Taxation
All Azerbaijani enterprises, representative offices, branches, and individuals engaged in business activities (as well as foreign entities and individuals conducting business activity in Azerbaijan through a "permanent establishment" ("PE")) must register with the tax authorities regardless of whether or not their activities are taxable in Azerbaijan. Divisions which have not established a PE are subject to a separate regime.
Corporate profit tax
A resident enterprise pays corporate profit tax on its income. A non-resident enterprise, carrying on business in Azerbaijan through a permanent establishment, is liable for tax on profit gained such activity. The rate of profit tax is 20%.
Road Tax
Legal entities and individuals of foreign states as well as persons owning vehicles in Azerbaijan Republic
must pay this tax when using the territory of the Azerbaijan Republic. Taxes are assessed on cars, buses and trucks depending on seat number, days spent in Azerbaijan and number of other conditions (e.g. $15 - $25 per day for buses, etc.)
Simplified Tax
Simplified tax is charged at the following rates on the gross revenue of the taxpayers:
· 4% for taxpayers operating in Baku
· 2% for taxpayers operating in other regions of Azerbaijan
In order to quality for this tax, the total revenue should not exceed 150,000 Azerbaijan manats (approximately 187,500 USD at the current exchange rate) for the previous 12 months period. The payers of the simplified tax are also exempt from VAT, profits tax and property tax.
Quarter shall be the reporting period for simplified tax regime.
VAT registration
Companies with taxable transactions exceeding a certain threshold (currently 150,000 AZN (187,500 USD) during previous 12 months must register as VAT payers. Other companies carrying out business activity in Azerbaijan may voluntarily register. Only registered VAT payers may charge VAT or claim a credit for input VAT that they pay.
Double Taxation Treaties
Azerbaijan has signed bilateral treaties for the avoidance of double taxation with 40 countries. Double taxation treaty negotiations are currently underway with Denmark, India, Ireland, Kyrgyzstan, Syria and Sweden.
Fore more information please see our "Doing Business in Azerbaijan" publication
