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Agreement between the Government of the United States of America and the 

Government of the Republic of Azerbaijan to Improve International Tax Compliance 

and to Implement FATCA

Whereas, the Government of the United States of America and the Government of the 

Republic of Azerbaijan (each, a “Party,” and together, the “Parties”) desire to conclude an 

agreement to improve international tax compliance through mutual assistance in tax matters 

based on an effective infrastructure for the automatic exchange of information;

Whereas, the Convention on Mutual Administrative Assistance in Tax Matters, done at 

Strasbourg on 25 January 1988 (the “Convention”) authorizes the exchange of information 

for tax purposes, including on an automatic basis (hereinafter “Convention” refers to the 

Convention and any amendments thereto that are in force for both Parties.)

Whereas, the United States of America enacted provisions commonly known as the Foreign 

Account Tax Compliance Act (“FATCA”), which introduce a reporting regime for financial 

institutions with respect to certain accounts;

Whereas, the Government of the Republic of Azerbaijan is supportive of the underlying 

policy goal of FATCA to improve tax compliance;

Whereas, FATCA has raised a number of issues, including that Republic of Azerbaijan

financial institutions may not be able to comply with certain aspects of FATCA due to 

domestic legal impediments;

Whereas, the Government of the United States of America collects information regarding 

certain accounts maintained by U.S. financial institutions held by residents of the Republic of 

Azerbaijan and is committed to exchanging such information with the Government of the 

Republic of Azerbaijan and pursuing equivalent levels of exchange, provided that the 

appropriate safeguards and infrastructure for an effective exchange relationship are in place;

Whereas, an intergovernmental approach to FATCA implementation would address legal 

impediments and reduce burdens for Republic of Azerbaijan financial institutions;

Whereas, the Parties desire to conclude an agreement to improve international tax compliance 

and provide for the implementation of FATCA based on domestic reporting and reciprocal 

automatic exchange pursuant to the Convention, and subject to the confidentiality and other 

protections provided for therein, including the provisions limiting the use of the information 

exchanged under the Convention; 

Now, therefore, the Parties have agreed as follows:

Article 1

Definitions

1. For purposes of this agreement and any annexes thereto (“Agreement”), the following 

terms shall have the meanings set forth below:

a) The term “United States” means the United States of America, including the 
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States thereof, but does not include the U.S. Territories. Any reference to a 

“State” of the United States includes the District of Columbia.

b) The term “U.S. Territory” means American Samoa, the Commonwealth of 

the Northern Mariana Islands, Guam, the Commonwealth of Puerto Rico, or 

the U.S. Virgin Islands.

c) The term “IRS” means the U.S. Internal Revenue Service.

d) The term “Republic of Azerbaijan” means the Republic of Azerbaijan.

e) The term “Partner Jurisdiction” means a jurisdiction that has in effect an 

agreement with the United States to facilitate the implementation of FATCA. 

The IRS shall publish a list identifying all Partner Jurisdictions.

f) The term “Competent Authority” means:

(1) in the case of the United States, the Secretary of the Treasury or his 

delegate; and

(2) in the case of the Republic of Azerbaijan, the Ministry of Taxes of the 

Republic of Azerbaijan.

g) The term “Financial Institution” means a Custodial Institution, a Depository 

Institution, an Investment Entity, or a Specified Insurance Company.

h) The term “Custodial Institution” means any Entity that holds, as a 

substantial portion of its business, financial assets for the account of others. 

An entity holds financial assets for the account of others as a substantial 

portion of its business if the entity’s gross income attributable to the holding of 

financial assets and related financial services equals or exceeds 20 percent of 

the entity’s gross income during the shorter of: (i) the three-year period that 

ends on December 31 (or the final day of a non-calendar year accounting 

period) prior to the year in which the determination is being made; or (ii) the 

period during which the entity has been in existence.

i) The term “Depository Institution” means any Entity that accepts deposits in 

the ordinary course of a banking or similar business. 

j) The term “Investment Entity” means any Entity that conducts as a business 

(or is managed by an entity that conducts as a business) one or more of the 

following activities or operations for or on behalf of a customer:

(1) trading in money market instruments (cheques, bills, certificates of 

deposit, derivatives, etc.); foreign exchange; exchange, interest rate 

and index instruments; transferable securities; or commodity futures 

trading;

(2) individual and collective portfolio management; or
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(3) otherwise investing, administering, or managing funds or money on 

behalf of other persons.

This subparagraph 1(j) shall be interpreted in a manner consistent with similar 

language set forth in the definition of “financial institution” in the Financial 

Action Task Force Recommendations.

k) The term “Specified Insurance Company” means any Entity that is an 

insurance company (or the holding company of an insurance company) that 

issues, or is obligated to make payments with respect to, a Cash Value 

Insurance Contract or an Annuity Contract.

l) The term “Republic of Azerbaijan Financial Institution” means (i) any 

Financial Institution resident in the Republic of Azerbaijan, but excluding any 

branch of such Financial Institution that is located outside the Republic of 

Azerbaijan, and (ii) any branch of a Financial Institution not resident in the 

Republic of Azerbaijan, if such branch is located in the Republic of 

Azerbaijan. 

m) The term “Partner Jurisdiction Financial Institution” means (i) any 

Financial Institution established in a Partner Jurisdiction, but excluding any 

branch of such Financial Institution that is located outside the Partner 

Jurisdiction, and (ii) any branch of a Financial Institution not established in the 

Partner Jurisdiction, if such branch is located in the Partner Jurisdiction.

n) The term “Reporting Financial Institution” means a Reporting Republic of 

Azerbaijan Financial Institution or a Reporting U.S. Financial Institution, as 

the context requires.

o) The term “Reporting Republic of Azerbaijan Financial Institution” means 

any Republic of Azerbaijan Financial Institution that is not a Non-Reporting 

Republic of Azerbaijan Financial Institution.

p) The term “Reporting U.S. Financial Institution” means (i) any Financial 

Institution that is resident in the United States, but excluding any branch of 

such Financial Institution that is located outside the United States, and (ii) any 

branch of a Financial Institution not resident in the United States, if such 

branch is located in the United States, provided that the Financial Institution or 

branch has control, receipt, or custody of income with respect to which 

information is required to be exchanged under subparagraph (2)(b) of Article 2 

of this Agreement.

q) The term “Non-Reporting Republic of Azerbaijan Financial Institution”

means any Republic of Azerbaijan Financial Institution, or other Entity 

resident in the Republic of Azerbaijan, that is described in Annex II as a NonReporting Republic of Azerbaijan Financial Institution or that otherwise 

qualifies as a deemed-compliant FFI or an exempt beneficial owner under 

relevant U.S. Treasury Regulations in effect on the date of signature of this 

Agreement.
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r) The term “Nonparticipating Financial Institution” means a nonparticipating 

FFI, as that term is defined in relevant U.S. Treasury Regulations, but does not 

include a Republic of Azerbaijan Financial Institution or other Partner 

Jurisdiction Financial Institution other than a Financial Institution treated as a 

Nonparticipating Financial Institution pursuant to subparagraph 2(b) of Article 

5 of this Agreement or the corresponding provision in an agreement between 

the United States and a Partner Jurisdiction.

s) The term “Financial Account” means an account maintained by a Financial 

Institution, and includes:

(1) in the case of an Entity that is a Financial Institution solely because it 

is an Investment Entity, any equity or debt interest (other than interests 

that are regularly traded on an established securities market) in the 

Financial Institution;

(2) in the case of a Financial Institution not described in subparagraph 

1(s)(1) of this Article, any equity or debt interest in the Financial 

Institution (other than interests that are regularly traded on an 

established securities market), if (i) the value of the debt or equity 

interest is determined, directly or indirectly, primarily by reference to 

assets that give rise to U.S. Source Withholdable Payments, and (ii) the 

class of interests was established with a purpose of avoiding reporting 

in accordance with this Agreement; and

(3) any Cash Value Insurance Contract and any Annuity Contract issued or 

maintained by a Financial Institution, other than a noninvestmentlinked, nontransferable immediate life annuity that is issued to an 

individual and monetizes a pension or disability benefit provided under 

an account that is excluded from the definition of Financial Account in 

Annex II.

Notwithstanding the foregoing, the term “Financial Account” does not include 

any account that is excluded from the definition of Financial Account in 

Annex II. For purposes of this Agreement, interests are “regularly traded” if 

there is a meaningful volume of trading with respect to the interests on an

ongoing basis, and an “established securities market” means an exchange that 

is officially recognized and supervised by a governmental authority in which 

the market is located and that has a meaningful annual value of shares traded 

on the exchange. For purposes of this subparagraph 1(s), an interest in a

Financial Institution is not “regularly traded” and shall be treated as a 

Financial Account if the holder of the interest (other than a Financial 

Institution acting as an intermediary) is registered on the books of such 

Financial Institution. The preceding sentence will not apply to interests first 

registered on the books of such Financial Institution prior to July 1, 2014, and 

with respect to interests first registered on the books of such Financial 

Institution on or after July 1, 2014, a Financial Institution is not required to 

apply the preceding sentence prior to January 1, 2016.

t) The term “Depository Account” includes any commercial, checking, savings, 
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time, or thrift account, or an account that is evidenced by a certificate of 

deposit, thrift certificate, investment certificate, certificate of indebtedness, or 

other similar instrument maintained by a Financial Institution in the ordinary 

course of a banking or similar business. A Depository Account also includes 

an amount held by an insurance company pursuant to a guaranteed investment 

contract or similar agreement to pay or credit interest thereon.

u) The term “Custodial Account” means an account (other than an Insurance 

Contract or Annuity Contract) for the benefit of another person that holds any 

financial instrument or contract held for investment (including, but not limited 

to, a share or stock in a corporation, a note, bond, debenture, or other evidence 

of indebtedness, a currency or commodity transaction, a credit default swap, a 

swap based upon a nonfinancial index, a notional principal contract, an 

Insurance Contract or Annuity Contract, and any option or other derivative 

instrument).

v) The term “Equity Interest” means, in the case of a partnership that is a 

Financial Institution, either a capital or profits interest in the partnership. In 

the case of a trust that is a Financial Institution, an Equity Interest is 

considered to be held by any person treated as a settlor or beneficiary of all or 

a portion of the trust, or any other natural person exercising ultimate effective 

control over the trust. A Specified U.S. Person shall be treated as being a 

beneficiary of a foreign trust if such Specified U.S. Person has the right to 

receive directly or indirectly (for example, through a nominee) a mandatory 

distribution or may receive, directly or indirectly, a discretionary distribution 

from the trust. 

w) The term “Insurance Contract” means a contract (other than an Annuity 

Contract) under which the issuer agrees to pay an amount upon the occurrence 

of a specified contingency involving mortality, morbidity, accident, liability, or 

property risk.

x) The term “Annuity Contract” means a contract under which the issuer agrees 

to make payments for a period of time determined in whole or in part by 

reference to the life expectancy of one or more individuals. The term also 

includes a contract that is considered to be an Annuity Contract in accordance 

with the law, regulation, or practice of the jurisdiction in which the contract 

was issued, and under which the issuer agrees to make payments for a term of 

years. 

y) The term “Cash Value Insurance Contract” means an Insurance Contract 

(other than an indemnity reinsurance contract between two insurance 

companies) that has a Cash Value greater than $50,000.

z) The term “Cash Value” means the greater of (i) the amount that the 

policyholder is entitled to receive upon surrender or termination of the 

contract (determined without reduction for any surrender charge or policy 

loan), and (ii) the amount the policyholder can borrow under or with regard to 

the contract. Notwithstanding the foregoing, the term “Cash Value” does not 

include an amount payable under an Insurance Contract as: 
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(1) a personal injury or sickness benefit or other benefit providing 

indemnification of an economic loss incurred upon the occurrence of 

the event insured against; 

(2) a refund to the policyholder of a previously paid premium under an 

Insurance Contract (other than under a life insurance contract) due to 

policy cancellation or termination, decrease in risk exposure during the 

effective period of the Insurance Contract, or arising from a 

redetermination of the premium due to correction of posting or other 

similar error; or 

(3) a policyholder dividend based upon the underwriting experience of the 

contract or group involved.

aa) The term “Reportable Account” means a U.S. Reportable Account or a 

Republic of Azerbaijan Reportable Account, as the context requires.

bb) The term “Republic of Azerbaijan Reportable Account” means a Financial

Account maintained by a Reporting U.S. Financial Institution if: (i) in the case 

of a Depository Account, the account is held by an individual resident in the 

Republic of Azerbaijan and more than $10 of interest is paid to such account 

in any given calendar year; or (ii) in the case of a Financial Account other than 

a Depository Account, the Account Holder is a resident of the Republic of 

Azerbaijan, including an Entity that certifies that it is resident in the Republic 

of Azerbaijan for tax purposes, with respect to which U.S. source income that 

is subject to reporting under chapter 3 of subtitle A or chapter 61 of subtitle F 

of the U.S. Internal Revenue Code is paid or credited.

cc) The term “U.S. Reportable Account” means a Financial Account maintained 

by a Reporting Republic of Azerbaijan Financial Institution and held by one or 

more Specified U.S. Persons or by a Non-U.S. Entity with one or more 

Controlling Persons that is a Specified U.S. Person. Notwithstanding the 

foregoing, an account shall not be treated as a U.S. Reportable Account if such 

account is not identified as a U.S. Reportable Account after application of the 

due diligence procedures in Annex I.

dd) The term “Account Holder” means the person listed or identified as the 

holder of a Financial Account by the Financial Institution that maintains the 

account. A person, other than a Financial Institution, holding a Financial 

Account for the benefit or account of another person as agent, custodian, 

nominee, signatory, investment advisor, or intermediary, is not treated as 

holding the account for purposes of this Agreement, and such other person is 

treated as holding the account. For purposes of the immediately preceding

sentence, the term “Financial Institution” does not include a Financial

Institution organized or incorporated in a U.S. Territory. In the case of a Cash 

Value Insurance Contract or an Annuity Contract, the Account Holder is any 

person entitled to access the Cash Value or change the beneficiary of the 

contract. If no person can access the Cash Value or change the beneficiary, the 

Account Holder is any person named as the owner in the contract and any 
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person with a vested entitlement to payment under the terms of the contract. 

