Taxes in Azerbaijan
- Emil Khudiyev (Lawyer)
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Tax — is a mandatory, individual, gratuitous payment collected from taxpayers to the state budget, to local budgets, as well as to targeted state funds in the form of alienation of funds belonging to them on the right of ownership, in order to financially support the activities of the state and municipalities.
Tax Code of Azerbaijan, adopted in 2001, has undergone a number of democratic changes and innovations that have made the taxation process in Azerbaijan even more transparent and business-oriented. Recent changes to the Azerbaijan Tax Code focus on non-cash payments in circulation.
State Tax Service of the Republic of Azerbaijan (subordinate to
the Ministry of Economy of Azerbaijan) is the main state body responsible for supervising tax compliance in Azerbaijan.
Tax system in Azerbaijan
Taxes in Azerbaijan are paid in manat. Tax system contains following taxes:
– Government taxes. Payable throughout whole the territory of the Republic of Azerbaijan;
– Taxes in Nakhchivan Autonomous Republic (NAR). Are paid in accordance and within NAR’s legislation territory;
– Local taxes (municipal taxes).
As the main financial burden is precisely government taxes, I will explain you in detail about it.
Types of taxes in Azerbaijan
Tax Code of Azerbaijan prescribes the following government taxes in Azerbaijan:
– Personal income tax (for individuals).
– Corporate income tax (except companies and organizations owned by the municipality);
– VAT (Value Added Tax);
– Excises;
– Simplified tax;
– Road tax (Vehicle tax);
– Mining tax;
– Property tax, applied both to companies and individuals (except cases, provided in Article 198.1 of Tax Code of Azerbaijan).
– Land tax, applied to companies and to individuals (cases are specified in Article 206.1 of Azerbaijani Tax Code).
Taxes, specified above, are also applied in Nakhchivan Autonomous Republic (NAR).
Municipal taxes (local taxes) in Azerbaijan are:
– Land tax, paid by individuals;
– Property tax, paid by individuals;
– Profit tax, applied to municipal companies.
Ammount of taxes in Azerbaijan
1) Personal income Tax. Tax rate varies from 14 to 25%. For example, A 20% personal income tax applied for an individual entrepreneur, 10% tax is applied for the bet winnings, a person who is employed and gains more than 2,500 manats per month undertakes to pay a tax of 350 manats + 25% of the amount of more than 2,500 per month.
2) Corporate income Tax (except companies and organizations owned by the municipality). In general, corporate income tax rate is 20%, Article 125 of Tax Code of Azerbaijan prescribes other corporate income tax rates.
3) VAT (Value Added Tax). VAT tax rate in Azerbaijan is 18%. Also Article 165 of the Tax Code of Azerbaijan prescribes cases when 0% VAT is applied.
4) Excises. This tax is applied on the import and production of goods, such as:
– alcohol and tobacco products;
– electronic cigarettes and liquids for it;
– energy drinks;
– oil products;
– cars and buses;
– boats and yachts;
– imported precious metals.
There are separate tax rates for each type of goods, specified above.
5) Simplified Tax. Persons who are not registered for
VAT purposes and the volume of taxable transactions of which during any month (months) of consecutive 12-month period is 200,000 manat or less, may became the simplified taxpayers
(Persons rendering catering services (e.g. restaurants, coffee shops, etc.) with annual turnover exceeding 200,000 AZN are still eligible to be a simplified taxpayers. In this case Simplified tax rate for them is 8%.
– Tax rate – 8% of the proceeds for the current period (2% for some categories of payers).
– Simplified tax for those who transport people, cargo depends on the type of activity, territory.
– Organizers of lotteries, sports and gambling games pay 6%, ticket sellers pay 4%.
– For organizations leasing land plots, their coefficients are calculated personally.
– Hosts, cleaners, shoemakers, seamstresses and others pay a fixed amount in manats.
Full list of payers of simplified taxes specified in Article 220 of Azerbaijan Tax Code.
6) Mining Tax. Payed by individuals or companies, who are engaged in the extraction of minerals in the territory of Azerbaijan. The rate depends on the type of mineral:
– oil – 26% of the wholesale price;
– natural gas – 20% of the wholesale price;
– ore metals – 3% of the wholesale price;
– mineral waters – 10 manats per 1 cubic meter;
– precious and semi-precious stones for jewelry – 6 manats per 1 cubic meter;
– salt – 6 manats per 1 cubic meter;
– sawn stone – 2 manats per 1 cubic meter;
– other non-ore metalic minerals (gypsum, marble, crushed stone, sand & etc.) – 1 manat per 1 cubic meter.
7) Road Tax (Vehicle Tax). Levied from foreign vehicles entering the territory of Azerbaijan. The rate depends on the type of vehicle, length of stay, engine size:
– for cars from 15 to 120 dollars;
– for buses from 15 to 1750 dollars;
– for trucks from 20 to 2800 dollars.
When transporting dangerous goods, the amount increases.
8) Property Tax. Paid by individuals and legal entities owning:
– buildings (the amount depends on the location and area);
– water and air transport (AZN 0.02 per 1 cc engine or 1% of the market value for transport without an engine;
– fixed assets of enterprises and individual entrepreneurs (1% of the cost).
9) Land Tax. Payers of the land tax are owners (individuals or companies) of lands or those who lease it. Charged annually. Tax rate:
– For agricultural lands – 2 manats per 100 square meters.
– For agricultural lands that cannot be used for its intended purpose or for which there is a certificate from the executive authority – 0.06 manat per 1 point. Points are calculated depending on the location, quality of the land, its use.
– For industrial lands – the rates are 2-20 manats per 100 square meters (depending on the area and region).
– For summer cottages, living houses – from 0.1 to 1.2 manats per 100 square meters (depending on the area and area).
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