Tax Code of Azerbaijan | 2026 Tax Code Amendments 

Summary of the draft amendments to the Tax Code of the Republic of Azerbaijan, the Law of the Republic of Azerbaijan "On Social Insurance" and the Law of the Republic of Azerbaijan "On Non-Cash Settlements" for 2026

Significant amendments are planned to be made to the Tax Code of the Republic of Azerbaijan, the Law of the Republic of Azerbaijan "On Social Insurance" and the Law of the Republic of Azerbaijan "On Non-Cash Settlements".

Amendments to the Tax Code 2026 - explanation of key provisions

The amendments planned to be made to the Tax Code from 2026 mainly relate to the following:

• tax control and its forms;
• registration and deregistration procedures;
• financial sanctions;
• general rules for tax payment;
• personal income tax and corporate profit tax;
• value added tax;
• excise taxes, property, land, road and mining taxes, simplified tax, etc.

Concepts and Definitions 

• The concept of voluntary disclosure provided for in the Tax Code has been expanded. Specifically, the following definition has been given to enable voluntary disclosure after completion of field tax audits and the new method introduced by legislation - horizontal monitoring - as well as to extend it to periods prior to the 3-year period after the reporting period, regardless of whether a field tax audit has been conducted:

"voluntary disclosure" - voluntary declaration to tax authorities by taxpayers of circumstances that were not detected during an audit     (monitoring) after completion of a field tax audit or horizontal monitoring and that resulted in the creation of a tax liability, as well as liability for mandatory state social insurance, unemployment insurance and mandatory health insurance contributions, as well as voluntary declaration of such circumstances for periods prior to the 3-year period specified in Article 85.5 of this Code, regardless of whether a field tax audit has been conducted."

• Agricultural products - The concepts of production and sale of agricultural products will also apply to fishing (except for the production of caviar). Fish products subjected to cutting and freezing operations by persons engaged in fish farming activities, except for fish products subjected to processing operations, are equated to agricultural products for the purposes of this Code.

• The scope of the concept of non-commodity transactions has been clarified to apply to transactions "carried out under fictitious and/or false contracts". The updated definition is as follows:

"non-commodity transaction - transactions detected during tax control measures, carried out to conceal other transactions or without such purpose, and carried out under fictitious and/or false contracts formalized for the purpose of obtaining profit (income) without actually providing goods, works and services."

Amendments to Registration and Deregistration Procedures

Registration of individuals for tax purposes by tax authorities is carried out electronically and/or in paper form (except for sending applications for registration by postal service).

An individual taxpayer submits an application for deregistration, the form of which is approved by the body (institution) determined by the relevant executive authority, to the tax authority electronically and/or in paper form (except for sending by postal service). When a taxpayer is deregistered, the requirement to return the certificate confirming their registration to the tax authority is abolished.

Amendments are also envisaged in the correspondence procedures with taxpayers. Specifically, documents sent to tax authorities by taxpayers related to electronic services included in the unified register of state information resources, systems and electronic services are submitted only electronically through the electronic cabinet.

Tax Control and Financial Sanctions

• The concept of electronic audit as one of the forms of tax control has been abolished.
• A financial sanction of 200 manats has been established for failure to submit an application for registration with the tax authority within the period specified in Article 33.4 of the Code.

Horizontal Monitoring

The concept of "horizontal monitoring" has been added to the Tax Code. The tax authority conducts horizontal monitoring of the activities of taxpayers accepted for horizontal monitoring in accordance with the appropriate procedure.