Upon the maturity of a Cash Value Insurance Contract or an Annuity Contract, 

each person entitled to receive a payment under the contract is treated as an 

Account Holder.

ee) The term “U.S. Person” means a U.S. citizen or resident individual, a 

partnership or corporation organized in the United States or under the laws of 

the United States or any State thereof, a trust if (i) a court within the United 

States would have authority under applicable law to render orders or 

judgments concerning substantially all issues regarding administration of the 

trust, and (ii) one or more U.S. persons have the authority to control all 

substantial decisions of the trust, or an estate of a decedent that is a citizen or 

resident of the United States. This subparagraph 1(ee) shall be interpreted in 

accordance with the U.S. Internal Revenue Code.

ff) The term “Specified U.S. Person” means a U.S. Person, other than: (i) a 

corporation the stock of which is regularly traded on one or more established 

securities markets; (ii) any corporation that is a member of the same expanded 

affiliated group, as defined in section 1471(e)(2) of the U.S. Internal Revenue 

Code, as a corporation described in clause (i); (iii) the United States or any 

wholly owned agency or instrumentality thereof; (iv) any State of the United 

States, any U.S. Territory, any political subdivision of any of the foregoing, or 

any wholly owned agency or instrumentality of any one or more of the 

foregoing; (v) any organization exempt from taxation under section 501(a) of 

the U.S. Internal Revenue Code or an individual retirement plan as defined in 

section 7701(a)(37) of the U.S. Internal Revenue Code; (vi) any bank as 

defined in section 581 of the U.S. Internal Revenue Code; (vii) any real estate 

investment trust as defined in section 856 of the U.S. Internal Revenue Code; 

(viii) any regulated investment company as defined in section 851 of the U.S. 

Internal Revenue Code or any entity registered with the U.S. Securities and 

Exchange Commission under the Investment Company Act of 1940 (15 U.S.C. 

80a-64); (ix) any common trust fund as defined in section 584(a) of the U.S.

Internal Revenue Code; (x) any trust that is exempt from tax under section 

664(c) of the U.S. Internal Revenue Code or that is described in section 

4947(a)(1) of the U.S. Internal Revenue Code; (xi) a dealer in securities, 

commodities, or derivative financial instruments (including notional principal 

contracts, futures, forwards, and options) that is registered as such under the 

laws of the United States or any State; (xii) a broker as defined in section 

6045(c) of the U.S. Internal Revenue Code; or (xiii) any tax-exempt trust 

under a plan that is described in section 403(b) or section 457(g) of the U.S. 

Internal Revenue Code. 

gg) The term “Entity” means a legal person or a legal arrangement such as a trust. 

hh) The term “Non-U.S. Entity” means an Entity that is not a U.S. Person.

ii) The term “U.S. Source Withholdable Payment” means any payment of 

interest (including any original issue discount), dividends, rents, salaries, 

wages, premiums, annuities, compensations, remunerations, emoluments, and 

other fixed or determinable annual or periodical gains, profits, and income, if 
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such payment is from sources within the United States. Notwithstanding the 

foregoing, a U.S. Source Withholdable Payment does not include any payment 

that is not treated as a withholdable payment in relevant U.S. Treasury 

Regulations.

jj) An Entity is a “Related Entity” of another Entity if either Entity controls the 

other Entity, or the two Entities are under common control. For this purpose 

control includes direct or indirect ownership of more than 50 percent of the 

vote or value in an Entity. Notwithstanding the foregoing, the Republic of 

Azerbaijan may treat an Entity as not a Related Entity of another Entity if the 

two Entities are not members of the same expanded affiliated group as defined 

in section 1471(e)(2) of the U.S. Internal Revenue Code.

kk) The term “U.S. TIN” means a U.S. federal taxpayer identifying number.

ll) The term “Republic of Azerbaijan TIN” means a Republic of Azerbaijan

taxpayer identifying number. 

mm) The term “Controlling Persons” means the natural persons who exercise 

control over an Entity. In the case of a trust, such term means the settlor, the 

trustees, the protector (if any), the beneficiaries or class of beneficiaries, and 

any other natural person exercising ultimate effective control over the trust, 

and in the case of a legal arrangement other than a trust, such term means 

persons in equivalent or similar positions. The term “Controlling Persons”

shall be interpreted in a manner consistent with the Financial Action Task 

Force Recommendations.

2. Any term not otherwise defined in this Agreement shall, unless the context otherwise 

requires or the Competent Authorities agree to a common meaning (as permitted by domestic 

law), have the meaning that it has at that time under the law of the Party applying this 

Agreement, any meaning under the applicable tax laws of that Party prevailing over a 

meaning given to the term under other laws of that Party.

Article 2

Obligations to Obtain and Exchange Information with Respect to Reportable Accounts

1. Subject to the provisions of Article 3 of this Agreement, each Party shall obtain the 

information specified in paragraph 2 of this Article with respect to all Reportable Accounts 

and shall annually exchange this information with the other Party on an automatic basis 

pursuant to the provisions of the Convention. 

2. The information to be obtained and exchanged is:

a) In the case of the Republic of Azerbaijan with respect to each U.S. Reportable 

Account of each Reporting Republic of Azerbaijan Financial Institution:

(1) the name, address, and U.S. TIN of each Specified U.S. Person that is 

an Account Holder of such account and, in the case of a Non-U.S. 

Entity that, after application of the due diligence procedures set forth in 

Annex I, is identified as having one or more Controlling Persons that is 
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a Specified U.S. Person, the name, address, and U.S. TIN (if any) of 

such entity and each such Specified U.S. Person;

(2) the account number (or functional equivalent in the absence of an 

account number); 

(3) the name and identifying number of the Reporting Republic of 

Azerbaijan Financial Institution;

(4) the account balance or value (including, in the case of a Cash Value 

Insurance Contract or Annuity Contract, the Cash Value or surrender 

value) as of the end of the relevant calendar year or other appropriate 

reporting period or, if the account was closed during such year, 

immediately before closure; 

(5) in the case of any Custodial Account: 

(A) the total gross amount of interest, the total gross amount of 

dividends, and the total gross amount of other income 

generated with respect to the assets held in the account, in each 

case paid or credited to the account (or with respect to the 

account) during the calendar year or other appropriate reporting 

period; and 

(B) the total gross proceeds from the sale or redemption of property 

paid or credited to the account during the calendar year or other 

appropriate reporting period with respect to which the 

Reporting Republic of Azerbaijan Financial Institution acted as 

a custodian, broker, nominee, or otherwise as an agent for the 

Account Holder; 

(6) in the case of any Depository Account, the total gross amount of 

interest paid or credited to the account during the calendar year or 

other appropriate reporting period; and

(7) in the case of any account not described in subparagraph 2(a)(5) or 

2(a)(6) of this Article, the total gross amount paid or credited to the 

Account Holder with respect to the account during the calendar year or 

other appropriate reporting period with respect to which the Reporting 

Republic of Azerbaijan Financial Institution is the obligor or debtor, 

including the aggregate amount of any redemption payments made to 

the Account Holder during the calendar year or other appropriate 

reporting period.

b) In the case of the United States, with respect to each Republic of Azerbaijan

Reportable Account of each Reporting U.S. Financial Institution:

(1) the name, address, and Republic of Azerbaijan TIN of any person that 

is a resident of the Republic of Azerbaijan and is an Account Holder of 

the account; 
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(2) the account number (or the functional equivalent in the absence of an 

account number); 

(3) the name and identifying number of the Reporting U.S. Financial 

Institution;

(4) the gross amount of interest paid on a Depository Account;

(5) the gross amount of U.S. source dividends paid or credited to the 

account; and 

(6) the gross amount of other U.S. source income paid or credited to the 

account, to the extent subject to reporting under chapter 3 of subtitle A 

or chapter 61 of subtitle F of the U.S. Internal Revenue Code.

Article 3

Time and Manner of Exchange of Information

1. For purposes of the exchange obligation in Article 2 of this Agreement, the amount 

and characterization of payments made with respect to a U.S. Reportable Account may be 

determined in accordance with the principles of the tax laws of the Republic of Azerbaijan,

and the amount and characterization of payments made with respect to a Republic of 

Azerbaijan Reportable Account may be determined in accordance with principles of U.S. 

federal income tax law. 

2. For purposes of the exchange obligation in Article 2 of this Agreement, the 

information exchanged shall identify the currency in which each relevant amount is 

denominated.

3. With respect to paragraph 2 of Article 2 of this Agreement, information is to be 

obtained and exchanged with respect to 2014 and all subsequent years, except that:

a) In the case of the Republic of Azerbaijan: 

(1) the information to be obtained and exchanged with respect to 2014 is 

only the information described in subparagraphs 2(a)(1) through 

2(a)(4) of Article 2 of this Agreement; 

(2) the information to be obtained and exchanged with respect to 2015 is 

the information described in subparagraphs 2(a)(1) through 2(a)(7) of 

Article 2 of this Agreement, except for gross proceeds described in 

subparagraph 2(a)(5)(B) of Article 2 of this Agreement; and

(3) the information to be obtained and exchanged with respect to 2016 and 

subsequent years is the information described in subparagraphs 2(a)(1) 

through 2(a)(7) of Article 2 of this Agreement;

b) In the case of the United States, the information to be obtained and exchanged 

with respect to 2014 and subsequent years is all of the information identified 
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in subparagraph 2(b) of Article 2 of this Agreement. 

4. Notwithstanding paragraph 3 of this Article, with respect to each Reportable Account 

that is maintained by a Reporting Financial Institution as of June 30, 2014, and subject to 

paragraph 3 of Article 6 of this Agreement, the Parties are not required to obtain and include 

in the exchanged information the Republic of Azerbaijan TIN or the U.S. TIN, as applicable, 

of any relevant person if such taxpayer identifying number is not in the records of the 

Reporting Financial Institution. In such a case, the Parties shall obtain and include in the 

exchanged information the date of birth of the relevant person, if the Reporting Financial 

Institution has such date of birth in its records.

5. Subject to paragraphs 3 and 4 of this Article, the information described in Article 2 of 

this Agreement shall be exchanged within nine months after the end of the calendar year to 

which the information relates. 

6. The Competent Authorities of the Republic of Azerbaijan and the United States shall

enter into an agreement or arrangement under the mutual agreement procedure provided for 

in Article 24 of the Convention, which shall:

a) establish the procedures for the automatic exchange obligations described in 

Article 2 of this Agreement;

b) prescribe rules and procedures as may be necessary to implement Article 5 of 

this Agreement; and

c) establish as necessary procedures for the exchange of the information reported 

under subparagraph 1(b) of Article 4 of this Agreement.

7. All information exchanged shall be subject to the confidentiality and other protections 

provided for in the Convention, including the provisions limiting the use of the information 

exchanged.

8. Following entry into force of this Agreement, each Competent Authority shall provide 

written notification to the other Competent Authority when it is satisfied that the jurisdiction 

of the other Competent Authority has in place (i) appropriate safeguards to ensure that the 

information received pursuant to this Agreement shall remain confidential and be used solely 

for tax purposes, and (ii) the infrastructure for an effective exchange relationship (including 

established processes for ensuring timely, accurate, and confidential information exchanges, 

effective and reliable communications, and demonstrated capabilities to promptly resolve 

questions and concerns about exchanges or requests for exchanges and to administer the 

provisions of Article 5 of this Agreement). The Competent Authorities shall endeavor in 

good faith to meet, prior to September 2015, to establish that each jurisdiction has such 

safeguards and infrastructure in place.

9. The obligations of the Parties to obtain and exchange information under Article 2 of 

this Agreement shall take effect on the date of the later of the written notifications described 

in paragraph 8 of this Article. Notwithstanding the foregoing, if the Republic of Azerbaijan

Competent Authority is satisfied that the United States has the safeguards and infrastructure 

described in paragraph 8 of this Article in place, but additional time is necessary for the U.S. 

Competent Authority to establish that the Republic of Azerbaijan has such safeguards and 
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infrastructure in place, the obligation of the Republic of Azerbaijan to obtain and exchange 

information under Article 2 of this Agreement shall take effect on the date of the written 

notification provided by the Republic of Azerbaijan Competent Authority to the U.S. 

Competent Authority pursuant to paragraph 8 of this Article. 

10. This Agreement shall terminate 12 months following entry into force if Article 2 of 

this Agreement is not in effect for either Party pursuant to paragraph 9 of this Article by that 

date. 

Article 4

Application of FATCA to Republic of Azerbaijan Financial Institutions

1. Treatment of Reporting Republic of Azerbaijan Financial Institutions. Each

Reporting Republic of Azerbaijan Financial Institution shall be treated as complying with,

and not subject to withholding under, section 1471 of the U.S. Internal Revenue Code if the 

Republic of Azerbaijan complies with its obligations under Articles 2 and 3 of this Agreement 

with respect to such Reporting Republic of Azerbaijan Financial Institution, and the 

Reporting Republic of Azerbaijan Financial Institution:

a) identifies U.S. Reportable Accounts and reports annually to the Republic of 

Azerbaijan Competent Authority the information required to be reported in 

subparagraph 2(a) of Article 2 of this Agreement in the time and manner

described in Article 3 of this Agreement;

b) for each of 2015 and 2016, reports annually to the Republic of Azerbaijan

Competent Authority the name of each Nonparticipating Financial Institution

to which it has made payments and the aggregate amount of such payments;

c) complies with the applicable registration requirements on the IRS FATCA 

registration website;

d) to the extent that a Reporting Republic of Azerbaijan Financial Institution is 

(i) acting as a qualified intermediary (for purposes of section 1441 of the U.S. 

Internal Revenue Code) that has elected to assume primary withholding 

responsibility under chapter 3 of subtitle A of the U.S. Internal Revenue Code, 

(ii) a foreign partnership that has elected to act as a withholding foreign 

partnership (for purposes of both sections 1441 and 1471 of the U.S. Internal 

Revenue Code), or (iii) a foreign trust that has elected to act as a withholding 

foreign trust (for purposes of both sections 1441 and 1471 of the U.S. Internal 

Revenue Code), withholds 30 percent of any U.S. Source Withholdable 

Payment to any Nonparticipating Financial Institution; and 

e) in the case of a Reporting Republic of Azerbaijan Financial Institution that is 

not described in subparagraph 1(d) of this Article and that makes a payment 

of, or acts as an intermediary with respect to, a U.S. Source Withholdable 

Payment to any Nonparticipating Financial Institution, the Reporting Republic 

of Azerbaijan Financial Institution provides to any immediate payor of such 

U.S. Source Withholdable Payment the information required for withholding 

and reporting to occur with respect to such payment.
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Notwithstanding the foregoing, a Reporting Republic of Azerbaijan Financial Institution with 

respect to which the conditions of this paragraph 1 are not satisfied shall not be subject to 

withholding under section 1471 of the U.S. Internal Revenue Code unless such Reporting 

Republic of Azerbaijan Financial Institution is treated by the IRS as a Nonparticipating 

Financial Institution pursuant to subparagraph 2(b) of Article 5 of this Agreement.

