Latest changes to legislation in April 2023

On February 24, 2023, the Law on amendments to the Civil Code of the Republic of Azerbaijan was adopted. 

According to the changes, 13 existing articlesof the Civil Code are amended and Chapter 37 (Loan Regulations) is completely revised. 

The changes cover two major directions: 

(i) Improvements in the regulation of loan agreements aiming to betterprotect debtors and consumers. In general, the amendment introducesthe following changes: 

·      Lender cannot provide a loan that will be used for buying its ownshares. Also, shares of the creditor cannot be used as a securityfor  the  performance  of  loan  obligations  owed  to  the  same creditor. These measures are taken to prohibit indirectshare buy-backs and the practice of setting off the payments for such buy-backs. 

·      A  detailed  regulation  of  when  a  loan  (money  and  other substituted goods)  is  considered  to be granted and returned/repaid under a loan agreement is provided;

·      Interest is calculated on the outstanding principal amount, rather

than the whole amount of the debt; 

·      Only those who are duly authorized to issue credits are entitled 

to  act as lenders on a  regular basis and  lend  money  to an unlimited number of borrowers for commercial purposes. 

·      A new credit agreement category –consumer credit agreement –is introduced. The mainobjective of this legal instrument is toprotect consumers by adopting specialmeasures, such as the initial information system for the avoidance of any confusion, prohibition of applying fluctuating interest rates, interpretation of all uncertainties in favor of the consumer, etc. 

(ii) Responses to the new challenges in the light of the development of information  society.  The Law covers  the below amendments in this regard: 

·      Contracts (i) concluded electronically or via other technical means and (ii) whose content can be reflected in a material form without beingchanged, will be considered to comply with the written form requirement. Using any method to authenticate the parties  providing  their  expression  of  will  should  satisfy  the signature  requisite.  Any other  special  methods  for  accurate identification can be determined by the law or the agreement of the parties. 

·      Consumption credit agreement can be concluded in any durable 

form along with paper. 

The Law enters into force on October 1, 2023. 

Additional rules for credit institutions

On February 24, 2023,the Law on amendments to the Laws of the Republic of Azerbaijan “On Credit Unions", "On Banks," and "On Non- Bank Credit Institutions" (the “Amendment”) was adopted. 

As  a  result  of  the  Amendment,  it  is  mandatory  to  consider  the requirements of the Civil Code while granting loans by credit unions and receiving (returning) loans from/by credit union members. 

The Amendment provides a new rule concerning the legal regulation ofrelations between banks and their clients. Namely,unless otherwise provided  in  the  Civil  Code,  the  amount  or  calculation  procedure  of interest and (or) other fees arisingfrom credits is determined by the parties' agreement. Interests, including interest for late payments, and additional fees, are calculated only on the amount of the outstanding principal balance until the repayment date. 

Also, provisions of credit agreements concluded by Non-BankCredit Institutions should conform with the requirements of the Civil Code. 

The Amendment came into force on March 31, 2023.

New import limitations on used passenger cars

On 29 March 2023, Decision №94 of the Cabinet of Ministers of the Republic of Azerbaijan “On restriction on import of used passenger cars into the customs territory of the Republic of Azerbaijan” (the “Decision”) was adopted.

The Decision aims at protecting people's life and health, as well as the environment,  reducing  the harmful substances  released  from  motor vehicles, and improving the ecological situation. Accordingly, import of 

passenger cars older than 10 (ten) years, based on the factory release date, to the territory of the Azerbaijan Republic will be restricted. This restriction does not apply to rare (vintage) and temporarily imported passenger cars.

The Decision enters into force on April 28, 2023.

Legislative   changes   related   to   international automobile transportation 

On February 24, 2023, Amendments to the Customs Code and Law “On State Duty” of the Republic of Azerbaijan” (the “Amendments”) were adopted. 

According to the Amendments, issuing permission forms at state border checkpoints to vehicles performing international road transportation hasbeen removed from the list of customsauthorities’ duties. Also, the requirements of the Law “On State Duty” regulating the payment of state duty for such permits have been revoked. 

