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Taxation in Azerbaijan
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Taxation in Azerbaijan

Corporate Tax

Tax on enterprises: 22% (effective from January 1st 2006)

Taxation occurs at the national and municipal levels. Residents are taxed on their worldwide income, with a credit for foreign tax. Most Azerbaijan-source income of non-residents is taxed. The rate of corporate tax has been decreased from 24% to 22% from January 1st 2006 in accordance with the adoption of the Law on Changes and Amendments to the Tax Code of Azerbaijan on December 17th 2005. The authorities are empowered to impose a minimum tax, taking into account the circumstances of each specific business sector. A 10% withholding tax applies to repatriated profits of foreign companies.

Individual Tax

Progressive rates up to 35%

Resident individuals pay tax on worldwide income; non-residents pay tax on Azerbaijan-source income only. A person is resident if present in the country for 183 days in a calendar year. The progressive rates to 35% apply to employment income. Entrepreneurs are taxed at progressive rates to 35%.

Capital Gains

Taxed as income

Capital gains are generally taxed as part of income.

Indirect Tax

Standard rate: 18%

Value-added tax (VAT) applies to most transactions. Exempt items include exports, subway transport, financial services (banking, leasing, etc), mass media (except for advertising), insurance services, and oil and gas companies working under the Production Sharing Agreement taxation regime.

Tax Administration and Compliance

Tax year: Corporations: calendar year; Individuals: calendar year

Enterprises pay corporate income and assets taxes quarterly in advance. VAT is paid and reported on a monthly basis. All enterprises must submit their annual corporate income-tax returns to the tax authorities before March 31st of the year following the relevant tax year. Payroll taxes are withheld and remitted monthly by employers on behalf of their employees.

Additional Tax Information

Withholding Taxes

Dividends 10%, Interest 10%, Royalties 14%.

Tax Treaties

Azerbaijan has concluded more than 15 tax treaties. There is no tax treaty with the US.

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