2. Suspension of Rules Relating to Recalcitrant Accounts. The United States shall not 

require a Reporting Republic of Azerbaijan Financial Institution to withhold tax under section 

1471 or 1472 of the U.S. Internal Revenue Code with respect to an account held by a 

recalcitrant account holder (as defined in section 1471(d)(6) of the U.S. Internal Revenue 

Code), or to close such account, if the U.S. Competent Authority receives the information set 

forth in subparagraph 2(a) of Article 2 of this Agreement, subject to the provisions of Article 

3 of this Agreement, with respect to such account.

3. Specific Treatment of the Republic of Azerbaijan Retirement Plans. The United 

States shall treat as deemed-compliant FFIs or exempt beneficial owners, as appropriate, for 

purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code, the Republic of 

Azerbaijan retirement plans described in Annex II. For this purpose, a Republic of 

Azerbaijan retirement plan includes an Entity established or located in, and regulated by, the 

Republic of Azerbaijan, or a predetermined contractual or legal arrangement, operated to 

provide pension or retirement benefits or earn income for providing such benefits under the 

laws of the Republic of Azerbaijan and regulated with respect to contributions, distributions, 

reporting, sponsorship, and taxation. 

4. Identification and Treatment of Other Deemed-Compliant FFIs and Exempt 

Beneficial Owners. The United States shall treat each Non-Reporting Republic of 

Azerbaijan Financial Institution as a deemed-compliant FFI or as an exempt beneficial owner, 

as appropriate, for purposes of section 1471 of the U.S. Internal Revenue Code. 

5. Special Rules Regarding Related Entities and Branches That Are 

Nonparticipating Financial Institutions. If a Republic of Azerbaijan Financial Institution,

that otherwise meets the requirements described in paragraph 1 of this Article or is described 

in paragraph 3 or 4 of this Article, has a Related Entity or branch that operates in a 

jurisdiction that prevents such Related Entity or branch from fulfilling the requirements of a 

participating FFI or deemed-compliant FFI for purposes of section 1471 of the U.S. Internal 

Revenue Code or has a Related Entity or branch that is treated as a Nonparticipating 

Financial Institution solely due to the expiration of the transitional rule for limited FFIs and 

limited branches under relevant U.S. Treasury Regulations, such Republic of Azerbaijan

Financial Institution shall continue to be in compliance with the terms of this Agreement and 

shall continue to be treated as a deemed-compliant FFI or exempt beneficial owner, as 

appropriate, for purposes of section 1471 of the U.S. Internal Revenue Code, provided that:

a) the Republic of Azerbaijan Financial Institution treats each such Related 

Entity or branch as a separate Nonparticipating Financial Institution for 

purposes of all the reporting and withholding requirements of this Agreement 

and each such Related Entity or branch identifies itself to withholding agents 

as a Nonparticipating Financial Institution;

b) each such Related Entity or branch identifies its U.S. accounts and reports the 

information with respect to those accounts as required under section 1471 of 
14

the U.S. Internal Revenue Code to the extent permitted under the relevant laws 

pertaining to the Related Entity or branch; and

c) such Related Entity or branch does not specifically solicit U.S. accounts held 

by persons that are not resident in the jurisdiction where such Related Entity

or branch is located or accounts held by Nonparticipating Financial 

Institutions that are not established in the jurisdiction where such Related 

Entity or branch is located, and such Related Entity or branch is not used by 

the Republic of Azerbaijan Financial Institution or any other Related Entity to 

circumvent the obligations under this Agreement or under section 1471 of the 

U.S. Internal Revenue Code, as appropriate.

6. Coordination of Timing. Notwithstanding paragraphs 3 and 5 of Article 3 of this 

Agreement: 

a) the Republic of Azerbaijan shall not be obligated to obtain and exchange 

information with respect to a calendar year that is prior to the calendar year 

with respect to which similar information is required to be reported to the IRS 

by participating FFIs pursuant to relevant U.S. Treasury Regulations;

b) the Republic of Azerbaijan shall not be obligated to begin exchanging 

information prior to the date by which participating FFIs are required to report 

similar information to the IRS under relevant U.S. Treasury Regulations; 

c) the United States shall not be obligated to obtain and exchange information 

with respect to a calendar year that is prior to the first calendar year with 

respect to which the Republic of Azerbaijan is required to obtain and exchange 

information; and

d) the United States shall not be obligated to begin exchanging information prior 

to the date by which the Republic of Azerbaijan is required to begin 

exchanging information.

7. Coordination of Definitions with U.S. Treasury Regulations. Notwithstanding 

Article 1 of this Agreement and the definitions provided in the Annexes to this Agreement, in 

implementing this Agreement, the Republic of Azerbaijan may use, and may permit the 

Republic of Azerbaijan Financial Institutions to use, a definition in relevant U.S. Treasury 

Regulations in lieu of a corresponding definition in this Agreement, provided that such 

application would not frustrate the purposes of this Agreement.
15

Article 5

Collaboration on Compliance and Enforcement

1. Minor and Administrative Errors. A Competent Authority shall notify the 

Competent Authority of the other Party when the first-mentioned Competent Authority has 

reason to believe that administrative errors or other minor errors may have led to incorrect or 

incomplete information reporting or resulted in other infringements of this Agreement. The 

Competent Authority of such other Party shall apply its domestic law (including applicable 

penalties) to obtain corrected and/or complete information or to resolve other infringements 

of this Agreement.

2. Significant Non-Compliance.

a) A Competent Authority shall notify the Competent Authority of the other Party 

when the first-mentioned Competent Authority has determined that there is 

significant non-compliance with the obligations under this Agreement with 

respect to a Reporting Financial Institution in the other jurisdiction. The 

Competent Authority of such other Party shall apply its domestic law 

(including applicable penalties) to address the significant non-compliance 

described in the notice. 

b) If, in the case of a Reporting Republic of Azerbaijan Financial Institution, 

such enforcement actions do not resolve the non-compliance within a period 

of 18 months after notification of significant non-compliance is first provided,

the United States shall treat the Reporting Republic of Azerbaijan Financial 

Institution as a Nonparticipating Financial Institution pursuant to this 

subparagraph 2(b).

3. Reliance on Third Party Service Providers. Each Party may allow Reporting 

Financial Institutions to use third party service providers to fulfill the obligations imposed on 

such Reporting Financial Institutions by a Party, as contemplated in this Agreement, but these 

obligations shall remain the responsibility of the Reporting Financial Institutions.

4. Prevention of Avoidance. The Parties shall implement as necessary requirements to 

prevent Financial Institutions from adopting practices intended to circumvent the reporting 

required under this Agreement.

Article 6

Mutual Commitment to Continue to Enhance the Effectiveness of Information 

Exchange and Transparency

1. Reciprocity. The Government of the United States acknowledges the need to achieve 

equivalent levels of reciprocal automatic information exchange with the Republic of 

Azerbaijan. The Government of the United States is committed to further improve 

transparency and enhance the exchange relationship with the Republic of Azerbaijan by 

pursuing the adoption of regulations and advocating and supporting relevant legislation to

achieve such equivalent levels of reciprocal automatic information exchange.

2. Treatment of Passthru Payments and Gross Proceeds. The Parties are committed 

to work together, along with Partner Jurisdictions, to develop a practical and effective 
16

alternative approach to achieve the policy objectives of foreign passthru payment and gross 

proceeds withholding that minimizes burden. 

3. Documentation of Accounts Maintained as of June 30, 2014. With respect to 

Reportable Accounts maintained by a Reporting Financial Institution as of June 30, 2014:

a) The United States commits to establish, by January 1, 2017, for reporting with 

respect to 2017 and subsequent years, rules requiring Reporting U.S. Financial 

Institutions to obtain and report the Republic of Azerbaijan TIN of each 

Account Holder of a Republic of Azerbaijan Reportable Account as required 

pursuant to subparagraph 2(b)(1) of Article 2 of this Agreement; and

b) the Republic of Azerbaijan commits to establish, by January 1, 2017, for 

reporting with respect to 2017 and subsequent years, rules requiring Reporting 

Republic of Azerbaijan Financial Institutions to obtain the U.S. TIN of each 

Specified U.S. Person as required pursuant to subparagraph 2(a)(1) of Article 

2 of this Agreement.

Article 7

Consistency in the Application of FATCA to Partner Jurisdictions 

1. The Republic of Azerbaijan shall be granted the benefit of any more favorable terms 

under Article 4 or Annex I of this Agreement relating to the application of FATCA to 

Republic of Azerbaijan Financial Institutions afforded to another Partner Jurisdiction under a 

signed bilateral agreement pursuant to which the other Partner Jurisdiction commits to 

undertake the same obligations as the Republic of Azerbaijan described in Articles 2 and 3 of 

this Agreement, and subject to the same terms and conditions as described therein and in 

Articles 5 through 9 of this Agreement. 

2. The United States shall notify the Republic of Azerbaijan of any such more favorable 

terms, and such more favorable terms shall apply automatically under this Agreement as if 

such terms were specified in this Agreement and effective as of the date of signing of the 

agreement incorporating the more favorable terms, unless the Republic of Azerbaijan declines 

in writing the application thereof.

Article 8

Consultations and Amendments

1. In case any difficulties in the implementation of this Agreement arise, either Party 

may request consultations to develop appropriate measures to ensure the fulfillment of this 

Agreement.

2. This Agreement may be amended by written mutual agreement of the Parties. Unless 

otherwise agreed upon, such an amendment shall enter into force through the same 

procedures as set forth in paragraph 1 of Article 10 of this Agreement.

Article 9

Annexes

The Annexes form an integral part of this Agreement.
17

Article 10

Term of Agreement

1. This Agreement shall enter into force on the date of the Republic of Azerbaijan’s

written notification to the United States that the Republic of Azerbaijan has completed its 

necessary internal procedures for entry into force of this Agreement. 

2. Either Party may terminate this Agreement by giving notice of termination in writing 

to the other Party. Such termination shall become effective on the first day of the month 

following the expiration of a period of 12 months after the date of the notice of termination.

3. The Parties shall, prior to December 31, 2016, consult in good faith to amend this 

Agreement as necessary to reflect progress on the commitments set forth in Article 6 of this 

Agreement.

In witness whereof, the undersigned, being duly authorized thereto by their respective 

Governments, have signed this Agreement.

Done at [_____], in duplicate, in the English and Azerbaijani languages, both texts being 

equally authentic, this [__] day of [_____], 20[__].

FOR THE GOVERNMENT OF

THE UNITED STATES OF AMERICA:

FOR THE GOVERNMENT OF THE 

REPUBLIC OF AZERBAIJAN: 
1

ANNEX I

DUE DILIGENCE OBLIGATIONS FOR IDENTIFYING AND REPORTING ON U.S. 

REPORTABLE ACCOUNTS AND ON PAYMENTS TO CERTAIN NONPARTICIPATING 

FINANCIAL INSTITUTIONS

I. General.

 

A. The Republic of Azerbaijan shall require that Reporting Republic of Azerbaijan 

Financial Institutions apply the due diligence procedures contained in this Annex I to identify 

U.S. Reportable Accounts and accounts held by Nonparticipating Financial Institutions. 

B. For purposes of the Agreement,

1. All dollar amounts are in U.S. dollars and shall be read to include the 

equivalent in other currencies. 

2. Except as otherwise provided herein, the balance or value of an account shall 

be determined as of the last day of the calendar year or other appropriate reporting 

period. 

3. Where a balance or value threshold is to be determined as of June 30, 2014 

under this Annex I, the relevant balance or value shall be determined as of that day or 

the last day of the reporting period ending immediately before June 30, 2014, and 

where a balance or value threshold is to be determined as of the last day of a calendar 

year under this Annex I, the relevant balance or value shall be determined as of the last 

day of the calendar year or other appropriate reporting period. 

4. Subject to subparagraph E(1) of section II of this Annex I, an account shall be 

treated as a U.S. Reportable Account beginning as of the date it is identified as such 

pursuant to the due diligence procedures in this Annex I. 

5. Unless otherwise provided, information with respect to a U.S. Reportable 

Account shall be reported annually in the calendar year following the year to which 

the information relates.

C. As an alternative to the procedures described in each section of this Annex I, the 

Republic of Azerbaijan may permit Reporting Republic of Azerbaijan Financial Institutions to 

rely on the procedures described in relevant U.S. Treasury Regulations to establish whether an 

account is a U.S. Reportable Account or an account held by a Nonparticipating Financial 

Institution. The Republic of Azerbaijan may permit Reporting Republic of Azerbaijan 

Financial Institutions to make such election separately for each section of this Annex I either 

with respect to all relevant Financial Accounts or, separately, with respect to any clearly 

identified group of such accounts (such as by line of business or the location of where the 

account is maintained).

II. Preexisting Individual Accounts. The following rules and procedures apply for purposes of 

identifying U.S. Reportable Accounts among Preexisting Accounts held by individuals (“Preexisting 

Individual Accounts”).

A. Accounts Not Required to Be Reviewed, Identified, or Reported. Unless the 

Reporting Republic of Azerbaijan Financial Institution elects otherwise, either with respect to 

all Preexisting Individual Accounts or, separately, with respect to any clearly identified group 
2

of such accounts, where the implementing rules in the Republic of Azerbaijan provide for 

such an election, the following Preexisting Individual Accounts are not required to be 

reviewed, identified, or reported as U.S. Reportable Accounts: 

1. Subject to subparagraph E(2) of this section, a Preexisting Individual Account 

with a balance or value that does not exceed $50,000 as of June 30, 2014. 

2. Subject to subparagraph E(2) of this section, a Preexisting Individual Account 

that is a Cash Value Insurance Contract or an Annuity Contract with a balance or 

value of $250,000 or less as of June 30, 2014. 

3. A Preexisting Individual Account that is a Cash Value Insurance Contract or 

an Annuity Contract, provided the law or regulations of the Republic of Azerbaijan or 

the United States effectively prevent the sale of such a Cash Value Insurance Contract 

or an Annuity Contract to U.S. residents (e.g., if the relevant Financial Institution does 

not have the required registration under U.S. law, and the law of the Republic of 

Azerbaijan requires reporting or withholding with respect to insurance products held 

by residents of the Republic of Azerbaijan). 

