Temporary Regulations on the Foreign Currency Account Regime for Residents and Non-Residents of Azerbaijan Republic

These regulations are drawn up in accordance with the Laws of Azerbaijan Republic “on Exchange Control”, “on the National Bank of Azerbaijan Republic” and “on Banks and Banking Activities in Azerbaijan Republic”.

1. General Provisions

1.1. These regulations shall control the conditions for accounts of legal and physical entities - residents and non-residents in credit agencies. Provisions stipulated in these Regulations shall not be valid for the banking activities of the credit agencies of Azerbaijan Republic.

1.2. The following terms have been used in these Regulations:

1.2.1. “Bank” is an authorized bank, as in the Law of Azerbaijan Republic “on Exchange Controls”;

1.2.2. “Foreign Currency” is token money as banknote (paper currency), legal tender notes and coins in circulation which are legal means of payment in the territory of the corresponding foreign state or group of states;

1.2.3. “Residents” :

• physical entities permanently residing in Azerbaijan Republic, including the ones which are temporarily outside Azerbaijan Republic;
• legal persons created in accordance with the legislation of Azerbaijan republic;
• enterprises and organizations based in Azerbaijan Republic and created in accordance with the legislation of Azerbaijan Republic, but not being legal persons;
• diplomatic and other official representations of Azerbaijan Republic situated outside Azerbaijan Republic;
• branches and representations of residents, described in subparagraphs “b” and “c” of this paragraph, situated outside Azerbaijan Republic;

1.2.4. “Non-Residents”:

• physical entities permanently residing outside Azerbaijan Republic, including the ones which are temporarily in Azerbaijan Republic;
• legal persons and enterprises and organizations, which are not legal persons, created in accordance with the legislations of foreign states and based outside Azerbaijan Republic;
• foreign diplomatic and other official representations, as well as international organizations, their branches and representations situated in Azerbaijan Republic;
• branches and representations (bureaus and agencies) of non-residents, described in subparagraph “b” of this paragraph, situated in Azerbaijan Republic;

2. Exchange Earnings to the Accounts of Residents and Non-Residents of Azerbaijan Republic

The means of payment may be received to exchange (foreign currency) accounts of residents and non-residents of Azerbaijan Republic in the authorized banks of Azerbaijan Republic without any limitations, except for:

2.1. Means gained from selling goods and rendering services in the territory of Azerbaijan Republic;

In such cases, license for selling goods and rendering services for foreign currency in the territory of Azerbaijan Republic, in accordance with the instruction of the National Bank of Azerbaijan Republic No 05/2 from November 1, 1994, is required.

2.2. Means paid by non-residents to residents in cash for exporting goods and rendering services by residents of Azerbaijan Republic;

Residents may receive in cash only that foreign exchange which has been preliminarily brought into the Republic by non-residents (physical persons or representatives of legal persons - non-residents) and declared with the Customs. The given operation is to be effected under the following procedure:

• payment in cash shall be stipulated in the Contract;
• means may be accepted only from the non-resident receiving the goods or a physical person authorized by this non-resident;
• means are to be submitted to the cash-box of the resident - supplier within 10 days after the date they were brought in the Republic by the non-resident and declared at the Customs;
• When submitting the means, an acceptance certificate in 3 copies is to be issued. The first copy shall be kept by non-resident, the second shall be with the resident and the third shall stay at the bank serving the resident. Besides, residents shall demand the Customs declaration certifying that the means have been brought into the Republic;
• residents, when receiving the means into the cash-box, shall issue a cash credit slip;
• residents shall submit the received means to the bank on the same day or during the following working day;
• bank, when receiving the means, shall require the following documents:
• the original of exports contract;
• the original of exports Customs declaration;
• copy of cash credit slip of resident;
• the original of the Customs declaration certifying that the means have been brought into the Republic;
• the original of the means acceptance certificate.

