Taxation System in Azerbaijan

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Corporate Tax Overview

Profit tax is levied on resident and non-resident enterprises.
Resident entities are taxed on their worldwide income.
Non-resident entities are taxed only on Azerbaijani source income.
The standard corporate tax rate is 20% (1/12 of taxable profit).
Tax losses can be carried forward for up to 5 years, but not backdated.
Controlled Foreign Companies (CFCs) are subject to taxation in Azerbaijan under certain conditions.
Market prices may be used to recalculate taxes in cases of import and export operations, barter transactions, transactions between related parties, or when prices differ by more than a specified percentage.

Residents are taxed on their worldwide income, while non-residents are taxed only on Azerbaijani source income.
Individuals not physically present in Azerbaijan for 183 days or more in a calendar year are considered non-residents unless otherwise determined by tie-breaker rules.
Tax rates:
- Income from employment in the oil and gas or public sectors is subject to different tax rates (not specified).
- Individuals with monthly income less than AZN 2,500 are exempt from tax on the first AZN 200 of their income.
- Annual income of individuals engaged in non-entrepreneurial activity is taxed at a rate of 14%.
- Individuals who derive income from business activities without forming a legal entity are liable to personal income tax at a rate of 20%.

Tax declarations and payments must be submitted by 31 March of the following year, with an option for a three-month extension if full payment is made on time.
Quarterly tax installments are due on the 15th of the month following each quarter.
Failure to comply may result in penalties.