4. A Depository Account with a balance of $50,000 or less. 

B. Review Procedures for Preexisting Individual Accounts With a Balance or Value 

as of June 30, 2014, that Exceeds $50,000 ($250,000 for a Cash Value Insurance 

Contract or Annuity Contract), But Does Not Exceed $1,000,000 (“Lower Value 

Accounts”).

1. Electronic Record Search. The Reporting Republic of Azerbaijan Financial 

Institution must review electronically searchable data maintained by the Reporting 

Republic of Azerbaijan Financial Institution for any of the following U.S. indicia:

a) Identification of the Account Holder as a U.S. citizen or resident; 

b) Unambiguous indication of a U.S. place of birth; 

c) Current U.S. mailing or residence address (including a U.S. post office 

box); 

d) Current U.S. telephone number; 

e) Standing instructions to transfer funds to an account maintained in the 

United States;

f) Currently effective power of attorney or signatory authority granted to 

a person with a U.S. address; or 

g) An “in-care-of” or “hold mail” address that is the sole address the 

Reporting Republic of Azerbaijan Financial Institution has on file for the 

Account Holder. In the case of a Preexisting Individual Account that is a 

Lower Value Account, an “in-care-of” address outside the United States or 

“hold mail” address shall not be treated as U.S. indicia. 

2. If none of the U.S. indicia listed in subparagraph B(1) of this section are 

discovered in the electronic search, then no further action is required until there is a 

change in circumstances that results in one or more U.S. indicia being associated with 
3

the account, or the account becomes a High Value Account described in paragraph D 

of this section. 

3. If any of the U.S. indicia listed in subparagraph B(1) of this section are 

discovered in the electronic search, or if there is a change in circumstances that results 

in one or more U.S. indicia being associated with the account, then the Reporting 

Republic of Azerbaijan Financial Institution must treat the account as a U.S. 

Reportable Account unless it elects to apply subparagraph B(4) of this section and one 

of the exceptions in such subparagraph applies with respect to that account. 

4. Notwithstanding a finding of U.S. indicia under subparagraph B(1) of this 

section, a Reporting Republic of Azerbaijan Financial Institution is not required to 

treat an account as a U.S. Reportable Account if:

a) Where the Account Holder information unambiguously indicates a U.S. 

place of birth, the Reporting Republic of Azerbaijan Financial Institution 

obtains, or has previously reviewed and maintains a record of: 

(1) A self-certification that the Account Holder is neither a U.S. 

citizen nor a U.S. resident for tax purposes (which may be on an IRS 

Form W-8 or other similar agreed form); 

(2) A non-U.S. passport or other government-issued identification 

evidencing the Account Holder’s citizenship or nationality in a country 

other than the United States; and

(3) A copy of the Account Holder’s Certificate of Loss of 

Nationality of the United States or a reasonable explanation of: 

(a) The reason the Account Holder does not have such a 

certificate despite relinquishing U.S. citizenship; or

(b) The reason the Account Holder did not obtain U.S. 

citizenship at birth.

b) Where the Account Holder information contains a current U.S. mailing 

or residence address, or one or more U.S. telephone numbers that are the 

only telephone numbers associated with the account, the Reporting Republic 

of Azerbaijan Financial Institution obtains, or has previously reviewed and 

maintains a record of: 

(1) A self-certification that the Account Holder is neither a U.S. 

citizen nor a U.S. resident for tax purposes (which may be on an IRS 

Form W-8 or other similar agreed form); and

(2) Documentary evidence, as defined in paragraph D of section VI 

of this Annex I, establishing the Account Holder’s non-U.S. status.

c) Where the Account Holder information contains standing instructions 

to transfer funds to an account maintained in the United States, the 

Reporting Republic of Azerbaijan Financial Institution obtains, or has 

previously reviewed and maintains a record of: 
4

(1) A self-certification that the Account Holder is neither a U.S. 

citizen nor a U.S. resident for tax purposes (which may be on an IRS 

Form W-8 or other similar agreed form); and

(2) Documentary evidence, as defined in paragraph D of section VI 

of this Annex I, establishing the Account Holder’s non-U.S. status. 

d) Where the Account Holder information contains a currently effective 

power of attorney or signatory authority granted to a person with a U.S. 

address, has an “in-care-of” address or “hold mail” address that is the sole 

address identified for the Account Holder, or has one or more U.S. telephone 

numbers (if a non-U.S. telephone number is also associated with the 

account), the Reporting Republic of Azerbaijan Financial Institution obtains, 

or has previously reviewed and maintains a record of: 

(1) A self-certification that the Account Holder is neither a U.S. 

citizen nor a U.S. resident for tax purposes (which may be on an IRS 

Form W-8 or other similar agreed form); or

(2) Documentary evidence, as defined in paragraph D of section VI 

of this Annex I, establishing the Account Holder’s non-U.S. status.

C. Additional Procedures Applicable to Preexisting Individual Accounts That Are 

Lower Value Accounts.

1. Review of Preexisting Individual Accounts that are Lower Value Accounts for 

U.S. indicia must be completed by June 30, 2016. 

2. If there is a change of circumstances with respect to a Preexisting Individual 

Account that is a Lower Value Account that results in one or more U.S. indicia 

described in subparagraph B(1) of this section being associated with the account, then 

the Reporting Republic of Azerbaijan Financial Institution must treat the account as a 

U.S. Reportable Account unless subparagraph B(4) of this section applies.

3. Except for Depository Accounts described in subparagraph A(4) of this 

section, any Preexisting Individual Account that has been identified as a U.S. 

Reportable Account under this section shall be treated as a U.S. Reportable Account in 

all subsequent years, unless the Account Holder ceases to be a Specified U.S. Person. 

D. Enhanced Review Procedures for Preexisting Individual Accounts With a 

Balance or Value That Exceeds $1,000,000 as of June 30, 2014, or December 31 of 2015 

or Any Subsequent Year (“High Value Accounts”). 

1. Electronic Record Search. The Reporting Republic of Azerbaijan Financial 

Institution must review electronically searchable data maintained by the Reporting 

Republic of Azerbaijan Financial Institution for any of the U.S. indicia described in 

subparagraph B(1) of this section. 

2. Paper Record Search. If the Reporting Republic of Azerbaijan Financial 

Institution’s electronically searchable databases include fields for, and capture all of 

the information described in, subparagraph D(3) of this section, then no further paper 

record search is required. If the electronic databases do not capture all of this 

information, then with respect to a High Value Account, the Reporting Republic of 

Azerbaijan Financial Institution must also review the current customer master file and, 
5

to the extent not contained in the current customer master file, the following 

documents associated with the account and obtained by the Reporting Republic of 

Azerbaijan Financial Institution within the last five years for any of the U.S. indicia 

described in subparagraph B(1) of this section:

a) The most recent documentary evidence collected with respect to the 

account; 

b) The most recent account opening contract or documentation; 

c) The most recent documentation obtained by the Reporting Republic of 

Azerbaijan Financial Institution pursuant to AML/KYC Procedures or for other 

regulatory purposes; 

d) Any power of attorney or signature authority forms currently in effect; 

and 

e) Any standing instructions to transfer funds currently in effect. 

3. Exception Where Databases Contain Sufficient Information. A Reporting 

Republic of Azerbaijan Financial Institution is not required to perform the paper 

record search described in subparagraph D(2) of this section if the Reporting Republic 

of Azerbaijan Financial Institution’s electronically searchable information includes the 

following: 

a) The Account Holder’s nationality or residence status; 

b) The Account Holder’s residence address and mailing address currently 

on file with the Reporting Republic of Azerbaijan Financial Institution; 

c) The Account Holder’s telephone number(s) currently on file, if any, 

with the Reporting Republic of Azerbaijan Financial Institution; 

d) Whether there are standing instructions to transfer funds in the account 

to another account (including an account at another branch of the Reporting 

Republic of Azerbaijan Financial Institution or another Financial Institution); 

e) Whether there is a current “in-care-of” address or “hold mail” address 

for the Account Holder; and

f) Whether there is any power of attorney or signatory authority for the 

account. 

4. Relationship Manager Inquiry for Actual Knowledge. In addition to the 

electronic and paper record searches described above, the Reporting Republic of 

Azerbaijan Financial Institution must treat as a U.S. Reportable Account any High 

Value Account assigned to a relationship manager (including any Financial Accounts 

aggregated with such High Value Account) if the relationship manager has actual 

knowledge that the Account Holder is a Specified U.S. Person. 

5. Effect of Finding U.S. Indicia. 

a) If none of the U.S. indicia listed in subparagraph B(1) of this section 

are discovered in the enhanced review of High Value Accounts described 
6

above, and the account is not identified as held by a Specified U.S. Person in 

subparagraph D(4) of this section, then no further action is required until there 

is a change in circumstances that results in one or more U.S. indicia being 

associated with the account.

b) If any of the U.S. indicia listed in subparagraph B(1) of this section are 

discovered in the enhanced review of High Value Accounts described above, 

or if there is a subsequent change in circumstances that results in one or more 

U.S. indicia being associated with the account, then the Reporting Republic of 

Azerbaijan Financial Institution must treat the account as a U.S. Reportable 

Account unless it elects to apply subparagraph B(4) of this section and one of 

the exceptions in such subparagraph applies with respect to that account.

c) Except for Depository Accounts described in subparagraph A(4) of this 

section, any Preexisting Individual Account that has been identified as a U.S. 

Reportable Account under this section shall be treated as a U.S. Reportable 

Account in all subsequent years, unless the Account Holder ceases to be a 

Specified U.S. Person. 

E. Additional Procedures Applicable to High Value Accounts.

1. If a Preexisting Individual Account is a High Value Account as of June 30, 

2014, the Reporting Republic of Azerbaijan Financial Institution must complete the 

enhanced review procedures described in paragraph D of this section with respect to 

such account by June 30, 2015. If based on this review such account is identified as a 

U.S. Reportable Account on or before December 31, 2014, the Reporting Republic of 

Azerbaijan Financial Institution must report the required information about such 

account with respect to 2014 in the first report on the account and on an annual basis 

thereafter. In the case of an account identified as a U.S. Reportable Account after 

December 31, 2014 and on or before June 30, 2015, the Reporting Republic of 

Azerbaijan Financial Institution is not required to report information about such 

account with respect to 2014, but must report information about the account on an 

annual basis thereafter. 

2. If a Preexisting Individual Account is not a High Value Account as of June 30, 

2014, but becomes a High Value Account as of the last day of 2015 or any subsequent 

calendar year, the Reporting Republic of Azerbaijan Financial Institution must 

complete the enhanced review procedures described in paragraph D of this section 

with respect to such account within six months after the last day of the calendar year 

in which the account becomes a High Value Account. If based on this review such 

account is identified as a U.S. Reportable Account, the Reporting Republic of 

Azerbaijan Financial Institution must report the required information about such 

account with respect to the year in which it is identified as a U.S. Reportable Account 

and subsequent years on an annual basis, unless the Account Holder ceases to be a 

Specified U.S. Person. 

3. Once a Reporting Republic of Azerbaijan Financial Institution applies the 

enhanced review procedures described in paragraph D of this section to a High Value 

Account, the Reporting Republic of Azerbaijan Financial Institution is not required to 

re-apply such procedures, other than the relationship manager inquiry described in 

subparagraph D(4) of this section, to the same High Value Account in any subsequent 

year. 
7

4. If there is a change of circumstances with respect to a High Value Account that 

results in one or more U.S. indicia described in subparagraph B(1) of this section 

being associated with the account, then the Reporting Republic of Azerbaijan 

Financial Institution must treat the account as a U.S. Reportable Account unless it 

elects to apply subparagraph B(4) of this section and one of the exceptions in such 

subparagraph applies with respect to that account. 

5. A Reporting Republic of Azerbaijan Financial Institution must implement 

procedures to ensure that a relationship manager identifies any change in 

circumstances of an account. For example, if a relationship manager is notified that 

the Account Holder has a new mailing address in the United States, the Reporting 

Republic of Azerbaijan Financial Institution is required to treat the new address as a 

change in circumstances and, if it elects to apply subparagraph B(4) of this section, is 

required to obtain the appropriate documentation from the Account Holder. 

F. Preexisting Individual Accounts That Have Been Documented for Certain Other 

Purposes. A Reporting Republic of Azerbaijan Financial Institution that has previously 

obtained documentation from an Account Holder to establish the Account Holder’s status as 

neither a U.S. citizen nor a U.S. resident in order to meet its obligations under a qualified 

intermediary, withholding foreign partnership, or withholding foreign trust agreement with 

the IRS, or to fulfill its obligations under chapter 61 of Title 26 of the United States Code, is 

not required to perform the procedures described in subparagraph B(1) of this section with 

respect to Lower Value Accounts or subparagraphs D(1) through D(3) of this section with 

respect to High Value Accounts.

III. New Individual Accounts. The following rules and procedures apply for purposes of 

identifying U.S. Reportable Accounts among Financial Accounts held by individuals and opened on 

or after July 1, 2014 (“New Individual Accounts”). 

A. Accounts Not Required to Be Reviewed, Identified, or Reported. Unless the 

Reporting Republic of Azerbaijan Financial Institution elects otherwise, either with respect to 

all New Individual Accounts or, separately, with respect to any clearly identified group of 

such accounts, where the implementing rules in the Republic of Azerbaijan provide for such 

an election, the following New Individual Accounts are not required to be reviewed, 

identified, or reported as U.S. Reportable Accounts: 

1. A Depository Account unless the account balance exceeds $50,000 at the end 

of any calendar year or other appropriate reporting period. 

2. A Cash Value Insurance Contract unless the Cash Value exceeds $50,000 at 

the end of any calendar year or other appropriate reporting period. 

B. Other New Individual Accounts. With respect to New Individual Accounts not 

described in paragraph A of this section, upon account opening (or within 90 days after the 

end of the calendar year in which the account ceases to be described in paragraph A of this 

section), the Reporting Republic of Azerbaijan Financial Institution must obtain a selfcertification, which may be part of the account opening documentation, that allows the 

Reporting Republic of Azerbaijan Financial Institution to determine whether the Account 

Holder is resident in the United States for tax purposes (for this purpose, a U.S. citizen is 

considered to be resident in the United States for tax purposes, even if the Account Holder is 

also a tax resident of another jurisdiction) and confirm the reasonableness of such selfcertification based on the information obtained by the Reporting Republic of Azerbaijan 
8

Financial Institution in connection with the opening of the account, including any 

documentation collected pursuant to AML/KYC Procedures.

