Obtaining Tax Residency Certificate in Azerbaijan is provided for by the “Regulations for administration of international agreements for the avoidance of double taxation between the Republic of Azerbaijan and other States”, approved by the Ministry of Taxes on 12 June 2017.
Tax residency certificates are vital for proving tax residency status in a given state and obtaining benefits from the Double Tax Treaties, i.e. avoid paying double taxes. The Certificate of Residency is issued by the State Tax Service for one tax year.
A DTA Form 1 shall be approved in a soft or hard copy and submitted to State Tax Services in order to obtain tax residency certificate in Azerbaijan. In addition to the DTA-01 Form, the information on the foreign state, applicant taxpayer, as well as description of works (services) shall be attached thereto. If the certificate of residency of Azerbaijan is requested for the purpose of obtaining tax exemption or lower tax rates provided for double tax treaties with respect to any income in the other contracting state, DTA-01 Form shall contain the date and number of the agreement which constitutes the basis for the income, as well as the amount of earned income in a relevant currency (if available).
It is possible to obtain electronic or hard-copy certificate of residency in Azerbaijan, upon the choice of the applicant taxpayer.
At CLC, we can represent you and obtain relevant tax residency certificate in Azerbaijan, as well as support for obtaining tax refunds in line with double tax treaties. Contact us via: [email protected], +994 50 289 89 73
Azerbaijan tax system ranks among the best in the world. Tax rates and tax payment methods in Azerbaijan are relatively simple and clear. Companies and individual entrepreneurs with tax identification number shall either obtain online tax login and password by signing an agreement with the tax authority or obtain ASAN signature (E-signature activated via mobile phone number).
If the question “How to pay tax in Azerbaijan ?” is understood as a technical one. The answer would be that in order to pay taxes in Azerbaijan it is important to login to e-taxes.gov.az system for proper tax filing and then by obtaining relevant treasury codes, again via online banking methods (usually accessible via ASAN imza or other online login setup of banks) by identifying the relevant code of the tax all taxes are paid via bank transfer. In addition to this, it is also possible to pay taxes at any bank in Azerbaijan. It must be noted that in that case, tax payment receipts must be kept. It is suggested to pay taxes online via online banking systems.
If the question “How to pay tax in Azerbaijan ?” covers the process of paying tax as an employee or foreign company, it must be noted that in such cases the employer (regarding employment income tax) or client (in case of income obtained from Azerbaijani sources, such as while providing services in Azerbaijan, etc) shall deduct relevant such taxes and pay on behalf of the person in question.
For further questions about tax rates, paying taxes and other compulsory payments, insurances in Azerbaijan, please contact us. Our team of tax accountants would be honored to provide you support and services in taxation and accounting in Azerbaijan.
The contract is a bilateral transaction. A contract is a form of agreement with at least two parties involved. Contract types in Azerbaijan can be divided into two types: as civil contracts and employment contracts. Other criteria may also be classified as contracts, for example, gratuitous contract (non-paid) and non-gratuitous (paid) contracts; Real contracts (concluded while transferring the object in question) and consensual contracts (concluded by undertaking an obligation).
Depending on the type of contract, it may be concluded orally, in written form or by approval of notary. Agreements related to the real estate shall be approved by a notary.
The types of civil contracts, that is, the types of commercial contracts, are mainly contracts for the supply of goods, works and services. An example is the sale and purchase contract for the goods. Contracts for work are usually considered as contractor contracts: construction contracts, repair contracts, and other contracts that result in the final product. Service contracts may include a variety of consulting services, technical support contracts, rental services, financial services.
It is illegal to sign a service contract with the company if there is actual employment relationship between the company and the individual. Signs of labor relations are the signs of obedience to work arrangements, wages, leave and other rights and relations provided for in the Labor Code.
Depending on the type of contract, the contract form should be selected. Contract forms under Azerbaijani laws are usually not legally defined and approved. In the free market economy, the contractual terms must be determined by the parties themselves, since the principle of voluntariness of contracting parties is based. In this case, the necessary conditions specified in the law for the specific type of contract must be observed. Contract provisions that are contrary to the necessary conditions in the law will be considered invalid.
Non-lawyers should also be advised in the form of contract forms, depending on the type of contract. For example, the opinion of a construction and engineering specialist when preparing a construction contract can be helpful in terms of more detailed information about construction progress, technical processes, and risks. In any case, based on these opinions, regardless of the type of contract, the contract must be entered into by the lawyer.
Contact us at [email protected], mobile: 00994 50 289 89 73 for more information or advice on contract types, contract specifications, contract forms, contract terms and conditions.
What is the rate of withholding tax in Azerbaijan? How are withholding taxes deducted? Is it possible to obtain a 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 (the 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 a double taxation treaty exists between the country of the non-resident and Azerbaijan, then it is possible to obtain a refund of such withholding taxes paid in Azerbaijan or obtain tax credit in the country 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. Under certain cases, where the relevant DTA allows, it is possible to submit a specific form and not pay withholding tax in Azerbaijan in accordance with local procedures.
Withholding taxes for royalties are imposed at 14% rate and deducted at the source. Another form of withholding tax - dividend tax rate is 10%. Under relevant avoidance of double taxation treaties, withholding tax rates might be lowered as a general rule or under specific cases.
For questions about withholding taxes or double taxation issues, as well as consultancy and refund of withholding taxes in Azerbaijan, please contact us.
One of the recent questions regarding buying property is whether foreigners can buy a property in Azerbaijan. Under Azerbaijani law, the property is divided into two categories: movable property (personal property) and immovable property (real property – real estate).
Any foreigner has equal rights regarding buying personal property in Azerbaijan as local citizens. A foreigner can buy real estate (immovable property) in Azerbaijan, with the exception of land. In other words, if you a foreign citizen or stateless person, you can buy a house, villa, apartment, commercial property and other property, but not land. Therefore, if you are not planning to buy land as a foreigner, you enjoy similar rights as local citizens.
1.Finding a proper property, physical inspection and agreement on price and terms;
2. Signing of a purchase agreement before notary (Note, it is possible to be represented via notary approved power of attorney, therefore, it is not necessary to be personally and physically in Azerbaijan);
3. Together with notary deal stage, application to state registry over the property is conducted.
4. Obtaining Title to the property.
Newly constructed property in Azerbaijan usually does not have property documents (title document) on is based on an internal agreement with the developer and the buyer (investor). This leads to further legal risks, which required legal support for the analysis of the agreement and checking liens/charges or possible frauds during the transactions. The possible problem stems from the fact that property without title document is not registered and therefore, can not be found in the state registry of immovable property. Any operation, transaction, charge or rights of third parties are also not recorded and registered due to the same reason. Therefore, this requires special attention.
Buying land could be possible indirectly, via registering a company. Again, this brings about additional concerns, such as property taxes (which are higher in companies), and legal risks and risks over property that must be analyzed and properly planned in a given situation.
Depending on the situation, property transactions have taxes and associated costs. But if properly planned and optimized, it is possible to reduce such taxes and costs.
A foreigner can freely dispose or sell the property and transfer the proceeds as any local person. Azerbaijani legislation does not discriminate regarding such rights between foreigner or a local person.
For details or questions, 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.
Yes, for most of the services, our team can provide such services from distance based principles. For this, we will need proper form of power of attorney, the form of which we will provide considering the circumstances of the case.
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.
No such requirement is specified.
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.
No such minimum amount is specified.
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.