Common use of Accounting and Tax Returns Clause in Contracts

Accounting and Tax Returns. (a) Each Contractor Party shall: (i) Maintain its tax books and records exclusively in Dollars. (ii) Recognise in its tax accounts income and expenditure at the time that such items would be recorded in accordance with the accounting principles adopted in the Azerbaijan Republic; i.e. on a cash receipts and disbursements basis. (iii) Draw up its tax financial statements and Profit Tax returns exclusively in Dollars and submit one set of accounts for the Calendar Year consisting of a tax balance sheet and profit and loss account, together with one Profit Tax computation for the Calendar Year reflecting the Hydrocarbon Activities of all of its Permanent Establishments in the Azerbaijan Republic. (iv) Have its tax financial statements and Profit Tax return for each Calendar Year audited by an auditor appointed by the Contractor Party and approved to carry out such audits by the appropriate authority of the Azerbaijan Republic. (v) Submit such tax financial statements and Profit Tax returns for each Calendar Year together with an appropriate comment from the auditor to the Tax Inspectorate no later than the fifteenth (15th) April of the following Calendar Year. (vi) Beginning in the first Calendar Year in which it estimates it will earn a Taxable Profit, pay estimated Profit Tax for each Calendar Quarter based upon its estimate of its Taxable Profit for such Calendar Quarter and for the preceding Calendar Quarters in such Calendar Year. Estimated Profit Tax shall be paid on or before twenty-five (25) days following the end of the relevant Calendar Quarter and shall be accompanied by a calculation in the form as set out in Article 12.3(a). In calculating the estimated Profit Tax for a Calendar Quarter, each Contractor Party may utilize the Annual Work Programme along with any other information which it deems appropriate. (b) Upon filing the final Profit Tax return for a Calendar Year, estimated Profit Taxes paid with respect to the Calendar Quarters during such Calendar Year will be credited against the final Profit Tax as calculated on the Profit Tax return. Any overpayment will be refunded to the Contractor Party within ten (10) days of submitting its final Profit Tax return for such Calendar Year (or at the election of the Contractor Party, credited against the following Calendar Quarter's or Quarters' estimated Profit Tax payment(s)) and any underpayment will be paid by the Contractor Party within ten (10) days of submitting such final Profit Tax return. In any event the final Profit Tax for a Calendar Year as calculated in the Profit Tax return shall be payable no later than twenty-fifth (25th) April of the following Calendar Year. (c) All estimated and final payments (and refunds of overpayments) of Profit Tax and any interest, penalties and fines thereon as described in Article 12.4(d) below shall be made in Dollars. (i) The filing of the Profit Tax returns and payment of Profit Tax thereunder shall be deemed to be a final and conclusive settlement of all Profit Tax liabilities for that Calendar Year upon the date thirty- six (36) months from the date the Profit Tax return for such Calendar Year was filed. The Contractor Party and the Tax Inspectorate may, by mutual agreement, extend this period. (ii) The Tax Inspectorate shall have the authority to conduct an audit of each Contractor Party's Profit Tax return for each Calendar Year. Upon completing such audit, the Tax Inspectorate shall discuss any proposed adjustments with the Contractor Party and, where appropriate, issue a notice of additional Profit Tax due or a notice of refund. Any agreed underpayments or overpayments of Profit Tax shall be paid within ten (10) days following receipt by the Contractor Party of the appropriate notice. If the Contractor Party and the Tax Inspectorate are unable to agree upon the amount of Profit Tax underpaid or overpaid, the issue shall be submitted to arbitration applying the principles contained in Article XXIII. (iii) Upon a final determination that there has been either an underpayment or overpayment of Profit Tax by the Contractor Party on its final Profit Tax return for a Calendar Year, interest shall be paid by the Contractor Party to the Tax Inspectorate (or, in the case of a refund of an overpayment, paid by the Tax Inspectorate to the Contractor Party) on the amount of the underpayment or overpayment at a rate of LIBOR plus four percent (4%) (such LIBOR rate prevailing on the day before payment). Such interest shall be computed from twenty-fifth (25th) April in the Calendar Year the final Profit Tax return was filed until the date the Profit Tax is paid by or refunded to the Contractor Party. The Contractor Party may at its option elect to apply any refund or interest against any future Profit Tax liability. (iv) In addition to interest payable as computed under (iii) above, a Contractor Party shall only be subject to the following penalties and fines with respect to Taxes: