Azerbaijan Taxation Guide

This comprehensive guide covers corporate and individual taxes in Azerbaijan, highlighting key points for understanding the tax system.

Corporate Taxation

Profit Tax

• Applicability: Applies to both resident and non-resident entities
• Tax Rates:
  • 20% for companies with annual income up to AZN 200,000
  • 15% for income between AZN 200,001 and AZN 500,000
  • 10% for income over AZN 500,000
• Tax Exemptions:
  • Dividends received by resident entities are exempt from tax
  • Income earned through a permanent establishment in Azerbaijan is exempt
  • Taxable profit attributable to a subsidiary of a controlled foreign company is exempt

Transfer Pricing

• Control Pricing: Applies when transactions involve related parties or where market prices differ significantly
• Recalculation of Taxes: Taxes may be recalculated based on the market price if control pricing applies

Individual Taxation

Residency Rules

• Residency Criteria: An individual is considered resident if they are physically present in Azerbaijan for 183 days or more in a calendar year

Tax Rates

• Taxable Income: For individuals, tax rates include
  • 0% for income up to AZN 200 per month
  • 14% for annual income less than AZN 30,000
  • 20% for business activities without forming a legal entity

General Tax Information

Profit Tax Return

• Filing Deadline: All taxpayers must submit their profit tax returns by 31 March of the year following the reporting year

Tax Installments

• Quarterly Payments: Quarterly installments are due on the 15th day of each month after each quarter

Interest and Penalties

• Late Compliance: Failure to comply with deadlines may result in penalties and interest charges