By AZE.US
Azerbaijan has decriminalized the failure to return foreign currency proceeds earned through overseas trade.
Beginning January 1, 2027, business executives will no longer face imprisonment under this provision, although the repatriation requirement and substantial administrative fines will remain in place.
The changes were introduced through legislation signed by President Ilham Aliyev. Article 208, titled “Failure to Return Foreign Currency Funds From Abroad,” will be removed from Azerbaijan’s Criminal Code when the new rules take effect on January 1, 2027.
Under the current legislation, executives who fail to return significant amounts of foreign currency earned through foreign economic activity can face up to three years of restricted freedom or imprisonment. Cases involving larger amounts can carry prison sentences of between three and five years.
The abolition of Article 208 removes criminal liability specifically for the non-repatriation of foreign currency proceeds. It does not, however, eliminate the obligation to transfer the money to an authorized bank account in Azerbaijan.
Administrative penalties will continue under a revised Article 483 of the Code of Administrative Offenses.
Under the new rules, officials may be fined between 10% and 20% of the unreturned amount. Legal entities could face penalties ranging from 20% to 30%.
A business or official will be released from administrative liability if the foreign currency is returned before a court or another authorized body issues its decision. These provisions will also enter into force on January 1, 2027.
Natig Jafarli, chairman of Azerbaijan’s opposition Republican Alternative Party, welcomed the abolition of prison terms but described the reform as incomplete.
According to Jafarli, the previous system placed a particularly heavy burden on small and medium-sized businesses, including agricultural exporters. Companies could face prosecution even when overseas buyers failed to make payments within the legally established period for reasons beyond the Azerbaijani exporter’s control.
“At least people will no longer be imprisoned. That is a positive decision, but the fines remain,” Jafarli said in an interview.
He argued that foreign currency should be attracted through incentives rather than threats, criminal cases or financial penalties.
Jafarli cited the example of a farmer who exports $500,000 worth of produce. After meeting tax obligations, he said, the entrepreneur may want to use part of the proceeds to purchase property, open a business or make another investment abroad.
In his view, the government should instead create conditions that make investing in Azerbaijan more attractive than transferring capital to Georgia, Kazakhstan, Uzbekistan, Turkey, Europe or the United States.
Possible incentives could include low-interest financing, tax advantages and greater protection for private property. Such measures, he argued, would encourage entrepreneurs to voluntarily bring their money into the Azerbaijani economy.
Jafarli also supported a broader economic amnesty that could allow Azerbaijani capital currently held abroad to be declared, taxed and invested legally inside the country.
He stressed, however, that such an initiative would require confidence that declared assets would not later be seized and that their owners would not face prosecution after bringing the money home.
According to Jafarli, an independent judiciary, reliable property protections and predictable business regulations are therefore essential if Azerbaijan wants to attract both domestic capital held abroad and foreign investment.
He said he does not currently see a clear mechanism for implementing a full economic amnesty in the near future.
The approved reform nevertheless marks a major shift in the treatment of export proceeds. From 2027, failing to repatriate foreign currency will no longer carry a prison sentence under Article 208, but companies could still lose as much as 30% of the unreturned amount through administrative penalties.
AZE.US