Real estate tax (property tax) is a municipal tax and is calculated annually based on rates established for each square meter of residential area. The first 30 square meters are exempt from tax.
For residential and non-residential properties owned by individuals, the tax applies to the area exceeding 30 m² at the following rates:
If the building is located in Baku, a coefficient from 0.7 to 1.5 is applied to these rates, as determined by the relevant executive authority. This coefficient reflects the fact that real estate values differ across areas of Baku - the city center is more expensive, while outlying districts are cheaper and the government uses this adjustment to account for those differences.
The tax for the current year is paid in two equal installments - by August 15 and by November 15. If the tax was not paid by the previous owner of the property, the obligation to pay the tax within the established deadlines falls on the new owner.
To obtain a tax residency certificate, you must apply to the tax authority using the DTA-01 application form (either electronically or in paper form).
The application must include:
Additionally, an individual who is not registered with the tax authorities must submit the application to the tax office at their place of residence and, if necessary, register for tax purposes first.
Land tax is calculated based on annual rates in AZN per square meter, which depend on the designation of the land plot (agricultural or non-agricultural) and its location. The object of taxation includes land plots owned or used by individuals and legal entities.
After obtaining a document confirming ownership or the right to use the land plot, the person must register the land within 1 month with the tax authority (for municipal land - with the municipality).
For agricultural land, the tax is calculated at very low rates based on the standard hectare value. For non-agricultural land, the tax is calculated according to fixed rates in AZN per m², determined for each settlement.
Legal entities pay land tax twice a year - by August 15 and November 15. Each payment amounts to half of the land tax calculated for the previous tax year.
The annual land tax return must be submitted to the tax authority by January 31 of the year following the reporting year.
The property tax for enterprises is calculated as a percentage and amounts to 1% of the average annual residual value of the enterprise’s property. The tax period is the calendar year.
Interim payments:
Standard income tax rates apply to gains from the alienation of the capital. E.g. personal income tax being 14% and corporate income tax being 20%. The sale of real estate is subject to simplified tax applied on the transaction. See here for the details.
There is no separate capital gains tax in Azerbaijan. However, this should not be understood as capital gains being exempt from income taxation. Capital gains, particularly income from the sale of shares, real estate and other assets are part of the structure of income (Azerbaijan applies global income tax principle). Increased values of the capital are subject to income tax only while realization (i.e. sale or other form of alienation).
General rate for personal income tax is 14% where the income is less than 2500 AZN per month; the higher bracket of 25% applies to the income exceeding the said 2500 AZN/month threshold. Salary income obtained in non-oil public industry (private employers with the exception of oil-gas industry) are exempt from personal income tax up to the 8 000 AZN/month.
Yes, the general rate for dividend taxes is 5%, which must be deducted by the Azerbaijani resident entity while distributing net profit among shareholders (same rate applies with regard to distributions made to corporate shareholders and individual shareholders, without any differential treatment of residency).
General corporate income tax (called as “profit tax”) is 20% of the net profit. Micro businesses with income less than 200 000 AZN and having a minimum of three employees are subject to 5% corporate income tax. Under special circumstances, such micro businesses are entitled to opt to apply simplified tax regime, i.e. 2% of the gross income (expenses not deducted) in lieu of corporate income tax. Public catering businesses (restaurants, cafes etc) are entitled to select simplified tax system, when exceeding 200 000 AZN annual revenue, and apply 8% tax from the gross income (expenses not deducted)
Codified tax law (i.e. unified Tax Code); state and municipal taxes system (municipal taxes cover property tax of individuals, land tax of individuals, corporate income tax of companies owned by the municipality), all other taxes are classified as state taxes; tax authorities acting as departments of State Tax Service under the Ministry of Economy (with regard to state taxes), customs authorities (with regard to import VAT) and municipal tax services (with regard to municipal taxes) are the tax authorities in Azerbaijan.
All tax matters are prescribed by the Tax Code of Azerbaijan, under which, no other taxes would be imposed under any other law. The Tax Code covers for administrative tax procedures, as well as substantial taxation issues, for both residents and non- residents, and for both domestic and international tax obligations.
