CSOs in Azerbaijan face the possibility of high fines related to their financial documentation, a penalty that does not exist under the current law. New draft amendments to Azerbaijan's Code of Administrative Offenses propose imposing fines on CSOs, including branches of foreign organisations, for failing to submit detailed annual financial reports to the Ministry of Justice. According to media reports, fines for non-compliance will range from 1,000 to 1,500 AZN (approximately 555–833 Euros) for officials and 2,500 to 3,000 AZN (approximately 1,390–1,667 Euros) for CSOs. The proposed changes raise concerns over potential impacts on CSOs operations and autonomy.
Increased regulatory pressure on civil society
The proposed fines to the Code of Administrative Offences (CAO) are part of broader changes linked to the law "On the fight against the legalisation of property obtained through crime and the financing of terrorism" (AML/CFT law). The new AML/CFT law requires CSOs, including foreign branches and representative offices, to submit detailed annual financial reports on grants and donations to the Ministry of Justice, on top of the one submitted to the Ministry of Finance. The form of a detailed annual financial report on grants and donations was approved by the Cabinet of Ministers' Resolution No. 343 dated July 17, 2024 . It is the same form to be submitted to the Ministry of Finance by April 1 of each year.
According to the proposed changes to the CAO, failure to comply—whether through late, incomplete, or inaccurate submissions—will result in high penalties.
These changes in the Code of Administrative Offences could place additional administrative and financial burdens on CSOs, particularly smaller organisations with limited resources. The threat of fines may discourage some CSOs from accepting grants or donations altogether, potentially stifling their ability to carry out vital work in different areas. If implemented without clear guidelines and safeguards, these fines could contribute to an environment of increased state control over CSOs.
For many local CSOs, the proposed fines pose a practical challenge. A small community-based organisation reliant on grants may struggle to navigate the additional reporting requirements. Even minor errors or delays in submissions could lead to fines that significantly impact their operations. Foreign CSOs, often key partners in development projects, may also find these measures restrictive, potentially limiting their involvement in Azerbaijan. These changes highlight the need for dialogue between the government and civil society to ensure financial transparency measures are balanced with the need to protect the autonomy and effectiveness of CSOs.
As Azerbaijan moves forward with these proposed amendments, it is essential to strike a balance between ensuring financial transparency and supporting the operational independence of civil society organisations. Clear guidelines, capacity-building support, and an open dialogue between the government and CSOs can help mitigate the risk of undue burden or misuse of the regulations. By fostering cooperation and creating fair compliance mechanisms, these measures can achieve their intended purpose without undermining the vital role of CSOs in Azerbaijan's development.