2.3 After checking the authenticity of documents, bank keeps copies of the contract, exports Customs declaration and cash credit slip of resident, originals of the other documents and accepts the means from resident. The original of the Customs declaration, certifying that the means have been brought into the Republic, shall be kept at bank only after its complete registration. Prior to this, bank shall make notes on the original of the Customs declaration and keep its copy.

3. Transfers from Accounts of Residents of Azerbaijan Republic

Transfers from Accounts of Residents of Azerbaijan Republic may be made by the following directions:

3.1. Within the Republic:

• transfers directed to the branches and representations of other residents or non-residents, to the person determined by a non-resident for goods imported and sold in the Republic, as well as for the services rendered by non-residents in and outside the Republic;
• participation in authorized capitals of other residents of Azerbaijan Republic on the basis of promotional agreements;
• contributions, social aid and sponsorship;
• credit and interest repayments;
• placing deposits in authorized banks of Azerbaijan Republic;
• transfers directed to the branches and representations based in the Republic, as well as to affiliations and subordinate enterprises (with the corresponding decision of the parent enterprise);
• payment of dividends to founders;
• other operations, not stipulated above, if admitted to be reasonable, may be realized by individual decisions of the National Bank;

3.2. Outside the Republic:

• means, transferred for goods brought into the Republic under imports contracts, as well as for the services rendered by non-residents in and outside the Republic;
• reexport transfers. In this case, residents , when purchasing and reselling goods from one foreign country to another, may pay the cost of goods only after receipt of the means from the country that has purchased these goods;
• advance payments. Advance payments, carried out by residents under imports contracts, are regulated by “Rules of Foreign Trade Regulation in Azerbaijan Republic”, approved by the Decree No520 of the President of Azerbaijan Republic from December 17, 1997;
• repayable means under non-executed contracts;
• payment for education and treatment abroad, as well as rendering material aid to citizens of the Republic for these purposes, transfers, directed to close relatives living abroad. For these purposes, each resident of the Republic may freely transfer 10 000 USD per year (or another currency in equivalent amount);
• payment for subscription to periodical editions of foreign countries. For these purposes, each resident of the Republic may freely transfer 10 000 USD per year (or another currency in equivalent amount);
• pensions, alimony, amounts to be paid abroad on the basis of decisions of courts and other authorized bodies; transfer directed to pay for expenditures of judicial, arbitrary, notarial and other bodies;
• taxes, duties and penalties to be paid abroad on the basis of the valid legislation;
• transfers directed to the branches and representations based outside the Republic, as well as to affiliations and subordinate enterprises (with the corresponding decision of the parent enterprise);
• transfers, carried out by legal persons established in Azerbaijan Republic for the purpose of paying dividends to foreign founders, provided the corresponding tax legislation be observed;
• other operations, not stipulated above, if admitted to be reasonable, may be realized by individual decisions of the National Bank;

3.3. When carrying out the transfers described in paragraphs 3.1.a and 3.2.a of these Regulations, it is required to write a note on the original (front) of imports contract and customs declaration that the payment has been made. This to be certified by the signature of an authorized worker and the stamp of bank, copies of these documents are to be kept in the bank.

The cost of goods under contracts, signed between suppliers and consignees, may only be paid by the organization which receives the goods. Paying for contracts by a third party (including, on the basis of joint activity agreements) may be allowed by individual permissions of the National Bank. If a contract or its appendix provides for payment of means, due to supplier, to settlements account of a third person, such payments may be carried out.

3.4. If the transfers described in the paragraphs 3.2.e., 3.2.f, 3.2.g, 3.2.h, 3.2.i of the present Regulations, are carried out by physical persons, a customer must be required to fill out and submit an application, shown in the annex to these Regulations (Annex 1), to the bank. The given application along with the originals of all certifying documents (contracts, letters, invoices etc.) shall be kept in the bank.

Transfers, exceeding the limit of indicative amount shown in these Regulations, may be allowed by permission of National Bank, if found to be reasonable, issued on the basis of application of bank. All certifying documents must be enclosed to the application being submitted to the National Bank to receive permission.