1. If the self-certification establishes that the Account Holder is resident in the 

United States for tax purposes, the Reporting Republic of Azerbaijan Financial 

Institution must treat the account as a U.S. Reportable Account and obtain a selfcertification that includes the Account Holder’s U.S. TIN (which may be an IRS Form 

W-9 or other similar agreed form). 

2. If there is a change of circumstances with respect to a New Individual Account 

that causes the Reporting Republic of Azerbaijan Financial Institution to know, or 

have reason to know, that the original self-certification is incorrect or unreliable, the 

Reporting Republic of Azerbaijan Financial Institution cannot rely on the original selfcertification and must obtain a valid self-certification that establishes whether the 

Account Holder is a U.S. citizen or resident for U.S. tax purposes. If the Reporting 

Republic of Azerbaijan Financial Institution is unable to obtain a valid selfcertification, the Reporting Republic of Azerbaijan Financial Institution must treat the 

account as a U.S. Reportable Account.

IV. Preexisting Entity Accounts. The following rules and procedures apply for purposes of 

identifying U.S. Reportable Accounts and accounts held by Nonparticipating Financial Institutions 

among Preexisting Accounts held by Entities (“Preexisting Entity Accounts”). 

A. Entity Accounts Not Required to Be Reviewed, Identified or Reported. Unless the 

Reporting Republic of Azerbaijan Financial Institution elects otherwise, either with respect to 

all Preexisting Entity Accounts or, separately, with respect to any clearly identified group of 

such accounts, where the implementing rules in the Republic of Azerbaijan provide for such 

an election, a Preexisting Entity Account with an account balance or value that does not 

exceed $250,000 as of June 30, 2014, is not required to be reviewed, identified, or reported as 

a U.S. Reportable Account until the account balance or value exceeds $1,000,000.

B. Entity Accounts Subject to Review. A Preexisting Entity Account that has an 

account balance or value that exceeds $250,000 as of June 30, 2014, and a Preexisting Entity 

Account that does not exceed $250,000 as of June 30, 2014 but the account balance or value 

of which exceeds $1,000,000 as of the last day of 2015 or any subsequent calendar year, must 

be reviewed in accordance with the procedures set forth in paragraph D of this section. 

C. Entity Accounts With Respect to Which Reporting Is Required. With respect to 

Preexisting Entity Accounts described in paragraph B of this section, only accounts that are 

held by one or more Entities that are Specified U.S. Persons, or by Passive NFFEs with one or 

more Controlling Persons who are U.S. citizens or residents, shall be treated as U.S. 

Reportable Accounts. In addition, accounts held by Nonparticipating Financial Institutions 

shall be treated as accounts for which aggregate payments as described in subparagraph 1(b) 

of Article 4 of the Agreement are reported to the Republic of Azerbaijan Competent 

Authority. 

D. Review Procedures for Identifying Entity Accounts With Respect to Which 

Reporting Is Required. For Preexisting Entity Accounts described in paragraph B of this 

section, the Reporting Republic of Azerbaijan Financial Institution must apply the following 

review procedures to determine whether the account is held by one or more Specified U.S. 

Persons, by Passive NFFEs with one or more Controlling Persons who are U.S. citizens or 

residents, or by Nonparticipating Financial Institutions: 
9

1. Determine Whether the Entity Is a Specified U.S. Person.

a) Review information maintained for regulatory or customer relationship 

purposes (including information collected pursuant to AML/KYC Procedures) 

to determine whether the information indicates that the Account Holder is a 

U.S. Person. For this purpose, information indicating that the Account Holder 

is a U.S. Person includes a U.S. place of incorporation or organization, or a 

U.S. address.

b) If the information indicates that the Account Holder is a U.S. Person, 

the Reporting Republic of Azerbaijan Financial Institution must treat the 

account as a U.S. Reportable Account unless it obtains a self-certification from 

the Account Holder (which may be on an IRS Form W-8 or W-9, or a similar 

agreed form), or reasonably determines based on information in its possession 

or that is publicly available, that the Account Holder is not a Specified U.S. 

Person. 

2. Determine Whether a Non-U.S. Entity Is a Financial Institution.

a) Review information maintained for regulatory or customer relationship 

purposes (including information collected pursuant to AML/KYC Procedures) 

to determine whether the information indicates that the Account Holder is a 

Financial Institution. 

b) If the information indicates that the Account Holder is a Financial 

Institution, or the Reporting Republic of Azerbaijan Financial Institution 

verifies the Account Holder’s Global Intermediary Identification Number on 

the published IRS FFI list, then the account is not a U.S. Reportable Account.

3. Determine Whether a Financial Institution Is a Nonparticipating 

Financial Institution Payments to Which Are Subject to Aggregate Reporting 

Under Subparagraph 1(b) of Article 4 of the Agreement. 

a) Subject to subparagraph D(3)(b) of this section, a Reporting Republic 

of Azerbaijan Financial Institution may determine that the Account Holder is a

Republic of Azerbaijan Financial Institution or other Partner Jurisdiction 

Financial Institution if the Reporting Republic of Azerbaijan Financial 

Institution reasonably determines that the Account Holder has such status on 

the basis of the Account Holder’s Global Intermediary Identification Number 

on the published IRS FFI list or other information that is publicly available or 

in the possession of the Reporting Republic of Azerbaijan Financial Institution, 

as applicable. In such case, no further review, identification, or reporting is 

required with respect to the account. 

b) If the Account Holder is a Republic of Azerbaijan Financial Institution 

or other Partner Jurisdiction Financial Institution treated by the IRS as a 

Nonparticipating Financial Institution, then the account is not a U.S. 

Reportable Account, but payments to the Account Holder must be reported as 

contemplated in subparagraph 1(b) of Article 4 of the Agreement. 

c) If the Account Holder is not a Republic of Azerbaijan Financial 

Institution or other Partner Jurisdiction Financial Institution, then the 

Reporting Republic of Azerbaijan Financial Institution must treat the Account 

Holder as a Nonparticipating Financial Institution payments to which are 
10

reportable under subparagraph 1(b) of Article 4 of the Agreement, unless the 

Reporting Republic of Azerbaijan Financial Institution: 

(1) Obtains a self-certification (which may be on an IRS Form W-8 

or similar agreed form) from the Account Holder that it is a certified 

deemed-compliant FFI, or an exempt beneficial owner, as those terms 

are defined in relevant U.S. Treasury Regulations; or

(2) In the case of a participating FFI or registered deemedcompliant FFI, verifies the Account Holder’s Global Intermediary 

Identification Number on the published IRS FFI list. 

4. Determine Whether an Account Held by an NFFE Is a U.S. Reportable 

Account. With respect to an Account Holder of a Preexisting Entity Account that is 

not identified as either a U.S. Person or a Financial Institution, the Reporting Republic 

of Azerbaijan Financial Institution must identify (i) whether the Account Holder has 

Controlling Persons, (ii) whether the Account Holder is a Passive NFFE, and (iii) 

whether any of the Controlling Persons of the Account Holder is a U.S. citizen or 

resident. In making these determinations the Reporting Republic of Azerbaijan 

Financial Institution must follow the guidance in subparagraphs D(4)(a) through 

D(4)(d) of this section in the order most appropriate under the circumstances. 

a) For purposes of determining the Controlling Persons of an Account 

Holder, a Reporting Republic of Azerbaijan Financial Institution may rely on 

information collected and maintained pursuant to AML/KYC Procedures. 

b) For purposes of determining whether the Account Holder is a Passive 

NFFE, the Reporting Republic of Azerbaijan Financial Institution must obtain 

a self-certification (which may be on an IRS Form W-8 or W-9, or on a similar 

agreed form) from the Account Holder to establish its status, unless it has 

information in its possession or that is publicly available, based on which it can 

reasonably determine that the Account Holder is an Active NFFE.

c) For purposes of determining whether a Controlling Person of a Passive 

NFFE is a U.S. citizen or resident for tax purposes, a Reporting Republic of 

Azerbaijan Financial Institution may rely on: 

(1) Information collected and maintained pursuant to AML/KYC 

Procedures in the case of a Preexisting Entity Account held by one or 

more NFFEs with an account balance or value that does not exceed 

$1,000,000; or 

(2) A self-certification (which may be on an IRS Form W-8 or W9, or on a similar agreed form) from the Account Holder or such 

Controlling Person in the case of a Preexisting Entity Account held by 

one or more NFFEs with an account balance or value that exceeds 

$1,000,000. 

d) If any Controlling Person of a Passive NFFE is a U.S. citizen or 

resident, the account shall be treated as a U.S. Reportable Account. 

E. Timing of Review and Additional Procedures Applicable to Preexisting Entity 

Accounts.
11

1. Review of Preexisting Entity Accounts with an account balance or value that 

exceeds $250,000 as of June 30, 2014 must be completed by June 30, 2016. 

2. Review of Preexisting Entity Accounts with an account balance or value that 

does not exceed $250,000 as of June 30, 2014, but exceeds $1,000,000 as of 

December 31 of 2015 or any subsequent year, must be completed within six months 

after the last day of the calendar year in which the account balance or value exceeds 

$1,000,000. 

3. If there is a change of circumstances with respect to a Preexisting Entity 

Account that causes the Reporting Republic of Azerbaijan Financial Institution to 

know, or have reason to know, that the self-certification or other documentation 

associated with an account is incorrect or unreliable, the Reporting Republic of 

Azerbaijan Financial Institution must redetermine the status of the account in 

accordance with the procedures set forth in paragraph D of this section. 

V. New Entity Accounts. The following rules and procedures apply for purposes of identifying 

U.S. Reportable Accounts and accounts held by Nonparticipating Financial Institutions among 

Financial Accounts held by Entities and opened on or after July 1, 2014 (“New Entity Accounts”). 

A. Entity Accounts Not Required to Be Reviewed, Identified or Reported. Unless the 

Reporting Republic of Azerbaijan Financial Institution elects otherwise, either with respect to 

all New Entity Accounts or, separately, with respect to any clearly identified group of such 

accounts, where the implementing rules in the Republic of Azerbaijan provide for such 

election, a credit card account or a revolving credit facility treated as a New Entity Account is 

not required to be reviewed, identified, or reported, provided that the Reporting Republic of 

Azerbaijan Financial Institution maintaining such account implements policies and procedures 

to prevent an account balance owed to the Account Holder that exceeds $50,000.

B. Other New Entity Accounts. With respect to New Entity Accounts not described in 

paragraph A of this section, the Reporting Republic of Azerbaijan Financial Institution must 

determine whether the Account Holder is: (i) a Specified U.S. Person; (ii) a Republic of 

Azerbaijan Financial Institution or other Partner Jurisdiction Financial Institution; (iii) a 

participating FFI, a deemed-compliant FFI, or an exempt beneficial owner, as those terms are 

defined in relevant U.S. Treasury Regulations; or (iv) an Active NFFE or Passive NFFE. 

1. Subject to subparagraph B(2) of this section, a Reporting Republic of 

Azerbaijan Financial Institution may determine that the Account Holder is an Active 

NFFE, a Republic of Azerbaijan Financial Institution, or other Partner Jurisdiction 

Financial Institution if the Reporting Republic of Azerbaijan Financial Institution 

reasonably determines that the Account Holder has such status on the basis of the 

Account Holder’s Global Intermediary Identification Number or other information that 

is publicly available or in the possession of the Reporting Republic of Azerbaijan 

Financial Institution, as applicable. 

2. If the Account Holder is a Republic of Azerbaijan Financial Institution or other 

Partner Jurisdiction Financial Institution treated by the IRS as a Nonparticipating 

Financial Institution, then the account is not a U.S. Reportable Account, but payments 

to the Account Holder must be reported as contemplated in subparagraph 1(b) of 

Article 4 of the Agreement. 

3. In all other cases, a Reporting Republic of Azerbaijan Financial Institution 

must obtain a self-certification from the Account Holder to establish the Account 

Holder’s status. Based on the self-certification, the following rules apply:
12

a) If the Account Holder is a Specified U.S. Person, the Reporting 

Republic of Azerbaijan Financial Institution must treat the account as a U.S. 

Reportable Account. 

b) If the Account Holder is a Passive NFFE, the Reporting Republic of 

Azerbaijan Financial Institution must identify the Controlling Persons as 

determined under AML/KYC Procedures, and must determine whether any 

such person is a U.S. citizen or resident on the basis of a self-certification from 

the Account Holder or such person. If any such person is a U.S. citizen or 

resident, the Reporting Republic of Azerbaijan Financial Institution must treat 

the account as a U.S. Reportable Account. 

c) If the Account Holder is: (i) a U.S. Person that is not a Specified U.S. 

Person; (ii) subject to subparagraph B(3)(d) of this section, a Republic of 

Azerbaijan Financial Institution or other Partner Jurisdiction Financial 

Institution; (iii) a participating FFI, a deemed-compliant FFI, or an exempt 

beneficial owner, as those terms are defined in relevant U.S. Treasury 

Regulations; (iv) an Active NFFE; or (v) a Passive NFFE none of the 

Controlling Persons of which is a U.S. citizen or resident, then the account is 

not a U.S. Reportable Account, and no reporting is required with respect to the 

account.

d) If the Account Holder is a Nonparticipating Financial Institution 

(including a Republic of Azerbaijan Financial Institution or other Partner 

Jurisdiction Financial Institution treated by the IRS as a Nonparticipating 

Financial Institution), then the account is not a U.S. Reportable Account, but 

payments to the Account Holder must be reported as contemplated in 

subparagraph 1(b) of Article 4 of the Agreement. 

VI. Special Rules and Definitions. The following additional rules and definitions apply in 

implementing the due diligence procedures described above: 

A. Reliance on Self-Certifications and Documentary Evidence. A Reporting Republic 

of Azerbaijan Financial Institution may not rely on a self-certification or documentary 

evidence if the Reporting Republic of Azerbaijan Financial Institution knows or has reason to 

know that the self-certification or documentary evidence is incorrect or unreliable. 

B. Definitions. The following definitions apply for purposes of this Annex I. 

1. AML/KYC Procedures. “AML/KYC Procedures” means the customer due 

diligence procedures of a Reporting Republic of Azerbaijan Financial Institution 

pursuant to the anti-money laundering or similar requirements of the Republic of 

Azerbaijan to which such Reporting Republic of Azerbaijan Financial Institution is 

subject. 

