Tax on property income in Azerbaijan

May 21, 2019

INDIVIDUAL TAXATION

Nonresidents are taxed on their Azerbaijan-sourced income. Married couples are taxed separately.

Foreign investors may own immovable property in Azerbaijan but they cannot purchase land. Foreign nationals and legal entities may only obtain the right to use land through lease agreements.

INCOME TAX

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
Gross rental income earned by nonresidents is taxed at a flat withholding tax rate of 14%. No deductions are allowed.

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.

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.

Property tax is deductible for profit tax purposes.

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