To register such transfers, a bank must start a special registration log and include the following data:

• description and requisites of person carrying out a transfer (passport number for physical persons);
• purpose and destination of transfer;
• amount being transferred;
• list of enclosed documents;
• other required information.

3.5. The National Bank of Azerbaijan Republic shall permit realization of an operation, if the operation is found reasonable.

3.6. Crediting non-residents by authorized banks of Azerbaijan Republic is not allowed.

Owner of the account ______________________________________

We request you to transfer __________________________________

from my account No______ in your bank ______________________

Purpose of transfer:

1. Payment for education (invoice and letter of the academic establishment are enclosed);

2. Payment for medical treatment (invoice and letter of the medical establishment are enclosed);

3. Payment for participation in a conference, exhibition (invoice and letter of invitation are enclosed);

4. Payment for subscription to periodicals (invoice is enclosed);

5. For other purposes (explain, please)

________________________________________

I certify hereby that all submitted documents are authentic and I bear full responsibility in accordance with the Legislation of Azerbaijan Republic. I request you to deduct all expenditures from account No ___.

Signature __________ Date “____” _______________ 199___.

4. Withdrawing Cash from the Accounts of residents of Azerbaijan Republic.

4.1 Residents may freely withdraw foreign exchange in cash from their accounts, except for:

• means on loan accounts;
• if imports contract provides for it, 50 000 US $ may be paid in cash under each contract (or another currency in the equivalent amount). An individual permission of the National Bank is required for paying cash in excess of this amount.

4.2 In case of means withdrawal in cash , certifying documents on destination and using the means must be submitted to the authorized banks.

4.3 The authorized banks issue the means after verifying submitted documents and reasonability of an operation.

5. Transfers from Accounts of Non-Residents of Azerbaijan Republic

5.1. Means in foreign exchange from the accounts of non-residents may be transferred abroad in the following directions:

• means preliminarily transferred or brought into the Republic in cash. In this case, means transferred or brought into the Republic in cash may freely be transferred abroad by non-residents, provided that Customs declaration, verifying that the means have been brought into the Republic, or extract from personal account, verifying their transfer to the Republic, be submitted;
• repatriation of foreign investments made into the economy of the Republic. The term “foreign investments” means activities provided by the Laws of Azerbaijan Republic “on Investment Activities” and “on the Protection of Foreign Investments”.
• Foreign investments may be freely repatriated, provided that all certifying documents be submitted (Customs declaration, verifying that the means have been brought into the Republic, or extract from personal account, verifying their transfer to the Republic and the document certifying that these means have been invested into various types of activities). Besides, foreign investors are allowed, after payment of corresponding taxes and dues, to transfer abroad income and other amounts, gained on legal basis in connection with the investments, including compensations and loss reimbursements;
• in other cases, individual permission of the National Bank.

6. Withdrawing Cash from the Accounts of Non-Residents of Azerbaijan Republic.

6.1. Non-residents may freely withdraw cash from their accounts.

6.2. Using cash, withdrawn from their accounts, by non-residents is carried out in accordance with the legislation of Azerbaijan Republic.

7. Carrying out Converting Transactions by Residents and Non-Residents

7.1. Physical and legal persons, which are residents or non-residents of Azerbaijan Republic, may, through the authorized banks, convert means on their accounts at Baku Inter-bank Currency Market (BMVB). Physical persons, which are residents or non-residents of Azerbaijan Republic, may convert their cash through the exchange bureaus acting under the authorized banks.

7.2. Residents and non-residents may purchase foreign exchange at BMVB for the purposes described in articles 3 & 5 of these Regulations, as well as for reimbursing travel allowance and representation expenditures.

7.3. Residents and non-residents, for converting foreign exchange at BMVB, shall apply to the authorized banks in accordance with the enclosed sample (Annex 2).

