Azerbaijan Taxation Overview

Azerbaijan has a territorial taxation system, where residents are taxed on their worldwide income and non-residents are taxed only on their Azerbaijani source income.

Profit Tax

Calculation and Payment

• Profit tax is calculated on a calendar year basis.
• Taxpayers must submit their profit tax returns by March 31 of the following year.
• Quarterly tax installments are due on the 15th day of each month following the quarter.
• Failure to comply may result in penalties.

Controlled Foreign Companies

A non-resident enterprise registered in a state with a preferential tax regime is subject to taxation in Azerbaijan if:

• A resident entity owns more than 50% of voting shares or charter capital.
• Tax paid on profit is at least two times less than taxable profit under Azerbaijani law.
• More than 30% of annual income comes from interest, royalties, dividends, financial leasing, insurance, banking, and other financial activities.

Market Prices

In cases where market prices differ by more than 10%, 20%, or 30% from prices in similar transactions, taxes may be recalculated based on market price.

Individual Tax

Income Taxation

• Residents are taxed on their worldwide income.
• Non-residents are taxed only on Azerbaijani source income.
• Tax on Azerbaijani source income is normally paid by withholding tax at progressive rates.
• Income earned from employment in the oil and gas or public sectors is subject to specific tax rates.