Tax System

Standard income tax rates apply to gains from the alienation of the capital. E.g. personal income tax being 14% and corporate income tax being 20%. The sale of real estate is subject to simplified tax applied on the transaction. See here for the details. 

There is no separate capital gains tax in Azerbaijan. However, this should not be understood as capital gains being exempt from income taxation. Capital gains, particularly income from the sale of shares, real estate and other assets are part of the structure of income (Azerbaijan applies global income tax principle). Increased values of the capital are subject to income tax only while realization (i.e. sale or other form of alienation). 

General rate for personal income tax is 14% where the income is less than 2500 AZN per month; the higher bracket of 25% applies to the income exceeding the said 2500 AZN/month threshold. Salary income obtained in non-oil public industry (private employers with the exception of oil-gas industry) are exempt from personal income tax up to the 8 000 AZN/month.

Yes, the general rate for dividend taxes is 5%, which must be deducted by the Azerbaijani resident entity while distributing net profit among shareholders (same rate applies with regard to distributions made to corporate shareholders and individual shareholders, without any differential treatment of residency).

General corporate income tax (called as “profit tax”) is 20% of the net profit. Micro businesses with income less than 200 000 AZN and having a minimum of three employees are subject to 5% corporate income tax. Under special circumstances, such micro businesses are entitled to opt to apply simplified tax regime, i.e. 2% of the gross income (expenses not deducted) in lieu of corporate income tax. Public catering businesses (restaurants, cafes etc) are entitled to select simplified tax system, when exceeding 200 000 AZN annual revenue, and apply 8% tax from the gross income (expenses not deducted)

Codified tax law (i.e. unified Tax Code); state and municipal taxes system (municipal taxes cover property tax of individuals, land tax of individuals, corporate income tax of companies owned by the municipality), all other taxes are classified as state taxes; tax authorities acting as departments of State Tax Service under the Ministry of Economy (with regard to state taxes), customs authorities (with regard to import VAT) and municipal tax services (with regard to municipal taxes) are the tax authorities in Azerbaijan.

All tax matters are prescribed by the Tax Code of Azerbaijan, under which, no other taxes would be imposed under any other law. The Tax Code covers for administrative tax procedures, as well as substantial taxation issues, for both residents and non- residents, and for both domestic and international tax obligations.