Income tax in Azerbaijan

May 21, 2019

INDIVIDUAL TAXATION

Residents are taxed on their worldwide income. Married couples are taxed separately.

INCOME TAX

Taxable income is classified into the following categories: (1) income from employment, (2) income from entrepreneurial activities and businesses, and (3) passive income or all other kinds of income that are not specifically exempted from taxation.

Income earned by nonresident foreigners is generally taxed at progressive rates, from 14% to 25%.

ANNUAL INCOME TAX

TAXABLE INCOME, AZN (US$) TAX RATE
Up to 30,000 (US$16,667) 14%
Over 30,000 (US$16,667) 25% on all income over US$16,667

MONTHLY INCOME TAX

TAXABLE INCOME, AZN (US$) TAX RATE
Up to 2,500 (US$1,389) 14%
Over 2,500 (US$1,389) 25% on all income over US$1,389

RENTAL INCOME
Rental income earned by residents is considered as ordinary income and taxed at the standard progressive rates, from 14% to 25%. Income-generating expenses are deductible when calculating taxable rental income.

CAPITAL GAINS
Capital gains are considered as ordinary income and taxed at the standard income tax rates, from 14% to 25%. Capital gains are computed as market value of property or selling price less acquisition costs and related expenses.

PROPERTY TAXATION

Land Tax

Land tax is levied on all land at different rates, depending on the location of the property, property use, and property size. The applicable tax rate varies from AZN1 (US$0.56) to AZN20 (US$11) per 100 square meters.

Property Tax

Property tax is levied at a flat rate of 1% of the fixed asset’s annual residual value.

Property tax is deductible for profit tax purposes.

CORPORATE TAXATION

PROFITS TAX

Profits tax is levied on the income and capital gains earned by corporations at a flat rate of 22% as of January 2010. Income-generating expenses are deductible when computing for the taxable profits.

CORPORATE TAXATION

INCOME TAX

Income and capital gains earned by companies are subject to profits tax at a flat rate of 20%. Income-generating expenses are deductible when calculating taxable income.

Property Tax

Companies are required to pay property tax at a rate of 1% of the fixed assets´ average annual residual value.

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