After amendments, no state duty is applied in the following cases during entry/exit to the territory of the Azerbaijan Republic or transit passage: 

·      In case, the number of entry/exits or transit passages exceeds the   established   quota   for   transportation   of   cargos   and passengers by road by the transporters of the foreign countries that have an Intergovernmental Agreement with Azerbaijan on international road transportation

·      Transportation  of  cargos  and  passengers  by  road  by  the transporters  of  the  foreign  countries  that  do  not  have  an Intergovernmental Agreement with Azerbaijan on international road transportation; 

·      Shipments to and from third countries; 

·      Loading  the  vehicles  registered  in  foreign  countries  in  the 

territory of Azerbaijan 

·      Entry of the unloaded vehicles registered in foreign countries to

the territory of Azerbaijan 

·      Entry of large tonnagevehicles registered in foreign countries 

into Baku, Sumgayit, and Ganja cities 

·      When   the   transporters   who   have   violated   the   interstate 

agreements leave the territory of Azerbaijan. 

The Amendment came into force on March 1, 2023.

Labor   protection   measures   at   no   cost   foremployees 

On February 24, 2023, the Law on amendment to the Labor Code of the Republic of Azerbaijan (the “Amendment”) was adopted.

As per the Amendment, employeesdo not bear any costs related to financing of labor protection measures. 

Prior to the change, this matter was not clearlyspecified in the Labor Code. 

The Amendment came into force on March 10, 2023.

Central   Bank:   New   parameters   of   interest corridors 

On March 29, 2023, the decision of the Management Board of the Central Bank of the Republic of Azerbaijan “on parameters of interest corridors" (the “Decision”) was adopted.

With the Decision, the discount rate (8.75%), the lower limit (7%), and the upper limit (9.75%) of the interest corridor were raised. The Decision wasmade based on the Central Bank's continuing anti-inflationary monetary policy as a reaction to the risks observed in the internaland externalinflation environment. The purpose of the Decision is to reduce inflationand normalize monetary policy. 

The Decision came into force on March 30, 2023. Information about the following decision on monetary policy will be publicly announced on May 3, 2023, and a press conference will be held in this regard. 

New zero-rated goods 

On April 15, 2023, the decisionof the Cabinet of the Ministry of the Republic of Azerbaijan on the amendment to the goods nomenclature of foreign economic activity, and rates of import and export customs duties (the “Decision”) was adopted.

By the Decision, the rates of import customsduties for 270 types of goods  were  lowered  to  0%  until  December  31,  2030.  These  goodsinclude, among others, a number of food and household products. Before changes, rates of import duties for these goods were set as 5% and 15%. 

The Decision will come into force on January 01, 2024.

 

