Regulation on operations with foreign currency accomplished by the residents of the Azerbaijan Republic

• I. General
  
• II. Currency profits of residents
  
• III. Regulation on sale of part of currency resources by the residents at a market exchange rate
  
• IV. Regulation on purchase and use of currency resources by the residents
  
• V. Specificities of purchase of currency resources at the expense of state budget

I. General

1.1. The present regulation has been prepared in accordance with Decree of President of the Azerbaijan Republic “About liberalisation of currency regulation in the Azerbaijan Republic”.

1.2. According to the Law of the Azerbaijan Republic “About National Bank of the Azerbaijan Republic” provisions of the present Regulation is binding for all residents — legal entities of the Azerbaijan Republic and those involved in business activity without formation of legal entity irrespective of the form of property, subordinance and kind of activity (hereinafter — the “Enterprises”)

II. Currency profits of residents

2.1. Profits obtained by the residents of the Azerbaijan Republic from sale of commodities (works, services) on the territory of the Azerbaijan Republic and their export less expenditures in hard currency on same operations, irrespective of methods of implementation and character of transactions, constitute their currency profits.

2.2. Customs duties, expenditures in hard currency connected with transportation, handling, storing and insurance of cargo are not included into the currency profits of the exporters.

III. Regulation on sale of part of currency resources by the residents at a market exchange rate

3.1. From 13 March, 1995 forth 30 percent of currency profits of the residents of the Azerbaijan Republic (legal entities and also enterprises and organisations without the status of legal entity), irrespective of form of property and kind of activity, must be sold at the auctions of Baku Interbank Currency Exchange.

Selling rate of currency is determined in the course of the auction in accordance with demand and supply.

3.2. Whenever currency takings of the enterprises arrive in blocking accounts of the enterprises the authorised banks shall notify their customers and within 2 banking days supply them with references-extracts from currency accounts.

3.3. Having received references from the authorised banks about transfer of money to the blocking currency accounts the enterprise within 10 working days sends application for sale of currency.

The reference shall include sum of currency presented for sale, manat account of the enterprise and other necessary data (Supplement No 1).

The lower limit of the obligatory currency sum to be sold is not established.

3.4. In case if 30 percent of profits of the enterprises and organisations under one agreement constitute the sum less than 1000 US dollars they will be exempted from obligatory sale of currency profits.

3.5. In case if the enterprise failed to present the application within the specified term then within next 3 working days authorised banks put out for sale at the next auction, without acceptance, 30 percents of transferred currency takings.

3.6. Authorised banks are responsible for timely and in due amount sale of the part of currency profits at the auction of currency exchange.

3.7. Authorised banks accomplishing operations in foreign currency shall provide the sale of 30 percents of their currency profits at the end of each quarter at the currency exchange auction.

3.8. Remaining currency resources of the residents after the obligatory sale through the currency exchange will be placed at the residents' disposal except cases specified in the present Regulation.

3.9. Currency resources which have been put out for sale at the currency exchange auctions but have not been sold during the three subsequent auctions as there was no demand shall be transferred to the current currency accounts of the enterprises.

IV. Regulation on purchase and use of currency resources by the residents

4.1. The enterprises have the right to buy currency resources at Baku Interbank Currency Exchange through the authorised banks.

4.2. The residents may buy currency resources at Baku Interbank Currency Exchange with the following objectives:

• to accomplish payment of cost of commodities, works and services to non-residents on contractual basis;
• to cover travelling expenses, representation and other expenses in connection with the residents' trips abroad;
• to repay the credits received in foreign currency and percents thereto;
• to pay dividends and percents in cases envisaged by the legislation;
• with other objectives not contradicting the normative acts of National Bank.

4.3. On condition of strict observance of instructions governing the open position of the Bank as per the foreign currency operations the authorised banks may buy currency at Baku Interbank Currency Exchange at their own expense.

4.4. For purchase of currency the enterprises send applications to authorised banks (banks possessing currency accounts) in accordance with the form given in Supplement No 2.

The applications are accepted by the banks only whenever at the Customer' account there is manat equivalent necessary for purchase of currency (if manat and currency accounts are within one and the same bank) or on transfer of manat equivalent to the bank possessing the currency account.

4.5. For purchase of currency resources the enterprises, together with the application, shall present to the authorised banks the following documents:

• first copy and duplicates of contracts being the basis for payment of cost of commodities, works and services to non-residents. On return of the first copy to the customers authorised bank should keep the copy;
• the copy of invitation and estimate of expenditures for payment of travelling expenses, representation money etc.;
• confirming document of creditor bank for payment of currency credits;
• documents confirming currency purchase for other objectives.

4.6. The authorised banks, having checked the accuracy of applications and confirming documents, after consideration of all applications of the customers present joint application to the currency exchange and after arrival of purchased currency resources to the bank transfer said currency to currency accounts of the enterprises.

4.7. During periods between the auctions at Baku Interbank Currency Exchange the authorised banks might convert manat resources of the enterprises only for payment of travelling expenses and representation expenditures, at the exchange rate of the bank on the date of convertation.

In such cases the difference between the convertation rate and exchange rate of National Bank cannot exceed ± 5 percent.

4.8. Currency resources purchased for the enterprises at Baku Interbank Currency Exchange should be spent within 60 days from the date of their entry to the accounts and only for the objectives specified in confirming documents.

After expiration of 60-day term the authorised bank writes off from the customer' account, without acceptance, currency resources bought at the currency exchange and provides their sale at the currency exchange with subsequent transfer of manat equivalent to manat account of the enterprise.

4.9. Currency resources purchased at Baku Interbank Currency Exchange might be transferred abroad in the following cases:

• for opening letters of credit;
• if there are confirming customs documents, for payment of cost of commodities imported into the Republic under the consignment agreements;
• for payment of cost of services rendered to residents based on payment documents (invoices) of non-residents;
• for other objectives determined by the National Bank.

4.10. Sum of advance payments of the enterprises, irrespective of the form of property, based on respective contracts, should not exceed 30 percent of the total sum of the contract.

If 30 percent of sum of the contract exceed the sum specified by the National Bank of the Azerbaijan Republic or amount of other currency which is equivalent to this sum, the enterprise must obtain in an established order, based on the application of the authorised bank permit of the National Bank.

Commodities envisaged in the contracts in connection with which advance payments abroad should be done, must be brought to the Republic within 180 days, with presentation of confirming documents to authorised banks.

In cases when the resources have not been returned or commodities under the contract have not been brought to the Republic within 180 days the authorised bank suspends operations with all accounts of the enterprise and on the same day notifies National Bank of the Azerbaijan Republic and Main State Tax Inspection of the Azerbaijan Republic.

V. Specificities of purchase of currency resources at the expense of state budget

5.1. Manat resources required for payment of necessary foreign currency expenditures of state power and administrative bodies of the Azerbaijan Republic are allotted from the Republican budget. With this objective Ministry of finances of the Azerbaijan Republic opens financing for organisations buying hard currency and transfers required manat resources to their current account.

5.2. Budgetary organisations purchase currency resources in an order specified by paragraph 4.4 of the present Regulation.

5.3. Authorised bank buying currency at Baku Interbank Currency Exchange based on the application transfers said currency to the currency account of the customer.