General Questions

What is the rate of withholding tax in Azerbaijan? How are withholding taxes deducted? Is it possible to obtain refund for the withholding taxes in Azerbaijan? - these are the most asked questions about withholding taxes in Azerbaijan. 

As a general rule, where a non-resident obtains income (profit) from Azerbaijan sources due to services, it shall be subject to 10% withholding tax. The payer (buyer of services) shall withhold 10% of the gross amount and pay to the government. In majority of cases, VAT would be applicable in addition to withholding tax. If avoidance of double taxation treaty exists between the country of the non-resident and Azerbaijan, then it is possible to obtain refund of such withholding taxes paid in Azerbaijan or obtain tax credit in the countr of registration (nationality). Under the relevant double taxation treaty (DTA), it may be possible to provide a specific DTA form and not deduct withholding tax via approval of tax auhtority - in which case, non-resident would pay its profit in the country of registration. 

For questions about withholding taxes in Azerbaijan, consultancy and refund about withholding taxes in Azerbaijan, please contact us. 

Getting Azerbaijani nationality is possible under naturalization as specified by the Law on Citizenship. For that, 5 years of continuous permanent residence, legal source   of income, undertaking to abide by the Constitution and laws of Azerbaijan, and knowledge of Azerbaijani language is required. 

In practice, a person shall start the process by obtaining residence permit. After staying in Azerbaijan 2 years via temporary residence permit, it is possible to apply for permanent residence. The 5 year period starts running from the date of the permanent residence card. A person shall learn and pass a test of Azerbaijani language      and have legal source of income. 

Applications are submitted to the State Migration Service, bu Azerbaijani President has the authority to grant Azerbaijani nationality. 

For further questions, please contact us. 

Summary answer: Opening of a bank account for a company is possible within 3 days after registration of the company. For the procedure, a notarized sample of the company seal and signature of the director are required. Additionally, an electronic tax certificate duplicate must be sent to the bank 2 days in advance of the opening of a bank account.

For the opening of a personal bank account in Azerbaijan, banks require a passport and the document which proves the customer's local registration. Some of the Azerbaijani banks provide modern e-banking services, which provide tools to control over the account from abroad, as well.  

The same rules apply while the opening of bank accounts by foreigners. A foreign citizen without a residence permit in Azerbaijan is authorized to open and maintain a bank account in Azerbaijani banks. 

Regarding companies owned by foreign companies (legal entities), the ultimate beneficiary owner (individual person) shall be identified in most of the cases. Where this is impossible due to reasonable grounds, board of directors and management board member identification shall be sufficient. 

Full answer:

The opening of bank accounts of residents and non-residents in national and foreign currency (except for correspondent accounts of foreign banks) on the territory of the Republic of Azerbaijan is carried out legally without any problem. Bank accounts are opened for state and municipal bodies, legal entities, their branches, representative offices and other divisions, as well as entrepreneurs engaged in entrepreneurial activity without creation of legal entity, and also individuals (hereinafter - clients). Clients (account holders) they are independent in selecting banks, opening accounts in one or several banks. Bank accounts in foreign currency can be opened only in authorized banks. Banks have the right to open correspondent accounts in national currency (manat) only at the Central Bank.

Bank accounts are divided into the following types:

- current accounts;

- current sub-accounts;

- loan accounts;

- savings accounts;

- Correspondent accounts.

Current accounts shall be opened for banking operations related to the financial and economic activity of state and municipal bodies, legal entities, their branches, representative offices and other separate divisions, and also physical persons engaged in business activity without the establishment of legal entity (hereinafter - individual entrepreneurs).

Current subaccounts can be opened to local entities that are not affiliated with a branch or representative office for their regional activities. Funds included in these accounts should be transferred to the current account of the parent entity within the period determined by the bank account agreement with the parent, except for the salaries of the employees of the local authorities and the payment of the required utility costs that would ensure the operation of these entities.

    Loans are opened to record bank loans to customers, and, in the cases provided for in the loan agreement, to carry out banking operations related to the use and repayment of credit funds.

Deposits accounts are opened in accordance with the Civil Code of the Republic of Azerbaijan for the execution of banking operations of clients under a bank deposit (deposit) agreement.

Correspondent accounts are the accounting records of banks and their clients. Correspondent accounts are opened for banks.