2. NFFE. An “NFFE” means any Non-U.S. Entity that is not an FFI as defined in 

relevant U.S. Treasury Regulations or is an Entity described in subparagraph 

B(4)(j) of this section, and also includes any Non-U.S. Entity that is established in 

the Republic of Azerbaijan or another Partner Jurisdiction and that is not a 

Financial Institution. 
13

3. Passive NFFE. A “Passive NFFE” means any NFFE that is not (i) an Active 

NFFE, or (ii) a withholding foreign partnership or withholding foreign trust 

pursuant to relevant U.S. Treasury Regulations. 

4. Active NFFE. An “Active NFFE” means any NFFE that meets any of the 

following criteria: 

a) Less than 50 percent of the NFFE’s gross income for the preceding 

calendar year or other appropriate reporting period is passive income and 

less than 50 percent of the assets held by the NFFE during the preceding 

calendar year or other appropriate reporting period are assets that produce 

or are held for the production of passive income;

b) The stock of the NFFE is regularly traded on an established securities 

market or the NFFE is a Related Entity of an Entity the stock of which is 

regularly traded on an established securities market; 

c) The NFFE is organized in a U.S. Territory and all of the owners of the 

payee are bona fide residents of that U.S. Territory; 

d) The NFFE is a government (other than the U.S. government), a political 

subdivision of such government (which, for the avoidance of doubt, 

includes a state, province, county, or municipality), or a public body 

performing a function of such government or a political subdivision 

thereof, a government of a U.S. Territory, an international organization, a 

non-U.S. central bank of issue, or an Entity wholly owned by one or more 

of the foregoing; 

e) Substantially all of the activities of the NFFE consist of holding (in whole 

or in part) the outstanding stock of, or providing financing and services to, 

one or more subsidiaries that engage in trades or businesses other than the 

business of a Financial Institution, except that an entity shall not qualify for 

NFFE status if the entity functions (or holds itself out) as an investment 

fund, such as a private equity fund, venture capital fund, leveraged buyout 

fund, or any investment vehicle whose purpose is to acquire or fund 

companies and then hold interests in those companies as capital assets for 

investment purposes; 

f) The NFFE is not yet operating a business and has no prior operating 

history, but is investing capital into assets with the intent to operate a 

business other than that of a Financial Institution, provided that the NFFE 

shall not qualify for this exception after the date that is 24 months after the 

date of the initial organization of the NFFE; 

g) The NFFE was not a Financial Institution in the past five years, and is in 

the process of liquidating its assets or is reorganizing with the intent to 

continue or recommence operations in a business other than that of a 

Financial Institution; 

h) The NFFE primarily engages in financing and hedging transactions with, or 

for, Related Entities that are not Financial Institutions, and does not 

provide financing or hedging services to any Entity that is not a Related 

Entity, provided that the group of any such Related Entities is primarily 

engaged in a business other than that of a Financial Institution; 
14

i) The NFFE is an “excepted NFFE” as described in relevant U.S. Treasury 

Regulations; or 

j) The NFFE meets all of the following requirements:

i. It is established and operated in its jurisdiction of residence 

exclusively for religious, charitable, scientific, artistic, cultural, 

athletic, or educational purposes; or it is established and operated in 

its jurisdiction of residence and it is a professional organization, 

business league, chamber of commerce, labor organization, 

agricultural or horticultural organization, civic league or an 

organization operated exclusively for the promotion of social 

welfare; 

ii. It is exempt from income tax in its jurisdiction of residence; 

iii. It has no shareholders or members who have a proprietary or 

beneficial interest in its income or assets; 

iv. The applicable laws of the NFFE’s jurisdiction of residence or the 

NFFE’s formation documents do not permit any income or assets of 

the NFFE to be distributed to, or applied for the benefit of, a private 

person or non-charitable Entity other than pursuant to the conduct 

of the NFFE’s charitable activities, or as payment of reasonable 

compensation for services rendered, or as payment representing the 

fair market value of property which the NFFE has purchased; and 

v. The applicable laws of the NFFE’s jurisdiction of residence or the 

NFFE’s formation documents require that, upon the NFFE’s 

liquidation or dissolution, all of its assets be distributed to a 

governmental entity or other non-profit organization, or escheat to 

the government of the NFFE’s jurisdiction of residence or any 

political subdivision thereof.

5. Preexisting Account. A “Preexisting Account” means a Financial Account 

maintained by a Reporting Financial Institution as of June 30, 2014. 

C. Account Balance Aggregation and Currency Translation Rules.

1. Aggregation of Individual Accounts. For purposes of determining the 

aggregate balance or value of Financial Accounts held by an individual, a Reporting 

Republic of Azerbaijan Financial Institution is required to aggregate all Financial 

Accounts maintained by the Reporting Republic of Azerbaijan Financial Institution, or 

by a Related Entity, but only to the extent that the Reporting Republic of Azerbaijan 

Financial Institution’s computerized systems link the Financial Accounts by reference 

to a data element such as client number or taxpayer identification number, and allow 

account balances or values to be aggregated. Each holder of a jointly held Financial 

Account shall be attributed the entire balance or value of the jointly held Financial 

Account for purposes of applying the aggregation requirements described in this 

paragraph 1.

2. Aggregation of Entity Accounts. For purposes of determining the aggregate 

balance or value of Financial Accounts held by an Entity, a Reporting Republic of 

Azerbaijan Financial Institution is required to take into account all Financial Accounts 
15

that are maintained by the Reporting Republic of Azerbaijan Financial Institution, or 

by a Related Entity, but only to the extent that the Reporting Republic of Azerbaijan 

Financial Institution’s computerized systems link the Financial Accounts by reference 

to a data element such as client number or taxpayer identification number, and allow 

account balances or values to be aggregated. 

3. Special Aggregation Rule Applicable to Relationship Managers. For 

purposes of determining the aggregate balance or value of Financial Accounts held by 

a person to determine whether a Financial Account is a High Value Account, a 

Reporting Republic of Azerbaijan Financial Institution is also required, in the case of 

any Financial Accounts that a relationship manager knows, or has reason to know, are 

directly or indirectly owned, controlled, or established (other than in a fiduciary 

capacity) by the same person, to aggregate all such accounts. 

4. Currency Translation Rule. For purposes of determining the balance or value 

of Financial Accounts denominated in a currency other than the U.S. dollar, a 

Reporting Republic of Azerbaijan Financial Institution must convert the U.S. dollar 

threshold amounts described in this Annex I into such currency using a published spot 

rate determined as of the last day of the calendar year preceding the year in which the 

Reporting Republic of Azerbaijan Financial Institution is determining the balance or 

value. 

D. Documentary Evidence. For purposes of this Annex I, acceptable documentary 

evidence includes any of the following: 

1. A certificate of residence issued by an authorized government body (for 

example, a government or agency thereof, or a municipality) of the jurisdiction in 

which the payee claims to be a resident. 

2. With respect to an individual, any valid identification issued by an authorized 

government body (for example, a government or agency thereof, or a municipality), 

that includes the individual’s name and is typically used for identification purposes. 

3. With respect to an Entity, any official documentation issued by an authorized 

government body (for example, a government or agency thereof, or a municipality) 

that includes the name of the Entity and either the address of its principal office in the 

jurisdiction (or U.S. Territory) in which it claims to be a resident or the jurisdiction (or 

U.S. Territory) in which the Entity was incorporated or organized.

4. With respect to a Financial Account maintained in a jurisdiction with antimoney laundering rules that have been approved by the IRS in connection with a QI 

agreement (as described in relevant U.S. Treasury Regulations), any of the documents, 

other than a Form W-8 or W-9, referenced in the jurisdiction’s attachment to the QI 

agreement for identifying individuals or Entities. 

5. Any financial statement, third-party credit report, bankruptcy filing, or U.S. 

Securities and Exchange Commission report. 

E. Alternative Procedures for Financial Accounts Held by Individual Beneficiaries 

of a Cash Value Insurance Contract. A Reporting Republic of Azerbaijan Financial 

Institution may presume that an individual beneficiary (other than the owner) of a Cash Value 

Insurance Contract receiving a death benefit is not a Specified U.S. Person and may treat such 

Financial Account as other than a U.S. Reportable Account unless the Reporting Republic of 

Azerbaijan Financial Institution has actual knowledge, or reason to know, that the beneficiary 
16

is a Specified U.S. Person. A Reporting Republic of Azerbaijan Financial Institution has 

reason to know that a beneficiary of a Cash Value Insurance Contract is a Specified U.S. 

Person if the information collected by the Reporting Republic of Azerbaijan Financial 

Institution and associated with the beneficiary contains U.S. indicia as described in 

subparagraph (B)(1) of section II of this Annex I. If a Reporting Republic of Azerbaijan 

Financial Institution has actual knowledge, or reason to know, that the beneficiary is a 

Specified U.S. Person, the Reporting Republic of Azerbaijan Financial Institution must follow 

the procedures in subparagraph B(3) of section II of this Annex I.

F. Reliance on Third Parties. Regardless of whether an election is made under 

paragraph C of section I of this Annex I, the Republic of Azerbaijan may permit Reporting 

Republic of Azerbaijan Financial Institutions to rely on due diligence procedures performed 

by third parties, to the extent provided in relevant U.S. Treasury Regulations.

G. Alternative Procedures for New Accounts Opened Prior to Entry Into Force of 

this Agreement.

1. Applicability. If the Republic of Azerbaijan has provided a written notice to 

the United States prior to entry into force of this Agreement that, as of July 1, 2014, 

the Republic of Azerbaijan lacked the legal authority to require Reporting Republic of 

Azerbaijan Financial Institutions either: (i) to require Account Holders of New 

Individual Accounts to provide the self-certification specified in section III of this 

Annex I, or (ii) to perform all the due diligence procedures related to New Entity 

Accounts specified in section V of this Annex I, then Reporting Republic of 

Azerbaijan Financial Institutions may apply the alternative procedures described in 

subparagraph G(2) of this section, as applicable, to such New Accounts, in lieu of the 

procedures otherwise required under this Annex I. The alternative procedures 

described in subparagraph G(2) of this section shall be available only for those New 

Individual Accounts or New Entity Accounts, as applicable, opened prior to the earlier 

of: (i) the date the Republic of Azerbaijan has the ability to compel Reporting 

Republic of Azerbaijan Financial Institutions to comply with the due diligence 

procedures described in section III or section V of this Annex I, as applicable, which 

date the Republic of Azerbaijan shall inform the United States of in writing by the date 

of entry into force of this Agreement, or (ii) the date of entry into force of this 

Agreement. If the alternative procedures for New Entity Accounts opened on or after 

July 1, 2014, and before January 1, 2015, described in paragraph H of this section are 

applied with respect to all New Entity Accounts or a clearly identified group of such 

accounts, the alternative procedures described in this paragraph G may not be applied 

with respect to such New Entity Accounts. For all other New Accounts, Reporting 

Republic of Azerbaijan Financial Institutions must apply the due diligence procedures 

described in section III or section V of this Annex I, as applicable, to determine if the 

account is a U.S. Reportable Account or an account held by a Nonparticipating 

Financial Institution.

2. Alternative Procedures. 

a) Within one year after the date of entry into force of this Agreement, 

Reporting Republic of Azerbaijan Financial Institutions must: (i) with respect 

to a New Individual Account described in subparagraph G(1) of this section, 

request the self-certification specified in section III of this Annex I and 

confirm the reasonableness of such self-certification consistent with the 

procedures described in section III of this Annex I, and (ii) with respect to a 

New Entity Account described in subparagraph G(1) of this section, perform 
17

the due diligence procedures specified in section V of this Annex I and request 

information as necessary to document the account, including any selfcertification, required by section V of this Annex I. 

b) The Republic of Azerbaijan must report on any New Account that is 

identified pursuant to subparagraph G(2)(a) of this section as a U.S. Reportable 

Account or as an account held by a Nonparticipating Financial Institution, as 

applicable, by the date that is the later of: (i) September 30 next following the 

date that the account is identified as a U.S. Reportable Account or as an 

account held by a Nonparticipating Financial Institution, as applicable, or (ii) 

90 days after the account is identified as a U.S. Reportable Account or as an 

account held by a Nonparticipating Financial Institution, as applicable. The 

information required to be reported with respect to such a New Account is any 

information that would have been reportable under this Agreement if the New 

Account had been identified as a U.S. Reportable Account or as an account 

held by a Nonparticipating Financial Institution, as applicable, as of the date 

the account was opened.

c) By the date that is one year after the date of entry into force of this 

Agreement, Reporting Republic of Azerbaijan Financial Institutions must close 

any New Account described in subparagraph G(1) of this section for which it 

was unable to collect the required self-certification or other documentation 

pursuant to the procedures described in subparagraph G(2)(a) of this section. 

In addition, by the date that is one year after the date of entry into force of this 

Agreement, Reporting Republic of Azerbaijan Financial Institutions must: (i) 

with respect to such closed accounts that prior to such closure were New 

Individual Accounts (without regard to whether such accounts were High 

Value Accounts), perform the due diligence procedures specified in paragraph 

D of section II of this Annex I, or (ii) with respect to such closed accounts that 

prior to such closure were New Entity Accounts, perform the due diligence 

procedures specified in section IV of this Annex I.

d) The Republic of Azerbaijan must report on any closed account that is 

identified pursuant to subparagraph G(2)(c) of this section as a U.S. Reportable 

Account or as an account held by a Nonparticipating Financial Institution, as 

applicable, by the date that is the later of: (i) September 30 next following the 

date that the account is identified as a U.S. Reportable Account or as an 

account held by a Nonparticipating Financial Institution, as applicable, or (ii) 

90 days after the account is identified as a U.S. Reportable Account or as an 

account held by a Nonparticipating Financial Institution, as applicable. The 

information required to be reported for such a closed account is any 

information that would have been reportable under this Agreement if the 

account had been identified as a U.S. Reportable Account or as an account held 

by a Nonparticipating Financial Institution, as applicable, as of the date the 

account was opened.

