Being a risky taxpayer is an undesirable situation for taxpayers. Therefore, it is useful to be aware of risky taxpayers and risky transactions in advance. In this article, we will provide detailed information about these concepts.
What are the criteria for a risky taxpayer and how are they determined?
The concepts of risky taxpayer and transaction without goods have been included in the Tax Code since January 1, 2020. A risky taxpayer is a person who carries out non-commodity or risky transactions and meets the criteria for risky taxpayers (listed below) approved by the Cabinet of Ministers. The decision on whether the taxpayer is a risky taxpayer and their removal from the list is made by the Ministry of Economy.
According to the Decision No. 265 of the Cabinet of Ministers of the Republic of Azerbaijan dated July 28, 2020 on "Criteria of a risky taxpayer, including risky transactions", criteria for risky taxpayers and risky transactions have been approved.
According to the legislation, a taxpayer who meets one or more of the following criteria is considered a risky taxpayer:
- when there are persons conducting risky operations;
- when it is determined that the taxpayer conducts transactions without goods as a result of tax control;
- if the manufacturer, importer, or non-importer business person does not have a warehouse or other business entity registered or leased by the tax authority, and also if there is no correspondence between the area of the registered business entity and the volume of imported or acquired goods;
- if during the tax control it is discovered that the goods obtained by the taxpayer and which do not correspond to the type of activity are presented without documentation;
- if the volume of goods purchased or imported by the taxpayer for sales purposes during the last 6 months is at least 3 times more than his turnover during the relevant period;
- a legal entity in which an individual who is considered a risky taxpayer is the founder or head of the executive body;
- a legal entity that is considered to be a risky taxpayer, founded by the founder or head of the executive body, or a legal entity that is the head of the executive body;
- natural persons who are the head of the executive body of more than five legal entities, as well as legal entities of which they are the head of the executive body.
Criteria for risky transactions
As mentioned above, a taxpayer is considered a risky taxpayer if he carries out risky operations. But which operations carried out by the taxpayer are risky tax operations?
According to the decision adopted by the Cabinet of Ministers, the risky transactions defined by the legislation are listed below:
- when it is discovered that the goods imported or purchased by taxpayers are marked differently in electronic invoices;
- when the case of presentation of goods in excess of the volume of goods imported or purchased by taxpayers is discovered.
What are the restrictions on at-risk taxpayers?
The Tax Code has the following restrictions on risky taxpayers:
- Documents obtained during non-commodity transactions are not considered documents confirming expenses deducted from income;
- Tax obligations arising from non-commodity transactions are placed on the beneficiary;
- Information about at-risk taxpayers is considered non-tax or trade secret information;
- Reimbursement of VAT paid for non-commodity and risky transactions is not allowed;
- If the taxpayer is a risky taxpayer, the tax authority has the right to calculate the tax until the date of payment;
- If the taxpayer is a high-risk taxpayer, it provides grounds for conducting an extraordinary mobile tax inspection and an operative tax control measure;
- The time limit for fulfilling the tax obligation is not extended to the risky taxpayer;
- Amounts paid in excess in relation to risky taxpayers are returned after the full completion of tax control measures (on the activity of the taxpayer).
How to get information about risky taxpayers?
Information on whether the taxpayer is on the list of risky taxpayers to the link it is possible to get it in open form by switching.
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