 Bank accounts can be opened in the national currency of the Republic of Azerbaijan and in any foreign currency. The current foreign exchange regime must be observed when opening non-residents' foreign currency loan accounts. Non-resident legal entities can open bank accounts in the national currency of the Republic of Azerbaijan (manat) only in banks with branches or representative offices in the territory of the Republic of Azerbaijan. Deposits for non-resident legal entities can be opened regardless of this condition. Non-resident legal entities and individuals may open bank accounts in foreign currency without restrictions.

However, there is no special requirement for a non-resident in the opening procedure of bank account in Azerbaijan. 

Income tax for employees in non-oil private industries is 0% where the monthly salary is below 8 000 AZN 

General VAT in Azerbaijan is 18%, for some goods and services 0% and exemptions apply.  

  • General Corporate tax rate in Azerbaijan is 20% paid from the net profit of the company. The following tax reliefs and differing rates apply: 
  • Micro business with annual turnover below 200 000 AZN and employees below 10 persons are qualified for 75% relief from the taxation, i.e. corporate tax would be 5%.  
  • Businesses providing services to individual persons without tax registration and with annual turnover below 200 000 AZN shall pay 2% simplified tax out of their turnover (without deducting expenses) 

Yes, a company may be owned 100% by a foreign individual person or company. There is no requirement to have a mandatory local shareholder, local director or any local partner in Azerbaijan.  

Registering a company (Limited liability Company) in Azerbaijan is simplified and requires minimal documentation, such as application form, company incorporation documents (Articles of Association, Incorporation decision of shareholders). The Registration Authority is the Ministry of Taxes. If a foreign person has local migration registration in Azerbaijan, it is possible to register a company in Azerbaijan online within a couple of minutes.  

For detailed information please click here.

Yes, wife/husband and kids directly qualify for dependent TRP. Parents of the main applicant who has undertaken custody for them are also qualified for dependent TRP. 

In practice TRP is issued for 3-12 months.  

  • Foreigners and stateless persons are issued permit for temporary residence in the Republic of Azerbaijan in the following cases: 

  • In case they are in close relationship with a citizen of the Republic of Azerbaijan. Parents and children, grandparents and grandchildren, sister and brothers having common parents are considered to be close relatives by law.

  • In case they invest at least 500 000 manats (AZN) in the economy of the country; 

  • In case they possess real estate which is worth at least 100 000 manats (AZN) on the territory of the Republic of Azerbaijan or funds in the same amount in the banks of the Republic of Azerbaijan; In such cases the price of the real estate in Azerbaijan is assessed by independent assessment agencies and the real contract price of the real estate does not take into consideration by authorities.

  • In case they are highly qualified specialists in the spheres of economy, industry, defense, science, culture, sports, etc.; 

  • Special category of professionals invited by individuals and legal entities for the purposes of specified by the executive body 

  • In case they are family members of foreigners and stateless persons temporarily or permanently residing on the territory of the Republic of Azerbaijan; 

  • In case they hold positions of head or deputy head in the branch or representation of a foreign legal entity in the Republic of Azerbaijan; 

  • In case they hold positions of head or deputy head in the legal entity established in the Republic of Azerbaijan with at least one shareholder is a foreign individual or foreign legal entity

  • In case they engage in entrepreneurship activity in the Republic of Azerbaijan; This is only considered as a ground for issuance of a permit for temporary residence in the territory of the Republic of Azerbaijan, when those persons work actually by concluding labor contract with at least 5 persons on full time employment or 10 persons on part-time employment. In this case, at least 80 percent of the workers are required to be the citizens of the Republic of Azerbaijan. 

  • In case they obtain work permit in a way envisaged by this Code to carry out paid labor activity on the territory of the Republic of Azerbaijan; 

  • In case they get full-time education at institutions of higher education and technical schools and in case they get education at secondary schools in the Republic of Azerbaijan; 

  • In case they are engaged in professional religious activity at officially registered religious institutions; 

  • In case there are grounds envisaged by the international agreements of the Republic of Azerbaijan. 

To obtain citizenship, there must be ground. Apart from general grounds (birth in Azerbaijan or born to Azerbaijani citizens), for admission to citizenship, foreign or stateless person must have stayed in Azerbaijan for minimum of 5 years on the base of permanent residence permit, possess legal source of income, and undertake to abide by the Constitution of Azerbaijan and submit a document certifying the knowledge of Azerbaijani language.

No, Azerbaijan is member of the Council of Europe, but not the EU yet.