Latest changes to legislation in April 2023

On February 24, 2023, the Law on amendments to the Civil Code of the Republic of Azerbaijan was adopted. According to the changes, 13 existing articlesof the Civil Code are amended and Chapter 37 (Loan Regulations) is completely revised. The changes cover two major directions: (i) Improvements in the regulation of loan agreements aiming to betterprotect debtors and consumers. In general, the amendment introducesthe following changes: ·      Lender cannot provide a loan that will be used for buying its ownshares. Also, shares of the creditor cannot be used as a securityfor  the  performance  of  loan  obligations  owed  to  the  same creditor. These measures are taken to prohibit indirectshare buy-backs and the practice of setting off the payments for such buy-backs. ·      A  detailed  regulation  of  when  a  loan  (money  and  other substituted goods)  is  considered  to be granted and returned/repaid under a loan agreement is provided;·      Interest is calculated on the outstanding principal amount, ratherthan the whole amount of the debt; ·      Only those who are duly authorized to issue credits are entitled to  act as lenders on a  regular basis and  lend  money  to an unlimited number of borrowers for commercial purposes. ·      A new credit agreement category –consumer credit agreement –is introduced. The mainobjective of this legal instrument is toprotect consumers by adopting specialmeasures, such as the initial information system for the avoidance of any confusion, prohibition of applying fluctuating interest rates, interpretation of all uncertainties in favor of the consumer, etc. (ii) Responses to the new challenges in the light of the development of information  society.  The Law covers  the below amendments in this regard: ·      Contracts (i) concluded electronically or via other technical means and (ii) whose content can be reflected in a material form without beingchanged, will be considered to comply with the written form requirement. Using any method to authenticate the parties  providing  their  expression  of  will  should  satisfy  the signature  requisite.  Any other  special  methods  for  accurate identification can be determined by the law or the agreement of the parties. ·      Consumption credit agreement can be concluded in any durable form along with paper. The Law enters into force on October 1, 2023. Additional rules for credit institutionsOn February 24, 2023,the Law on amendments to the Laws of the Republic of Azerbaijan “On Credit Unions", "On Banks," and "On Non- Bank Credit Institutions" (the “Amendment”) was adopted. As  a  result  of  the  Amendment,  it  is  mandatory  to  consider  the requirements of the Civil Code while granting loans by credit unions and receiving (returning) loans from/by credit union members. The Amendment provides a new rule concerning the legal regulation ofrelations between banks and their clients. Namely,unless otherwise provided  in  the  Civil  Code,  the  amount  or  calculation  procedure  of interest and (or) other fees arisingfrom credits is determined by the parties' agreement. Interests, including interest for late payments, and additional fees, are calculated only on the amount of the outstanding principal balance until the repayment date. Also, provisions of credit agreements concluded by Non-BankCredit Institutions should conform with the requirements of the Civil Code. The Amendment came into force on March 31, 2023.New import limitations on used passenger carsOn 29 March 2023, Decision №94 of the Cabinet of Ministers of the Republic of Azerbaijan “On restriction on import of used passenger cars into the customs territory of the Republic of Azerbaijan” (the “Decision”) was adopted.The Decision aims at protecting people's life and health, as well as the environment,  reducing  the harmful substances  released  from  motor vehicles, and improving the ecological situation. Accordingly, import of passenger cars older than 10 (ten) years, based on the factory release date, to the territory of the Azerbaijan Republic will be restricted. This restriction does not apply to rare (vintage) and temporarily imported passenger cars.The Decision enters into force on April 28, 2023.Legislative   changes   related   to   international automobile transportation On February 24, 2023, Amendments to the Customs Code and Law “On State Duty” of the Republic of Azerbaijan” (the “Amendments”) were adopted. According to the Amendments, issuing permission forms at state border checkpoints to vehicles performing international road transportation hasbeen removed from the list of customsauthorities’ duties. Also, the requirements of the Law “On State Duty” regulating the payment of state duty for such permits have been revoked. After amendments, no state duty is applied in the following cases during entry/exit to the territory of the Azerbaijan Republic or transit passage: ·      In case, the number of entry/exits or transit passages exceeds the   established   quota   for   transportation   of   cargos   and passengers by road by the transporters of the foreign countries that have an Intergovernmental Agreement with Azerbaijan on international road transportation·      Transportation  of  cargos  and  passengers  by  road  by  the transporters  of  the  foreign  countries  that  do  not  have  an Intergovernmental Agreement with Azerbaijan on international road transportation; ·      Shipments to and from third countries; ·      Loading  the  vehicles  registered  in  foreign  countries  in  the territory of Azerbaijan ·      Entry of the unloaded vehicles registered in foreign countries tothe territory of Azerbaijan ·      Entry of large tonnagevehicles registered in foreign countries into Baku, Sumgayit, and Ganja cities ·      When   the   transporters   who   have   violated   the   interstate agreements leave the territory of Azerbaijan. The Amendment came into force on March 1, 2023.Labor   protection   measures   at   no   cost   foremployees On February 24, 2023, the Law on amendment to the Labor Code of the Republic of Azerbaijan (the “Amendment”) was adopted.As per the Amendment, employeesdo not bear any costs related to financing of labor protection measures. Prior to the change, this matter was not clearlyspecified in the Labor Code. The Amendment came into force on March 10, 2023.Central   Bank:   New   parameters   of   interest corridors On March 29, 2023, the decision of the Management Board of the Central Bank of the Republic of Azerbaijan “on parameters of interest corridors" (the “Decision”) was adopted.With the Decision, the discount rate (8.75%), the lower limit (7%), and the upper limit (9.75%) of the interest corridor were raised. The Decision wasmade based on the Central Bank's continuing anti-inflationary monetary policy as a reaction to the risks observed in the internaland externalinflation environment. The purpose of the Decision is to reduce inflationand normalize monetary policy. The Decision came into force on March 30, 2023. Information about the following decision on monetary policy will be publicly announced on May 3, 2023, and a press conference will be held in this regard. New zero-rated goods On April 15, 2023, the decisionof the Cabinet of the Ministry of the Republic of Azerbaijan on the amendment to the goods nomenclature of foreign economic activity, and rates of import and export customs duties (the “Decision”) was adopted.By the Decision, the rates of import customsduties for 270 types of goods  were  lowered  to  0%  until  December  31,  2030.  These  goodsinclude, among others, a number of food and household products. Before changes, rates of import duties for these goods were set as 5% and 15%. The Decision will come into force on January 01, 2024. 

Date
4 May 2023
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