H. Alternative Procedures for New Entity Accounts Opened on or after July 1, 2014,

and before January 1, 2015. For New Entity Accounts opened on or after July 1, 2014, and 

before January 1, 2015, either with respect to all New Entity Accounts or, separately, with 

respect to any clearly identified group of such accounts, the Republic of Azerbaijan may 

permit Reporting Republic of Azerbaijan Financial Institutions to treat such accounts as 

Preexisting Entity Accounts and apply the due diligence procedures related to Preexisting 
18

Entity Accounts specified in section IV of this Annex I in lieu of the due diligence procedures 

specified in section V of this Annex I. In this case, the due diligence procedures of section IV 

of this Annex I must be applied without regard to the account balance or value threshold 

specified in paragraph A of section IV of this Annex I.
1

ANNEX II

The following Entities shall be treated as exempt beneficial owners or deemed-compliant FFIs, as 

the case may be, and the following accounts are excluded from the definition of Financial Accounts.

This Annex II may be modified by a mutual written decision entered into between the Competent 

Authorities of the Republic of Azerbaijan and the United States: (1) to include additional Entities

and accounts that present a low risk of being used by U.S. Persons to evade U.S. tax and that have 

similar characteristics to the Entities and accounts described in this Annex II as of the date of 

signature of the Agreement; or (2) to remove Entities and accounts that, due to changes in 

circumstances, no longer present a low risk of being used by U.S. Persons to evade U.S. tax. Any 

such addition or removal shall be effective on the date of signature of the mutual decision, unless 

otherwise provided therein. Procedures for reaching such a mutual decision may be included in the 

mutual agreement or arrangement described in paragraph 6 of Article 3 of the Agreement.

I. Exempt Beneficial Owners other than Funds. The following Entities shall be treated as NonReporting Republic of Azerbaijan Financial Institutions and as exempt beneficial owners for 

purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code, other than with respect 

to a payment that is derived from an obligation held in connection with a commercial financial 

activity of a type engaged in by a Specified Insurance Company, Custodial Institution, or 

Depository Institution.

A. Governmental Entity. The government of the Republic of Azerbaijan, any political 

subdivision of the Republic of Azerbaijan (which, for the avoidance of doubt, includes a 

state, province, county, or municipality), or any wholly owned agency or instrumentality of 

the Republic of Azerbaijan or any one or more of the foregoing (each, a “Republic of 

Azerbaijan Governmental Entity”). This category is comprised of the integral parts, 

controlled entities, and political subdivisions of the Republic of Azerbaijan.

1. An integral part of the Republic of Azerbaijan means any person, organization, agency, 

bureau, fund, instrumentality, or other body, however designated, that constitutes a 

governing authority of the Republic of Azerbaijan. The net earnings of the governing 

authority must be credited to its own account or to other accounts of the Republic of 

Azerbaijan, with no portion inuring to the benefit of any private person. An integral part 

does not include any individual who is a sovereign, official, or administrator acting in a 

private or personal capacity. 

2. A controlled entity means an Entity that is separate in form from the Republic of 

Azerbaijan or that otherwise constitutes a separate juridical entity, provided that:

a) The Entity is wholly owned and controlled by one or more the Republic of 

Azerbaijan Governmental Entities directly or through one or more controlled entities; 

b) The Entity’s net earnings are credited to its own account or to the accounts of one or 

more Republic of Azerbaijan Governmental Entities, with no portion of its income 

inuring to the benefit of any private person; and 
2

c) The Entity’s assets vest in one or more Republic of Azerbaijan Governmental 

Entities upon dissolution. 

3. Income does not inure to the benefit of private personsif such persons are the intended 

beneficiaries of a governmental program, and the program activities are performed for 

the general public with respect to the common welfare or relate to the administration of 

some phase of government. Notwithstanding the foregoing, however, income is 

considered to inure to the benefit of private persons if the income is derived from the use 

of a governmental entity to conduct a commercial business, such as a commercial 

banking business, that provides financial services to private persons.

B. International Organization. Any international organization or wholly owned agency or 

instrumentality thereof. This category includes any intergovernmental organization 

(including a supranational organization) (1) that is comprised primarily of non-U.S. 

governments; (2) that has in effect a headquarters agreement with the Republic of 

Azerbaijan; and (3) the income of which does not inure to the benefit of private persons.

C. Central Bank. An institution that is by law or government sanction the principal authority, 

other than the government of the Republic of Azerbaijan itself, issuing instruments intended 

to circulate as currency. Such an institution may include an instrumentality that is separate 

from the government of the Republic of Azerbaijan, whether or not owned in whole or in 

part by the Republic of Azerbaijan. 

II. Funds that Qualify as Exempt Beneficial Owners. The following Entities shall be treated as 

Non-Reporting Republic of Azerbaijan Financial Institutions and as exempt beneficial owners 

for purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code.

A. Broad Participation Retirement Fund. A fund established in the Republic of Azerbaijan

to provide retirement, disability, or death benefits, or any combination thereof, to 

beneficiaries that are current or former employees (or persons designated by such 

employees) of one or more employers in consideration for services rendered, provided that 

the fund:

1. Does not have a single beneficiary with a right to more than five percent of the fund’s 

assets; 

2. Is subject to government regulation and provides annual information reporting about its 

beneficiaries to the relevant tax authorities in the Republic of Azerbaijan; and 

3. Satisfies at least one of the following requirements:

a) The fund is generally exempt from tax in the Republic of Azerbaijan on investment 

income under the laws of the Republic of Azerbaijan due to its status as a retirement 

or pension plan; 

b) The fund receives at least 50 percent of its total contributions (other than transfers of 

assets from other plans described in paragraphs A through C of this section or from 
3

retirement and pension accounts described in subparagraph A(1) of section V of this 

Annex II) from the sponsoring employers; 

c) Distributions or withdrawals from the fund are allowed only upon the occurrence of 

specified events related to retirement, disability, or death (except rollover 

distributions to other retirement funds described in paragraphs A through C of this 

section or retirement and pension accounts described in subparagraph A(1) of section 

V of this Annex II), or penalties apply to distributions or withdrawals made before 

such specified events; or

d) Contributions (other than certain permitted make-up contributions) by employees to 

the fund are limited by reference to earned income of the employee or may not 

exceed $50,000 annually, applying the rules set forth in Annex I for account 

aggregation and currency translation.

B. Narrow Participation Retirement Fund. A fund established in the Republic of Azerbaijan

to provide retirement, disability, or death benefits to beneficiaries that are current or former 

employees (or persons designated by such employees) of one or more employers in 

consideration for services rendered, provided that:

1. The fund has fewer than 50 participants; 

2. The fund is sponsored by one or more employers that are not Investment Entities or 

Passive NFFEs; 

3. The employee and employer contributions to the fund (other than transfers of assets from 

retirement and pension accounts described in subparagraph A(1) of section V of this 

Annex II) are limited by reference to earned income and compensation of the employee, 

respectively; 

4. Participants that are not residents of the Republic of Azerbaijan are not entitled to more 

than 20 percent of the fund’s assets; and

5. The fund is subject to government regulation and provides annual information reporting 

about its beneficiaries to the relevant tax authorities in the Republic of Azerbaijan. 

C. Pension Fund of an Exempt Beneficial Owner. A fund established in the Republic of 

Azerbaijan by an exempt beneficial owner to provide retirement, disability, or death benefits 

to beneficiaries or participants that are current or former employees of the exempt beneficial 

owner (or persons designated by such employees), or that are not current or former 

employees, if the benefits provided to such beneficiaries or participants are in consideration 

of personal services performed for the exempt beneficial owner.

D. Investment Entity Wholly Owned by Exempt Beneficial Owners. An Entity that is a

Republic of Azerbaijan Financial Institution solely because it is an Investment Entity, 

provided that each direct holder of an Equity Interest in the Entity is an exempt beneficial 

owner, and each direct holder of a debt interest in such Entity is either a Depository 

Institution (with respect to a loan made to such Entity) or an exempt beneficial owner.
4

III. Small or Limited Scope Financial Institutions that Qualify as Deemed-Compliant FFIs.

The following Financial Institutions are Non-Reporting Republic of Azerbaijan Financial 

Institutions that shall be treated as deemed-compliant FFIs for purposes of section 1471 of the 

U.S. Internal Revenue Code.

A. Financial Institution with a Local Client Base. A Financial Institution satisfying the 

following requirements:

1. The Financial Institution must be licensed and regulated as a financial institution under 

the laws of the Republic of Azerbaijan;

2. The Financial Institution must have no fixed place of business outside of the Republic of 

Azerbaijan. For this purpose, a fixed place of business does not include a location that is 

not advertised to the public and from which the Financial Institution performs solely 

administrative support functions;

3. The Financial Institution must not solicit customers or Account Holders outside the 

Republic of Azerbaijan. For this purpose, a Financial Institution shall not be considered 

to have solicited customers or Account Holders outside the Republic of Azerbaijan

merely because the Financial Institution (a) operates a website, provided that the website 

does not specifically indicate that the Financial Institution provides Financial Accounts 

or services to nonresidents, and does not otherwise target or solicit U.S. customers or 

Account Holders, or (b) advertises in print media or on a radio or television station that is 

distributed or aired primarily within the Republic of Azerbaijan but is also incidentally 

distributed or aired in other countries, provided that the advertisement does not 

specifically indicate that the Financial Institution provides Financial Accounts or services 

to nonresidents, and does not otherwise target or solicit U.S. customers or Account 

Holders;

4. The Financial Institution must be required under the laws of the Republic of Azerbaijan

to identify resident Account Holders for purposes of either information reporting or 

withholding of tax with respect to Financial Accounts held by residents or for purposes 

of satisfying the Republic of Azerbaijan’s AML due diligence requirements;

5. At least 98 percent of the Financial Accounts by value maintained by the Financial 

Institution must be held by residents (including residents that are Entities) of the 

Republic of Azerbaijan;

6. Beginning on or before July 1, 2014, the Financial Institution must have policies and 

procedures, consistent with those set forth in Annex I, to prevent the Financial Institution 

from providing a Financial Account to any Nonparticipating Financial Institution and to 

monitor whether the Financial Institution opens or maintains a Financial Account for any

Specified U.S. Person who is not a resident of the Republic of Azerbaijan (including a 

U.S. Person that was a resident of the Republic of Azerbaijan when the Financial 

Account was opened but subsequently ceases to be a resident of the Republic of 

Azerbaijan) or any Passive NFFE with Controlling Persons who are U.S. residents or 

U.S. citizens who are not residents of the Republic of Azerbaijan;
5

7. Such policies and procedures must provide that if any Financial Account held by a 

Specified U.S. Person who is not a resident of the Republic of Azerbaijan or by a Passive 

NFFE with Controlling Persons who are U.S. residents or U.S. citizens who are not 

residents of the Republic of Azerbaijan is identified, the Financial Institution must report 

such Financial Account as would be required if the Financial Institution were a Reporting 

Republic of Azerbaijan Financial Institution (including by following the applicable 

registration requirements on the IRS FATCA registration website) or close such 

Financial Account;

8. With respect to a Preexisting Account held by an individual who is not a resident of the 

Republic of Azerbaijan or by an Entity, the Financial Institution must review those 

Preexisting Accounts in accordance with the procedures set forth in Annex I applicable 

to Preexisting Accounts to identify any U.S. Reportable Account or Financial Account 

held by a Nonparticipating Financial Institution, and must report such Financial Account 

as would be required if the Financial Institution were a Reporting Republic of Azerbaijan

Financial Institution (including by following the applicable registration requirements on 

the IRS FATCA registration website) or close such Financial Account;

9. Each Related Entity of the Financial Institution that is a Financial Institution must be 

incorporated or organized in the Republic of Azerbaijan and, with the exception of any 

Related Entity that is a retirement fund described in paragraphs A through C of section 

II of this Annex II, satisfy the requirements set forth in this paragraph A; and 

10. The Financial Institution must not have policies or practices that discriminate against

opening or maintaining Financial Accounts for individuals who are Specified U.S.

Persons and residents of the Republic of Azerbaijan. 

B. Local Bank. A Financial Institution satisfying the following requirements:

1. The Financial Institution operates solely as (and is licensed and regulated under the laws 

of the Republic of Azerbaijan as) (a) a bank or (b) a credit union or similar cooperative 

credit organization that is operated without profit;

2. The Financial Institution’s business consists primarily of receiving deposits from and 

making loans to, with respect to a bank, unrelated retail customers and, with respect to a 

credit union or similar cooperative credit organization, members, provided that no 

member has a greater than five percent interest in such credit union or cooperative credit 

organization;

3. The Financial Institution satisfies the requirements set forth in subparagraphs A(2) and 

A(3) of this section, provided that, in addition to the limitations on the website described 

in subparagraph A(3) of this section, the website does not permit the opening of a 

Financial Account;

4. The Financial Institution does not have more than $175 million in assets on its balance 

sheet, and the Financial Institution and any Related Entities, taken together, do not have 
6

more than $500 million in total assets on their consolidated or combined balance sheets; 

and

5. Any Related Entity must be incorporated or organized in the Republic of Azerbaijan,

and any Related Entity that is a Financial Institution, with the exception of any Related 

Entity that is a retirement fund described in paragraphs A through C of section II of this 

Annex II or a Financial Institution with only low-value accounts described in paragraph 

C of this section, must satisfy the requirements set forth in this paragraph B. 

C. Financial Institution with Only Low-Value Accounts. A Republic of Azerbaijan

Financial Institution satisfying the following requirements:

1. The Financial Institution is not an Investment Entity;

2. No Financial Account maintained by the Financial Institution or any Related Entity has 

a balance or value in excess of $50,000, applying the rules set forth in Annex I for 

account aggregation and currency translation; and

3. The Financial Institution does not have more than $50 million in assets on its balance 

sheet, and the Financial Institution and any Related Entities, taken together, do not have 

more than $50 million in total assets on their consolidated or combined balance sheets. 

D. Qualified Credit Card Issuer. A Republic of Azerbaijan Financial Institution satisfying the 

following requirements:

1. The Financial Institution is a Financial Institution solely because it is an issuer of credit 

cards that accepts deposits only when a customer makes a payment in excess of a balance 

due with respect to the card and the overpayment is not immediately returned to the

customer; and

2. Beginning on or before July 1, 2014, the Financial Institution implements policies and 

procedures to either prevent a customer deposit in excess of $50,000, or to ensure that 

any customer deposit in excess of $50,000, in each case applying the rules set forth in 

Annex I for account aggregation and currency translation, is refunded to the customer 

within 60 days. For this purpose, a customer deposit does not refer to credit balances to 

the extent of disputed charges but does include credit balances resulting from 

merchandise returns.

IV. Investment Entities that Qualify as Deemed-Compliant FFIs and Other Special Rules. The 

Financial Institutions described in paragraphs A through E of this section are Non-Reporting 

Republic of Azerbaijan Financial Institutions that shall be treated as deemed-compliant FFIs for 

purposes of section 1471 of the U.S. Internal Revenue Code. In addition, paragraph F of this 

section provides special rules applicable to an Investment Entity. 