For taxpayers accepted for horizontal monitoring, desk audits and field tax audits (except for cases provided for in Articles 38.3.2, 38.3.5, 38.3.6 and 38.3.10 of this Code) are not conducted for reporting periods covered by monitoring, except for the following cases:

• when false and/or distorted information is detected in the act prepared based on the results of a tax audit
• when signs of concealment (reduction) of the taxpayer's income or taxable object are identified based on any information with a known source obtained by the tax authority
• when there is a relevant decision of the court or law enforcement agencies to conduct tax audits in accordance with criminal procedural legislation
• when calculating taxes in cases where relevant information is received from competent authorities of foreign states regarding the application of transfer pricing and income obtained from abroad by taxpayers accepted for horizontal monitoring. This case is also grounds for conducting an extraordinary field tax audit by tax authorities, but the audit can only be conducted on transactions covered by information received from competent authorities of foreign states regarding the application of transfer pricing or income obtained abroad.

Horizontal monitoring is carried out under this Code and other normative legal acts adopted on its basis. The subject of horizontal monitoring is to control the correct calculation of taxes in accordance with this Code, and their full and timely payment. Investigation of relevant information from competent authorities of foreign states regarding the application of transfer pricing and income obtained from abroad is carried out with other tax control measures and is not covered by horizontal monitoring.

The period covered by horizontal monitoring is considered a calendar year and covers one calendar year prior to the date it begins.

Scope of Persons Accepted for Horizontal Monitoring

Taxpayers meeting all of the following conditions as of the date of submitting an application for acceptance to horizontal monitoring may be accepted for horizontal monitoring:

• the taxpayer is a medium or large business entity;
• the taxpayer maintains accounting and tax records using software designed for automation of accounting and/or tax records;
• the taxpayer implements an internal control system in accordance with the requirements of Article 38-1.10.2 of this Code.

A taxpayer cannot be accepted for horizontal monitoring when a decision on being a risky taxpayer is in force, or when a criminal case has been initiated for violation of tax legislation.

Application for Acceptance to Horizontal Monitoring

A taxpayer applying for acceptance to horizontal monitoring applies to the tax authority no later than September 1 of the year preceding the period for which horizontal monitoring will be conducted, with an application whose form and completion procedure are approved by the relevant body (institution), together with the following documents (information):

• documents and information related to the calculation and payment of taxes in accordance with the administrative regulations approved according to the relevant norm;
• documents on the internal control system established in accordance with the relevant norm, possible tax risks and the control procedure for such risks.

The tax authority reviews the compliance of the application for acceptance to horizontal monitoring and the documents attached to it with the relevant conditions within 2 months, and based on the results of the review, makes a reasoned decision on accepting the taxpayer for horizontal monitoring or refusing acceptance to horizontal monitoring. The decision on accepting a taxpayer for horizontal monitoring is made once and remains in force for subsequent years (unless the taxpayer is removed from horizontal monitoring in accordance with the relevant norm).

Obligations of Taxpayers Accepted for Horizontal Monitoring

A taxpayer for whom a decision on acceptance to horizontal monitoring has been issued submits to the tax authority the documents and information required for conducting the monitoring within 30 days from the last date for submitting profit and income tax returns within the period provided for in this Code (taking into account the extension of the reporting submission period). After the specified period expires, the tax authority makes a decision the next day to begin horizontal monitoring and it is completed no later than 6 months. If additional investigation is required, the period for conducting horizontal monitoring may be extended by up to two months based on the tax authority's decision.

When documents and information that must be submitted by a taxpayer applying for acceptance to horizontal monitoring are not submitted within the period specified in that article or there are deficiencies in the submitted documents and information, the tax authority sends an electronic inquiry to the taxpayer within 5 working days to submit those documents and information, or if they are not available to the taxpayer, an explanation in this regard. After the inquiry is sent, the required documents and information must be submitted to the tax authority within 15 days.

Within 15 days from the start date of horizontal monitoring, the taxpayer may submit revised tax returns.

A taxpayer accepted for horizontal monitoring has the following obligations:

• Place documents and information related to the calculation and payment of taxes in accordance with the administrative regulations approved by the relevant body (institution) on an information exchange platform created for this purpose and ensure the tax authority's access to that platform;
• Establish an internal control system in accordance with the rules approved by the relevant body (institution) and submit to the tax authority information on possible tax risks and the control procedure for such risks.

