1. Court Cases and Dispute Resolution on Tax Matters
Civil disputes and criminal cases
AmCham Tax & Customs Committee Meeting, 14 March 2014
Altay Mustafayev

2. Pre-Court Proceedings
Criminal Cases
Agenda

3. Pre-Court Proceedings

4. Law on Administrative Proceedings
Applicable Law
Law on Administrative Proceedings
Tax Code

5. Stages for Tax Complaints
Higher tax authority
Tax Appeal Council
Court

6. Complaints to A Higher Tax Authority
Should be filed within 3 months after a tax payer learnt about violation of such tax payer’s rights;
A tax payer has the right to provide evidence and participate in a formal administrative hearing;
The tax authorities bear the burden of proof;
Appeals are considered within 30 days;
During consideration of the appeal, a tax payer may refuse to pay financial sanctions.

7. Complaints to Tax Appeal Council
Chaired by Deputy Minister and composed of the senior officials of the Ministry of Taxes;
Only repeated appeals are considered – a tax payer shall first appeal to a higher tax authority;
Can be appealed online;
Appeals from the decisions of the Minister of Taxes are not considered;
If appealed to a court, the case is terminated by the Council.

8. Court Proceedings

9. Litigation Steps Supreme Court Court of Appeals
Administrative-Economic Court
Court of Appeals
Supreme Court

10. General Features
The tax authorities shall provide that a tax payer was in breach not vice versa
A tax payer may ask for provisional measures
A tax payer may submit additional evidence and request documents from third parties
Failure to appeal to a court will enable the tax authorities to force banks to assess the amount

11. Defenses to Exclude Tax Liability
Lack of violation
Lack of fault
Lapse of time – 3 years from the date of violation

12. Lack of Fault Force mojeure;
Reliance on explanations and advice of the tax authorities if they are given withing the respective scope of competence;
Set-off of tax credit against tax debts;
Curing tax violations before tax audit proactively.

13. Law on Audits in Business Sector and Protection of Rights of Entrepreneurs
Generallly, not applicable to tax audits, but applies to audits conduction by the SSPF
Audits performed with violation of law cannot trigger any penalties or liability against a business
Businesses cannot be liable for breaches occurred as a result of reliance on verbal and written responses of the tax/SSPF authorities

14. Useful Tips
Ask for suspension of arrest of the account and other measures
Make sure to observe time limitations
Provide as much as evidence possible during the first instance hearings
Make sure that your evidence is properly recorded into the minutes of the hearings

15. Criminal Cases

16. Article 213 of the Criminal Code – Tax Evasion
Evasion from taxes and social security contributions
Exceeding AZN 2,000
Committed with direct intent
By an individual

17. Penalties Evasion between AZN 2,000 and AZN 50,000
with or without prohibition to engage in certain business up to 3 years AND
fine (between AZN 1,000 and 2,000) OR
probation works up to 2 years OR
imprisonment up to 3 years
Evasion by an organized group or exceeding AZN 50,000
imprisonment between 3 and 7 years

18. Time Limitation for Criminal Liability
7 years!
As opposed to 3 years for tax liability

19. Process
Investigation is conducted by the Investigation Department of the Ministry of Taxes
Usually the director and chief accountant/outsourced accountant are targeted
After completion of investigation, the case is heard by a respective district court.

20. Thank you! Altay.Mustafayev@bakermckenzie.com