Recent tax legislation reforms in Azerbaijan is characterized by promoting cashless payments and transparency. Today, businesses seek better tax planning and organization to cope with ongoing reforms. Especially, many of the businesses are not well aware of possible tax exemptions and benefits offered by legislation. We ensure businesses are properly informed of such opportunities and obtain benefit where available.
Tax Code of Azerbaijan
The Azerbaijani Tax Code, which has entered into force on 1st of January 2001, regulates the taxation and tax administration as codified law. The Tax Code of Azerbaijan is a special law, prevails over other laws with regard to taxation issues.
The Tax Code prescribes the following government taxes in Azerbaijan:
- Corporate Tax: 20% as a general rate, 5% for micro-businesses. Withholding taxes of non-residents is deducted at 10% by the paying resident;
- Personal Income Tax: 14%-25%;
- Value Added Tax: 18%, some works, and services are taxed with 0% VAT;
- Excises: this tax is added to the sales price of certain goods imported to or produced in Azerbaijan. The rates vary, for example, excise rate of alcoholic drinks such vodka is 2 manats per liter, 1000 unit of cigarettes 20 manats;
- Property Tax of Legal Entities (Companies): 1% of the asset value annually;
- Land Tax: different tax rates apply to lands depending on the location and type of land. For example, Industrial lands in Baku are taxed as 10 manat per square meter where the land size is below 10 000 square meters, and 20 manat when above this threshold. Land Tax is taxed annually;
- Road Tax (Vehicle Tax): the object of road tax is vehicles entering or leaving Azerbaijan, as well as petrol, diesel, liquid gas imported to or produced in Azerbaijan;
- MiningTax: different tax rates apply in mining operations, such as 26% for oil, 20% for gas;
- Simplified Tax: this tax is imposed on smaller businesses with maximum annual revenue of 200 000 manats without VAT registration (2%), businesses providing public catering services where their annual revenue is above 200 000 manats (8%) and businesses engaged in the construction of buildings and companies providing transportation services (different rates apply depending on several factors).
The latest amendments to the Tax Code of Azerbaijan is further specific for the following reasons:
- It prescribes additional tax exemptions for businesses, including small businesses;
- Reduces some of the tax rates in Azerbaijan;
- Eliminates taxation of employee salaries in private non-oil industry;
- Provides further clarity and transparency for the tax procedures and tax audits.
For the full text of tax amendments to the Tax Code of Azerbaijan, effective from 1 January 2019, please follow this link.
Tax Services in Azerbaijan
We ensure that the company (business) complies with tax and customs regulations and gains from benefits offered by tax and customs legislation. Import and export in Azerbaijan are strictly regulated by the Customs Code, which usually requires not only formal legal tax and customs consultancy, but also practical recommendations in such cases.
Tax lawyers and tax experts of CLC provide international taxation (double taxation, transfer-pricing) and tax services in Azerbaijan. Supported with accountants and tax accountancy services, our team provides a full range of tax consultancy and accounting services in Azerbaijan, both for multinational companies operating in Baku, as well as local businesses mainly with international business ties.
Professional tax services in Azerbaijan by tax consultants and tax lawyers
Our team has extended experience in taxation issues, with practical experience in leading Tax Law Development unit at the Ministry of Taxes. We are well experienced international taxation, including double taxation and transfer-pricing regulations. Being selected as Tax Reported from Azerbaijan by the International Bar Association, we constantly provide tax updates to our clients, as well we propose amendments to the legislation considering best international practices.
We offer the following taxation services:
- Tax advisory and tax planning;
- Assistance for planning, restructuring and optimizing tax liabilities;
- Tax consultancy in double taxation issues, including prevention of juridical or economic double taxation, obtaining tax credits or claiming for refund stemming from double taxation treaties;
- Consultancy regarding withholding taxes in Azerbaijan;
- VAT consultancy for residents and non-residents;
- Transfer-pricing arrangements and transfer-pricing consultancy for multi-national enterprises in Azerbaijan and local businesses with international presence;
- Obtaining Special Regimes of Taxation and tax benefits on donations, sponsorships, and other investments;
- Acquiring tax benefits and other incentives through negotiations with state and local governments;
- Writing opinion letters on the tax consequences of transactions and other tax matters;
- Audit of the company's tax compliance condition and recommendations;
- Providing tax law solutions for complicated business transactions and situations, particularly including multi-parties and cross-border transactions;
- resolution of tax disputes and litigation supported by tax lawyers and attorneys.
Accounting and payroll Services in Azerbaijan:
As one-stop-shop for businesses, we provide full accounting, taxation, payroll, and HR services. This provides opportunities for our clients to focus on business and commercial matters, and be confident about all accounting and tax liability issues without hiring specific experts for each function. Our accounting team is composed of accountants and HR professionals in addition to tax lawyers/consultants.
Our accounting and payroll services include:
- Full Accounting services with specific software or financial reporting requirements;
- Payroll and outsourcing services, payment of salaries, registration of employees;
- human resources services, including concluding employment agreements, registering employee, termination of employment agreements, documentation of HR-related operations (sick-leave, annual leave, business trips, and other available operations);
- book-keeping services and statutory reporting services;
- Contact person for banking issues, resolving any bank related transactions and representing clients before banks;
- Other accounting and payroll related-services and support.