Laws Entered Into Force in January 2018
1. New Law of the Republic of Azerbaijan on Unemployment Insurance
The Law of the Republic of Azerbaijan on Unemployment Insurance came into force on January 1, 2018. This Law defines organizational, legal and economic basis of unemployment insurance, as well as requires payment of unemployment insurance fee by employers and employees. According to the law, insurance tariffs on unemployment insurance are set at the following interest rates:
i) insurance fee paid by insurer (i.e. employer) - 0.5 per cent of calculated total salary;
ii) insurance fee paid by insured (i.e. employee) - 0.5 per cent of employee's salary...
2. Minimum Monthly Salary
According to the Decree of the President of the Republic of Azerbaijan No. 3545 on the Minimum Monthly Salary Increase dated December 25, 2017, the minimum monthly wage is set at 130 manats from 1 January 2018. It is worth noting that in accordance with Article 192.3 of the Code of Administrative Offenses, officials are fined at the amount of 1,000 to 1,500 manats if they pay wages less than the minimum wage established by the relevant executive authority. Therefore, according to the existing amendment, the wages less than the minimum monthly wage should be increased.
3. Subsistence Minimum in the Republic of Azerbaijan for 2018
According to the Law of the Republic of Azerbaijan on the Subsistence Minimum in the Republic of Azerbaijan for 2018 that came into force on January 1, 2018, the subsistence minimum (cost of living) is set as 173 manats in general, 183 manats for able-bodied population, 144 manats for pensioners and 154 manats for children. It is worth mentioning that according to the Tax Code of the Republic of Azerbaijan, if income of the physical person with the main employer (at the place where labor record is maintained) is up to 2,500 manats per month or 30,000 manats annually, then their income will be exempt from income tax in the amount of respectively minimum subsistence (i.e. 173 manats for 2018) or 12 fold of minimum subsistance. Accordingly, the new subsistence minimum established under the Law shall be taken into account when calculating employees' salaries.
4. Amendments to the Labor Code of the Republic of Azerbaijan
The Labor Code of the Republic of Azerbaijan has been amended by the Law dated 31 May 2017. Pursuant to the changes that came into force on January 1, 2018, prior to the termination of employment agreement by the employer on the basis of grounds of reduction of the number of employees or reduction of the staff (paragraph (b) of the Article 70 of the Labor Code), the employee must be officially notified by the employer within the following periods, depending on work experience determined by the employment agreement concluded with employer:
•up to 1 year of work experience – at least 2 calendar weeks;
•2 to 5 years of work experience – at least 4 calendar weeks;
•5 to 10 years of work experience – at least 6 calendar weeks;
•more than 10 years of work experience – at least 9 calendar weeks.
At the same time, according to the amendments, in the case of termination of employment agreement by the employer on the grounds of liquidation of the enterprise or reduction of the number of employees or staff reduction (paragraphs "a" and "b" of Article 70 of the Labor Code), the severance pay shall be paid in the following amounts depending on the work experience determined in accordance with labor contract concluded with employer:
•Up to 1 year of work experience – in the amount of average monthly wage;
•1 to 5 years of work experience- at least in the amount of 1.4 fold of average monthly wage;
•5 to 10 years of work experience– at least in the amount of 1.7 fold of average monthly wage;
•more than 10 years of work experience– at least in the amount of 2 fold of average monthly wage.
In this regard please note that according to the Article 192.6 of the Code of Administrative Offenses of the Republic of Azerbaijan, officials are fined in the amount between 1,500 to 2,000 manats for termination of labor contract violating labor legislation requirements. Therefore, in case of termination of labor contract by employer on the noted grounds, above-mentioned amendments to the legislation should be taken into consideration.
5. Submission of Electronic Invoices by Taxpayers
Starting from January 1, 2018 all taxpayers have to submit electronic invoices to their customers who are legal entities or sole entrepreneurs, for goods, works and services rendered in connection with entrepreneurial activity of such taxpayers. Please note that according to the amendments made to the Tax Code of the Republic of Azerbaijan dated December 16, 2016, the requirement to submit such electronic invoice has been effective since April 1, 2017 for the persons registered as a VAT-payers or whose volume of trade and (or) public catering activities exceeds 200,000 manat in any month (months) of the 12-month period.
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