| Azerbaijan Income Tax Rates Azerbaijan personal income tax rates for 2009 are progressive, between 14% - 35%.
Income of physical persons in Azerbaijan are taxed at the following rates:
Taxable income / Tax Rate %
Up to AZN 24,000 14%
Above AZN 24,000 AZN 3,360 + 35% of the amount above AZN 24,000
The Azerbaijan tax department proposed a reduction of the income tax (Gəlir Vergisi), from current 35% to 30%, effective from 2010.
Exchange rate for 18 Jul 2009: 1 USD = 0.81 Azerbaijani Manats (AZN)
In Azerbaijan, resident and non-resident physical persons are payers of the income tax. Resident physical persons in Azerbaijan are taxed from their income generated in and outside the Republic of Azerbaijan. Nonresident physical persons are taxed on income generated from the sources in the Republic of Azerbaijan only.
Tax Year: Azerbaijan tax year is the calendar year.
Azerbaijan Corporate Tax RateAzerbaijan corporate tax rate for 2010 is a flat 20%.
The Azerbaijan tax department proposed a reduction of the corporate profit tax, from current 22% to 20%, effective from 2010. Azerbaijan tax department also announced to reduce the V.A.T. rate from 18% to 17%.
Azerbaijan companies are subject to a corporate tax (Mənfəət Vergisi) of 20% on their worldwide income in 2009. Nonresidents are taxed on Azerbaijan income at the 20% rate. PSA contractors that carry out business in Azerbaijan in connection with petroleum operations pay profit tax at pre-negotiated rates of 25% to 32%. In lieu of profit tax, foreign subcontractors to a PSA can pay withholding tax at rates ranging from 5% to 8% of the gross payments received as consideration for work or services performed in Azerbaijan. The tax, which is a final tax for the foreign subcontractor, is withheldby the payor with the proceeds remitted to the Azerbaijani budget. Tax is imposed on the taxable profits of each main exporting pipeline (MEP) participant for a year relating to project (MEP Project) activities at a flat tax rate of 27%.
Capital Gains Tax: Capital gains are treated as ordinary income in Azerbaijan and are taxed at the ordinary profit tax rate.
Foreign Tax Credit: Corporate income tax paid outside Azerbaijan may be credited against Azerbaijan tax due. Excess foreign tax credits may not be offset against a resident taxpayer's Azerbaijan tax liabilities on any domestic-source income, nor may it be carried forward or back.
Real Property Tax: An annula land tax is levied in Azerbaijan, on the owners and users of land (whether or not resident), with the amount of tax depending on where the land is located and how it is used.
Social Security: Employers in Azerbaijan are required to make contributions to the state social protection fund (Dövlət Sosial Müdafiə Fondu) on behalf of their employees. The rate is 25%, with 22% paid by the employer on gross payroll and 3% withheld from the employee's gross salary.
Withholding Tax in Azerbaijan
Dividends: Dividends are subject to a 10% withholding tax, unless the withholding tax rate is reduced under a tax treaty.
Interest: Interest paid to a nonresident is subject to a 10% withholding tax, unless the tax rate is reduced under a tax treaty.
Royalties: Royalties paid to a nonresident are subject to a 14% withholding tax, unless the tax rate is reduced under a tax treaty.
Branch Remittance Tax: Net profits remitted to the head office of a branch are subject to a 10% withholding tax.
Azerbaijan Value Added Tax (VAT) RatesThe standard rate of VAT (Əlavə Dəyər Vergisi - ƏDV) in Azerbaijan is 18%.
Reduced VAT rates: Exports as well as financial and assurance services are exempt from Value Added Tax in Azerbaijan.
Azerbaijan tax department announced to reduce the Value Added Tax rate from current 18% to 17%. The change is expected to be effective beginning 2010.
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