Taxation in Azerbaijan
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Taxation |
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The tax legislation of Azerbaijan is comprised by the
From 2010, the government revenues from taxes started to rise. Thus, in 2014, tax revenues as percentage from GDP totaled 14.213%. Highest shares of tax revenues came from value added tax and corporate profit taxes in 2014.[3] In 2015, tax revenues as percentage of GDP were equal to 15.6%.[4]
The central
Tax Regime
Currently, Azerbaijan has 3 distinct tax regimes. These are the following: statutory tax regime, tax regime that relates to companies operating under Production Sharing Agreements and tax regime that relates to companies operating under Host Government Agreements.[6]
The statutory tax regime is applicable to all companies operating in Azerbaijan, except for those, who are involved into oil and gas industry.
The regime related to Production Sharing Agreements covers the rules for more than twenty existing PSAs. Milli Majlis has ratified these PSAs.
The rules related to Baku-Tbilisi-Ceyhan oil export and South Caucasus pipelines are covered by Host Government Agreements tax regime.[6]
Tax Procedures
The
Taxes can be withhold from people who are related to employment activities, as well as non-
Agricultural income, gifts and inheritance from family members, capital gains, income from crafts production, lottery prizes, alimonies and compensation receipts are exempt from taxation. Standard deductions are applicable for war heroes, their families and military officials.[1]
State Taxes
Income tax from individuals
Profit tax from legal persons
Profit is defined as the difference between income and expenses. The profits of all resident-enterprises should be taxed. If legal person is permanently established in Azerbaijan – then its profits should be taxed. Otherwise, it should be taxed at the source of payment without subtracting its expenses. Gains, which arise from revaluation of assets are not subject to taxation. The profits are taxed at 20% rate.
Value Added Tax
Value Added Tax (VAT) rate is 18%. All works, goods, services provided and taxable imports constitute the base for taxation. There also exists zero (0) rate VAT in the country for the issues related with financial aids, diplomacy, cargo and valuable goods.
Excise Tax
Excise taxes are
Property Tax
Taxable base of property tax for physical persons are the value of buildings and their parts, any water and air transportation or facility. For legal enterprises it is only average annual value of fixed assets. The rates are specified based on the area where buildings are located. Thus, for Baku it is 0.4 AZN per each square meter,
Tax on land
Residents, as well as non-residents and businesses are obliged to register for paying taxes after proving their rights to use the land, and regardless of the results of
Taxes to the Road
The taxable base for this type of tax constitutes the motor vehicles which are imported to the country by non-residents and are used for transportation, as well as all motor fuels, diesel that has been either produced or imported to Azerbaijan Republic for domestic use. Taxes for motor cars are calculated depending on engine cubic capacity and period of presence, for buses – number of seats and period of presence, for trucks – number of axis and period of presence. Generally, these taxes may vary from US$20 to US$2800 and higher. For transportation, delivering dangerous cargo there is specific procedure of calculation.
Royalty (Mining Tax)
These taxes are paid by physical entities and enterprises which extract
Simplified Tax
Simplified tax is applicable to entities, whose volume of transactions does not exceed 200.000 AZN in 12 consecutive months. Gross volume of cash flows received in respect of goods and services provided is subject to taxation. Simplified tax rate for Baku is 4%, for other regions – 2%, for trading activities – 6%, for public catering activity – 8%.
See also
- Ministry of Taxes of Azerbaijan Republic
- Economy of Azerbaijan
- Economic development in Azerbaijan
- Tax Code of Azerbaijan
References
- ^ a b c d e "- Legislation". Taxes.Gov.Az. Retrieved 2018-02-27.
- ^ "Global Forum on Transparency and Exchange of Information for Tax Purposes Peer Reviews: Azerbaijan 2016 | OECD READ edition". OECD iLibrary. Retrieved 2018-02-27.
- ^ "Data on the receipt of taxes and other payments to the state budget". Taxes.Gov.Az. Retrieved 2018-02-27.
- ^ "Tax revenue (% of GDP) | Data". data.worldbank.org. Retrieved 2018-02-27.
- ^ "History of Ministry of Taxes". Taxes.Gov.Az. Retrieved 2018-02-27.
- ^ a b "Doing Business and Investing in Azerbaijan" (PDF). PWC. 2017.