Income tax in Azerbaijan
Taxation Researcher | July 25, 2021
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%.
REDUCED ANNUAL INCOME TAX 2019-2025 |
|
| TAXABLE INCOME, AZN (US$) | TAX RATE |
| Up to 96,000 (US$53,333) | 14% |
| Over 96,000 (US$53,333) | 25% on all income over US$53,333 |
REDUCED ANNUAL INCOME TAX 2019-2025 |
|
| TAXABLE INCOME, AZN (US$) | TAX RATE |
| Up to 8,000 (US$4,444) | 14% |
| Over 8,000 (US$4,444) | 25% on all income over US$4,444 |
The reduced tax rates will be in force for a seven-year period, from 01 January 2019 to 31 December 2025 for employees of the non-public and non-oil and non-gas sectors.
ANNUAL INCOME TAX |
|
| TAXABLE INCOME, AZN (US$) | 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.