Accounting & Tax Services: Personal & Corporate Taxes
General Information on Tax System in Azerbaijan
Value Added Tax (VAT) is 18%
Excise duties are applicable to alcohol, e-cigarettes, tobacco products, energy drinks, oil products, leisure and sport yachts, imported platinum, gold, jewelry, diamonds, leather goods.
Tax rate for foreign companies, corporate profit tax is 20% from net profits, after deducting expenses.
Foreign companies are taxed on their Azerbaijan income.
Capital gains are included in taxable income. They are taxed at the standard corporate tax rate of 20%.
Bad debts are tax deductible. Fines, penalties, charitable contributions are not deductible.
Business trip expenses and repairs within certain limits are also deductible.
Individual entrepreneurs pay 20%
Azerbaijani residents are taxed on their worldwide income, whereas non-residents are taxed on their Azerbaijani income. The rate is the same as for nationals.
Dividends - 10%
Interest - 10%
Royalties - 14%
Corporate profit tax. It shall be made clear that all these terms denote the same tax – which is the tax over the income of enterprises.
Micro-business: Companies with the annual turnover of 200,000 AZN qualify as a micro business.
The Azerbaijani tax code specifies certain rules regarding thin capitalization applicable in cases of loans.
Taxpayers shall submit their corporate income tax returns no later than March 31st following the previous fiscal year. The calculated final income tax shall be paid to the state treasury by the same deadline.
Corporate income tax interim reports should be submitted quarterly.
Taxpayers must pay 2 percent simplified tax from total turnover, without deducting expenses, if they are not registered for VAT and the turnover does not exceed 200,000 AZN during 12-month period.
Taxpayers who are not registered for VAT purposes and their turnover does not exceed 200 000 manats during any month consecutive 12-months period.
Payroll taxes in Azerbaijan are mainly deducted by the employer and paid on behalf of the employees.
Mandatory Social Insurance Contribution: 25%
Mandatory Unemployment insurance: 1%
Unemployment insurance payment is 0.5% paid from the employee’s salary and 0.5% by the employer from its funds.
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