7.4. Residents and non-residents, when purchasing foreign exchange through the authorized banks for the purposes described in articles 3 & 5 of these Regulations and other purposes, must submit to the bank the following documents, in addition to the application:

• which the basis for paying the cost of goods, work and services. the original of the contract shall be returned to the applicant and the copy shall be retained by the bank;
• a copy of invitation and estimate of expenditures for traveling, representation and other;
• a certifying document from a crediting bank for receiving exchange credits;
• for the other purposes, a document verifying the purpose of receiving exchange.

7.5. Banks, after the examination of an application and verifying documents, shall summarize applications of all customers and submit common application. As foreign exchange arrives into a bank, it will be debited to the foreign exchange account of each applicant.

7.6. In case that the means in foreign exchange, purchased for means of residents and non-residents at BMVB, have not been used within 30 calendar days by their destination, they shall be subject to sale at BMVB.

7.7. When applying for selling foreign exchange, residents and non-residents are not required to submit additional documents to the authorized banks.

7.8. Bank commission for converting transactions shall be charged according to mutual agreement with an applicant.

Organisation ______________________________

Address __________________________________

Phone ________ Fax ___________ Telex __________

Full name of the employee authorized to make decisions regarding transactions __________________

We request you to purchase / sell on our behalf _________________

(amount an description of currency)

We request you to deduct from our account No _____ in your bank the cost of foreign exchange to be purchased/sold and commissions in the amount of ___ %.

The currency to be purchased will be used for the following purposes _________________

The application is valid till: _______________________

Chief ___________________________________________

Chief Accountant _________________________________

Seal Date ________________________________________

The National Bank of Azerbaijan Republic is sending “Temporary Regulations on the Foreign Currency Account Regime for Residents and Non-Residents of Azerbaijan Republic” from May 3, 1997 No87. These Regulations shall enter into force from May 12, 1997. You are charged to use the above mentioned Regulations as a guide and provide their execution.

The Instructions of the National Bank of Azerbaijan Republic from March 9, 1995 No14 and from August 10, 1995 No08-05 shall be void since the date of validity of these Regulations.

8. Functioning as the Agents on Foreign Exchange Control by the Authorized Banks of Azerbaijan Republic

8.1 The authorized banks of Azerbaijan Republic, being the agents on foreign exchange control, within the limits of their authorities shall execute control over compliance of foreign exchange transactions carried out by residents and non-residents of Azerbaijan Republic too the requirements of legislation in force, as well as of normative acts of the National Bank.

8.2 The authorized banks, having had violations or shown incompetence while carrying out the operations described herein, shall bear the responsibility as per article 12 of the Law of Azerbaijan Republic “on Exchange Controls” and article 35 of the Law of Azerbaijan Republic “on National Bank of Azerbaijan Republic”.

9. Control of the National Bank of Azerbaijan Republic over the Execution of the Present Regulations

9.1. In accordance the Laws of Azerbaijan Republic “on Exchange Controls” “on National Bank of Azerbaijan Republic”, National Bank of Azerbaijan Republic within the limits of its authorities shall execute control over the realization of foreign exchange transactions by banks, residents and non-residents under the provisions of these Regulations, as well as licenses and permissions.

9.2. The National Bank, when revealing operations, causing doubts, among the operations, described herein, which are carried out by the authorized banks, shall have the right to demand additional documents or explanations on the documents connected with the given operation.

9.3. The National Bank, when revealing violations of these Regulations by banks during inspections, shall have the right to apply the following sanctions to residents, non-residents and the authorized banks:

• if the operations on contracts signed between residents and non-residents cause doubts, The National Bank shall have the right to suspend the mentioned operations;
• to impose fine on banks;
• to deprive banks of the right to carry out some banking operations provided by the license issued by the National Bank;
• to withdraw the licenses issued to banks to carry out transactions with foreign exchange;
• if found necessary, to send the materials of inspection on violations of law to the administrative bodies to take legal actions;

10. Concluding Provisions

10.1. Introducing these Regulations to residents and non-residents shall be the responsibility of the authorized banks.

10.2. These Regulations shall enter into force from the date of their signature.

10.3. Instructions of the National Bank from March 9, 1995 No14 and from August 10, 1995 No08-05 shall be considered void.