A. Trustee-Documented Trust. A trust established under the laws of the Republic of 

Azerbaijan to the extent that the trustee of the trust is a Reporting U.S. Financial Institution,

Reporting Model 1 FFI, or Participating FFI and reports all information required to be 

reported pursuant to the Agreement with respect to all U.S. Reportable Accounts of the trust.
7

B. Sponsored Investment Entity and Controlled Foreign Corporation. A Financial 

Institution described in subparagraph B(1) or B(2) of this section having a sponsoring entity 

that complies with the requirements of subparagraph B(3) of this section. 

1. A Financial Institution is a sponsored investment entity if (a) it is an Investment Entity

established in the Republic of Azerbaijan that is not a qualified intermediary, 

withholding foreign partnership, or withholding foreign trust pursuant to relevant U.S. 

Treasury Regulations; and (b) an Entity has agreed with the Financial Institution to act as 

a sponsoring entity for the Financial Institution. 

2. A Financial Institution is a sponsored controlled foreign corporation if (a) the Financial 

Institution is a controlled foreign corporation1 organized under the laws of the Republic 

of Azerbaijan that is not a qualified intermediary, withholding foreign partnership, or 

withholding foreign trust pursuant to relevant U.S. Treasury Regulations; (b) the 

Financial Institution is wholly owned, directly or indirectly, by a Reporting U.S. 

Financial Institution that agrees to act, or requires an affiliate of the Financial Institution 

to act, as a sponsoring entity for the Financial Institution; and (c) the Financial Institution

shares a common electronic account system with the sponsoring entity that enables the 

sponsoring entity to identify all Account Holders and payees of the Financial Institution

and to access all account and customer information maintained by the Financial 

Institution including, but not limited to, customer identification information, customer 

documentation, account balance, and all payments made to the Account Holder or payee. 

3. The sponsoring entity complies with the following requirements:

a) The sponsoring entity is authorized to act on behalf of the Financial Institution (such 

as a fund manager, trustee, corporate director, or managing partner) to fulfill 

applicable registration requirements on the IRS FATCA registration website; 

b) The sponsoring entity has registered as a sponsoring entity with the IRS on the IRS 

FATCA registration website; 

c) If the sponsoring entity identifies any U.S. Reportable Accounts with respect to the 

Financial Institution, the sponsoring entity registers the Financial Institution pursuant 

to applicable registration requirements on the IRS FATCA registration website on or 

before the later of December 31, 2015 and the date that is 90 days after such a U.S. 

Reportable Account is first identified; 

d) The sponsoring entity agrees to perform, on behalf of the Financial Institution, all due 

diligence, withholding, reporting, and other requirements that the Financial 

 1 A “controlled foreign corporation” means any foreign corporation if more than 50 percent of the total combined 

voting power of all classes of stock of such corporation entitled to vote, or the total value of the stock of such 

corporation, is owned, or is considered as owned, by “United States shareholders” on any day during the taxable year 

of such foreign corporation. The term a “United States shareholder” means, with respect to any foreign corporation, a 

United States person who owns, or is considered as owning, 10 percent or more of the total combined voting power of 

all classes of stock entitled to vote of such foreign corporation.
8

Institution would have been required to perform if it were a Reporting Republic of 

Azerbaijan Financial Institution;

e) The sponsoring entity identifies the Financial Institution and includes the identifying 

number of the Financial Institution (obtained by following applicable registration 

requirements on the IRS FATCA registration website) in all reporting completed on 

the Financial Institution’s behalf; and 

f) The sponsoring entity has not had its status as a sponsor revoked.

C. Sponsored, Closely Held Investment Vehicle. A Republic of Azerbaijan Financial 

Institution satisfying the following requirements:

1. The Financial Institution is a Financial Institution solely because it is an Investment 

Entity and is not a qualified intermediary, withholding foreign partnership, or 

withholding foreign trust pursuant to relevant U.S. Treasury Regulations;

2. The sponsoring entity is a Reporting U.S. Financial Institution, Reporting Model 1 FFI, 

or Participating FFI, is authorized to act on behalf of the Financial Institution (such as a 

professional manager, trustee, or managing partner), and agrees to perform, on behalf of 

the Financial Institution, all due diligence, withholding, reporting, and other 

requirements that the Financial Institution would have been required to perform if it were 

a Reporting Republic of Azerbaijan Financial Institution;

3. The Financial Institution does not hold itself out as an investment vehicle for unrelated 

parties;

4. Twenty or fewer individuals own all of the debt interests and Equity Interests in the 

Financial Institution (disregarding debt interests owned by Participating FFIs and 

deemed-compliant FFIs and Equity Interests owned by an Entity if that Entity owns 100 

percent of the Equity Interests in the Financial Institution and is itself a sponsored 

Financial Institution described in this paragraph C); and

5. The sponsoring entity complies with the following requirements: 

a) The sponsoring entity has registered as a sponsoring entity with the IRS on the IRS 

FATCA registration website; 

b) The sponsoring entity agrees to perform, on behalf of the Financial Institution, all due 

diligence, withholding, reporting, and other requirements that the Financial 

Institution would have been required to perform if it were a Reporting Republic of 

Azerbaijan Financial Institution and retains documentation collected with respect to 

the Financial Institution for a period of six years; 

c) The sponsoring entity identifies the Financial Institution in all reporting completed on 

the Financial Institution’s behalf; and 

d) The sponsoring entity has not had its status as a sponsor revoked. 
9

D. Investment Advisors and Investment Managers. An Investment Entity established in the 

Republic of Azerbaijan that is a Financial Institution solely because it (1) renders investment 

advice to, and acts on behalf of, or (2) manages portfolios for, and acts on behalf of, a 

customer for the purposes of investing, managing, or administering funds deposited in the 

name of the customer with a Financial Institution other than a Nonparticipating Financial 

Institution.

E. Collective Investment Vehicle. An Investment Entity established in the Republic of 

Azerbaijan that is regulated as a collective investment vehicle, provided that all of the 

interests in the collective investment vehicle (including debt interests in excess of $50,000) 

are held by or through one or more exempt beneficial owners, Active NFFEs described in 

subparagraph B(4) of section VI of Annex I, U.S. Persons that are not Specified U.S. 

Persons, or Financial Institutions that are not Nonparticipating Financial Institutions. 

F. Special Rules. The following rules apply to an Investment Entity: 

1. With respect to interests in an Investment Entity that is a collective investment vehicle 

described in paragraph E of this section, the reporting obligations of any Investment 

Entity (other than a Financial Institution through which interests in the collective 

investment vehicle are held) shall be deemed fulfilled.

2. With respect to interests in: 

a) An Investment Entity established in a Partner Jurisdiction that is regulated as a 

collective investment vehicle, all of the interests in which (including debt interests in 

excess of $50,000) are held by or through one or more exempt beneficial owners, 

Active NFFEs described in subparagraph B(4) of section VI of Annex I, U.S. Persons 

that are not Specified U.S. Persons, or Financial Institutions that are not 

Nonparticipating Financial Institutions; or

b) An Investment Entity that is a qualified collective investment vehicle under relevant 

U.S. Treasury Regulations; 

the reporting obligations of any Investment Entity that is a Republic of Azerbaijan

Financial Institution (other than a Financial Institution through which interests in the 

collective investment vehicle are held) shall be deemed fulfilled.

3. With respect to interests in an Investment Entity established in the Republic of 

Azerbaijan that is not described in paragraph E or subparagraph F(2) of this section, 

consistent with paragraph 3 of Article 5 of the Agreement, the reporting obligations of 

all other Investment Entities with respect to such interests shall be deemed fulfilled if the 

information required to be reported by the first-mentioned Investment Entity pursuant to 

the Agreement with respect to such interests is reported by such Investment Entity or 

another person.
10

V. Accounts Excluded from Financial Accounts. The following accounts are excluded from the 

definition of Financial Accounts and therefore shall not be treated as U.S. Reportable Accounts.

A. Certain Savings Accounts.

1. Retirement and Pension Account. A retirement or pension account maintained in the 

Republic of Azerbaijan that satisfies the following requirements under the laws of the 

Republic of Azerbaijan. 

a) The account is subject to regulation as a personal retirement account or is part of a 

registered or regulated retirement or pension plan for the provision of retirement or 

pension benefits (including disability or death benefits);

b) The account is tax-favored (i.e., contributions to the account that would otherwise be 

subject to tax under the laws of the Republic of Azerbaijan are deductible or 

excluded from the gross income of the account holder or taxed at a reduced rate, or 

taxation of investment income from the account is deferred or taxed at a reduced 

rate);

c) Annual information reporting is required to the tax authorities in the Republic of 

Azerbaijan with respect to the account;

d) Withdrawals are conditioned on reaching a specified retirement age, disability, or 

death, or penalties apply to withdrawals made before such specified events; and

e) Either (i) annual contributions are limited to $50,000 or less, or (ii) there is a 

maximum lifetime contribution limit to the account of $1,000,000 or less, in each 

case applying the rules set forth in Annex I for account aggregation and currency 

translation. 

2. Non-Retirement Savings Accounts. An account maintained in the Republic of 

Azerbaijan (other than an insurance or Annuity Contract) that satisfies the following 

requirements under the laws of the Republic of Azerbaijan. 

a) The account is subject to regulation as a savings vehicle for purposes other than for 

retirement;

b) The account is tax-favored (i.e., contributions to the account that would otherwise be 

subject to tax under the laws of the Republic of Azerbaijan are deductible or 

excluded from the gross income of the account holder or taxed at a reduced rate, or 

taxation of investment income from the account is deferred or taxed at a reduced 

rate);

c) Withdrawals are conditioned on meeting specific criteria related to the purpose of the 

savings account (for example, the provision of educational or medical benefits), or 

penalties apply to withdrawals made before such criteria are met; and
11

d) Annual contributions are limited to $50,000 or less, applying the rules set forth in 

Annex I for account aggregation and currency translation.

B. Certain Term Life Insurance Contracts. A life insurance contract maintained in the 

Republic of Azerbaijan with a coverage period that will end before the insured individual 

attains age 90, provided that the contract satisfies the following requirements: 

1. Periodic premiums, which do not decrease over time, are payable at least annually during 

the period the contract is in existence or until the insured attains age 90, whichever is 

shorter;

2. The contract has no contract value that any person can access (by withdrawal, loan, or 

otherwise) without terminating the contract;

3. The amount (other than a death benefit) payable upon cancellation or termination of the 

contract cannot exceed the aggregate premiums paid for the contract, less the sum of 

mortality, morbidity, and expense charges (whether or not actually imposed) for the 

period or periods of the contract’s existence and any amounts paid prior to the 

cancellation or termination of the contract; and

4. The contract is not held by a transferee for value.

C. Account Held By an Estate. An account maintained in the Republic of Azerbaijan that is 

held solely by an estate if the documentation for such account includes a copy of the 

deceased’s will or death certificate.

D. Escrow Accounts. An account maintained in the Republic of Azerbaijan established in 

connection with any of the following: 

1. A court order or judgment.

2. A sale, exchange, or lease of real or personal property, provided that the account satisfies

the following requirements:

a) The account is funded solely with a down payment, earnest money, deposit in an 

amount appropriate to secure an obligation directly related to the transaction, or a 

similar payment, or is funded with a financial asset that is deposited in the account in 

connection with the sale, exchange, or lease of the property; 

b) The account is established and used solely to secure the obligation of the purchaser to 

pay the purchase price for the property, the seller to pay any contingent liability, or 

the lessor or lessee to pay for any damages relating to the leased property as agreed 

under the lease;

c) The assets of the account, including the income earned thereon, will be paid or 

otherwise distributed for the benefit of the purchaser, seller, lessor, or lessee 

(including to satisfy such person’s obligation) when the property is sold, exchanged, 

or surrendered, or the lease terminates;
12

d) The account is not a margin or similar account established in connection with a sale 

or exchange of a financial asset; and

e) The account is not associated with a credit card account. 

3. An obligation of a Financial Institution servicing a loan secured by real property to set 

aside a portion of a payment solely to facilitate the payment of taxes or insurance related 

to the real property at a later time.

4. An obligation of a Financial Institution solely to facilitate the payment of taxes at a later 

time.

E. Partner Jurisdiction Accounts. An account maintained in the Republic of Azerbaijan and 

excluded from the definition of Financial Account under an agreement between the United 

States and another Partner Jurisdiction to facilitate the implementation of FATCA, provided 

that such account is subject to the same requirements and oversight under the laws of such 

other Partner Jurisdiction as if such account were established in that Partner Jurisdiction and 

maintained by a Partner Jurisdiction Financial Institution in that Partner Jurisdiction.

VI. Definitions. The following additional definitions shall apply to the descriptions above:

A. Reporting Model 1 FFI. The term Reporting Model 1 FFI means a Financial Institution 

with respect to which a non-U.S. government or agency thereof agrees to obtain and 

exchange information pursuant to a Model 1 IGA, other than a Financial Institution treated 

as a Nonparticipating Financial Institution under the Model 1 IGA. For purposes of this 

definition, the term Model 1 IGA means an arrangement between the United States or the 

Treasury Department and a non-U.S. government or one or more agencies thereof to 

implement FATCA through reporting by Financial Institutions to such non-U.S. government 

or agency thereof, followed by automatic exchange of such reported information with the 

IRS. 

B. Participating FFI. The term Participating FFI means a Financial Institution that has agreed 

to comply with the requirements of an FFI Agreement, including a Financial Institution 

described in a Model 2 IGA that has agreed to comply with the requirements of an FFI 

Agreement. The term Participating FFI also includes a qualified intermediary branch of a 

Reporting U.S. Financial Institution, unless such branch is a Reporting Model 1 FFI. For 

purposes of this definition, the term FFI Agreement means an agreement that sets forth the 

requirements for a Financial Institution to be treated as complying with the requirements of 

section 1471(b) of the U.S. Internal Revenue Code. In addition, for purposes of this 

definition, the term Model 2 IGA means an arrangement between the United States or the 

Treasury Department and a non-U.S. government or one or more agencies thereof to 

facilitate the implementation of FATCA through reporting by Financial Institutions directly 

to the IRS in accordance with the requirements of an FFI Agreement, supplemented by the 

exchange of information between such non-U.S. government or agency thereof and the IRS.