To the Minister of Taxes of the Republic of Azerbaijan Mr. Fazil Mammadov

ADMINISTRATIVE COMPLAINT

On cancellation of decisions on the calculation of tax amounts and on recognizing decisions on the appointment of on-site tax audits invalid and unlawful

Dear Mr. Minister!

I want to inform you that according to the decision of the Ministry of Taxes dated May 11, 2017 No. 1719020271327400 "On Calculating Taxes", as a result of a cameral audit carried out by the Tax Authority we were charged taxes in the amount of 3,744.36 manats under the "Declaration of Profit Tax" for the year 2016.

After your letter related to the Administrative Complaint addressed to you on June 1, 2017, No. 408, the General Director of the Department for Analysis and Supervision of Tax Risks, the Chief Tax Service Advisor Natig Telman Oglu Shirinov reviewed our Administrative Complaint addressed to the Ministry of Taxes dated 02.06.2017 (AVIS Registration: from 02.06.2017 № 1717010009705701) on the reduction of the amount of tax for LLC Turan Information Agency, calculated by the cameral tax audit. Having considered the Administrative Appeal, the Ministry of Taxes concluded that, based on the actual circumstances, the evidence provided, the materials collected and the arguments, and also guided by the provisions of the law, the complaint must be granted.

By the Decree of the Ministry of Taxes of June 30, 2017 No. 1717030009784600 "On the satisfaction of the Administrative Appeal," the decision of 11.05.2017 No. 1719020271327400 "On Calculating Taxes" with respect to LLC Turan Information Agency was canceled.

On August 7, 2017, 3 decisions on the profit tax "On Calculating Taxes" were received from the Local Income Department of Baku under the Ministry of Taxes in the online paperwork (e-mail box) of the Turan Information Agency:

- On the basis of Decision No. 1719020481771600 for the year 2014 to the Applicant, 7991.70 manats;

- On the basis of Decision No. 1719020481777800 for 2015 to the Applicant, 9829.20 manats;

- On the basis of Decision No. 1719020481778500 for the year 2016 to the Applicant, 9086.30 manats;

Total tax on profit in the amount of 26,907.20 manats was accrued.

I would also like to note that along with this, the mentioned Department of the Ministry of Taxes also sent us letters dated August 7, 2017 No. 1719020481751200, 1719020481753600 and 1719020481752900 with the demand for documents (data) and explanatory letters required for the Cameral Tax Audit.

On August 08, 2017 our office (Address: Baku, AZ1010, Suleiman Rahimov St., house 186, apartment 24), was visited by a representative of the Department of Preliminary Investigation of Tax Crimes under the Ministry of Taxes, who showed us a decision on the appointment of an extraordinary on-site tax audit. However he refused to give us even a copy of the decision and only left a note about it in the Supervision Book.

As you can see from this entry, according to August 7, 2017, № 170091700105920, in accordance with Article 38.3.5 of the Tax Code, an extraordinary on-site tax audit in Turan Information Agency was appointed to check the compliance with the legislation on payment of taxes and other mandatory payments. According to the written request No. 1700917003106126, presented by the representative, we are required to hand over almost all the accounting documents that we have at our disposal.

The Tax Code of Azerbaijan Republic states that "Extraordinary tax audit may be carried out by tax authorities in the following cases: ....

- 38.3.5. On the basis of any information received from the tax authority from a known source of signs of concealment (understatement) of the taxpayer's income or taxation object." As we can see, on this basis, verification can then be appointed when, firstly, signs are revealed of the taxpayer's concealment (underestimation) of his income or taxable object, and, secondly, there is information about it obtained from a well-known source. However, in the mentioned decision, there is no data at all that the organization has concealed its income and / or understated the object of taxation, and since there are none, there is not a single reference to any sources.

According to the law, it was necessary to publish the source of profit tax for a total of 26,907.20 manats, calculated according to the above-mentioned decisions, and to give us detailed explanations about it. The comments should have reflected on the basis of which points of income and expenditure the annually calculated profit tax was determined.

At the same time, I believe that the solutions presented to us have several contradictions and violations of the law.

The first contradiction - according to Paragraph 37.2 of Article 37 of the Tax Code of the Republic of Azerbaijan (Cameral Tax Audit), the date of issue of the decision contradicts the Tax Code of the Republic of Azerbaijan, since the interval (difference) between the dates of submission of the Declaration and the decision is more than 30 days.

Paragraph 37.2 of Article 37 of the Tax Code of the Republic of Azerbaijan (Cameral Tax Audit) states:

37.2. Cameral tax audit is conducted within 30 working days from the date the taxpayer submits to the tax authorities the tax declaration provided for in Article 72 of this Code. After the end of this period, on the submitted declaration, as well as on the specified declaration filed on the notice specified in Article 37.2-1 of this Code, it is unacceptable to again conduct a cameral tax audit.

The second contradiction - according to Paragraph 37.3 of Article 37 of the Tax Code of the Republic of Azerbaijan (Cameral Tax Audit), if a contradiction or error was found in the information for conducting a cameral audit contained in the required supporting documents and an explanatory letter submitted by us to the tax authority, the tax authority was required to request additional information, documents and explanations from us.

However, after the required supporting documents and an explanatory letter were submitted to the tax authority in connection with the declarations submitted for the noted periods, no additional information, documents or explanations were required from us. According to the law, if contradictions or errors were found in the information we provided, this issue should have been checked by us again.

Paragraph 37.3 of Article 37 of the Tax Code of the Republic of Azerbaijan (Cameral Tax Audit) states:

37.3. If a discrepancy or error is found in the information contained in the documents related to the declaration submitted by the taxpayer for a cameral audit, the tax authority may require additional information, documents and explanations from the taxpayer.

Synchronicity in the decisions and activities of the above-mentioned bodies of the Ministry of Taxes indicates that this activity is aimed at preventing and paralyzing the activity of Turan Information Agency as a mass media. Ignoring the decisions of higher authorities of the Ministry of Taxes, the requirement of the two Departments of accounting documents simultaneously serves the intent to put an end to the freedom of expression of the Applicant.

Actions of the Ministry of Taxes against the Information Agency Turan violate, along with the legislation of the Republic of Azerbaijan, Articles 7, 10, 13, 14, 17 and 18 of the Convention on the Protection of Human Rights and Fundamental Freedoms, as well as Article 1 of Protocol No. 1, Article 4 of the Protocol No. 7 to this Convention.

I ASK YOU TO:

1. To abolish the decisions of the Local Income Department of Baku under the Ministry of Taxes of the Republic of Azerbaijan as of 07.08.2017 No. 1719020481771600, 1719020481777800 and 1719020481778500.

2. To recognize as invalid and unlawful the decision of the Department for Preliminary Investigation of Tax Crimes under the Ministry of Taxes of the Republic of Azerbaijan of August 7, 2017 No. 170091700105920 on the appointment of an extraordinary on-site tax audit at Turan Information Agency LLC.

Yours faithfully,

Mehman Aliyev,

Director of Turan Information Agency