Republic of Azerbaijan or the body (institution) determined by the relevant executive authority, and individuals holding elected paid positions;
- individuals registered as taxpayers (individual entrepreneurs, private notaries, members of the bar association);
- individuals rendering works (services) on the basis of civil service agreements;
- each liter of gasoline, diesel fuel and liquefied gas produced in the territory of the Republic of Azerbaijan and directed to domestic consumption (wholesale) and imported into the territory of the Republic of Azerbaijan;
- co-financing amounts.
Provisions on compulsory medical insurance for insured persons not mentioned in the above lists shall enter into force on 1 January, 2023.