Formalization of the results of horizontal monitoring, entry by authorized persons of the tax authority conducting tax control during horizontal monitoring within their powers to the territories and/or buildings (except residential buildings (areas)) of taxpayers, inspection of their territories, buildings (except residential buildings (areas)), as well as their documents and objects, taking objects as samples, involving experts, inviting specialists, interpreters and observers, and conducting inventory are carried out in the manner determined by the relevant articles of this Code.

Removal of Taxpayers from Horizontal Monitoring

Horizontal monitoring is terminated and the taxpayer is removed from horizontal monitoring in the following cases:

• when an application is submitted by the taxpayer to terminate participation in horizontal monitoring (in this case, the taxpayer is removed from horizontal monitoring within 3 working days);
• when the tax authority's requirements for submission of documents and information are violated twice consecutively;
• when a decision is made to conduct an extraordinary field tax audit in accordance with the relevant article of the Tax Code;
• when a decision is made to conduct an extraordinary field tax audit for the period covered by horizontal monitoring in a taxpayer in accordance with the relevant article of the Code if the taxpayer has not disclosed information about possible tax risks in accordance with the requirements of the relevant article of the Code, or when the period covered by an audit conducted for a period not covered by horizontal monitoring is extended in cases where the tax authority has information with a known source about tax evasion in the period after the period covered by the audit (including the period covered by horizontal monitoring);
• when a decision is made that the taxpayer is a risky taxpayer, and also when a criminal case is initiated against the taxpayer for violation of tax legislation.

Formalization of Results of Horizontal Monitoring and Financial Sanctions

After completion of horizontal monitoring, the head of the tax authority (or their deputy) issues one of the following decisions within 10 days based on its results:

• holding the taxpayer liable for violation of tax legislation;
• refusing to hold the taxpayer liable for violation of tax legislation.

Except for the following case, when reduction of the tax base or incorrect calculation of tax is detected in a taxpayer undergoing horizontal monitoring, a financial sanction is applied by decision of the tax authority in the amount of 25 percent of the reduced or evaded tax amount (excluding additional tax amount calculated as a result of desk tax audit).

If a taxpayer has disclosed information about deviations detected by horizontal monitoring before the start of horizontal monitoring in the appropriate form by implementing an internal control system in accordance with the requirements of the relevant article of the Code, the guilt of taxpayers undergoing horizontal monitoring is excluded and no financial sanction is applied for reduction of the tax base or incorrect calculation of tax.

Interest on overdue and overpaid taxes is applied to tax amounts not paid on time detected as a result of horizontal monitoring from the day those tax amounts were charged to the taxpayer.

Submission of Electronic Invoices

• According to amendments in the submission periods of electronic invoices, unlike for other work and services, electronic invoices for international transportation services must be submitted by the time transportation services begin, and for services provided on a regular and permanent basis - at the time services begin for each calendar month.
• Electronic invoices for advance payments must be submitted by that time, not on the day the advance is received.
• The unified form of electronic invoice for the refund of value added tax paid for goods acquired in the territory of the Republic of Azerbaijan by foreigners and stateless persons, as well as for medical services provided to foreigners and stateless persons by medical institutions and individuals engaged in private medical practice, that are not intended for production or commercial purposes, is approved by the body (institution) determined by the relevant executive authority.

Personal Income Tax

For individuals working in taxpayers belonging to the non-state sector without activities in the oil and gas sector, tax on monthly income from salaried work is levied at the following rates:

From January 1, 2026 to January 1, 2027, according to the following table:

From January 1, 2027 to January 1, 2028, according to the following table:

From January 1, 2028, according to the following table:

In addition, a 5 percent tax rate has been established on dividends paid by non-resident enterprises. 

Exemptions and Reliefs

The exemption period from income tax for income (including advertising income) obtained by media entities (excluding audiovisual media entities) from their activities, as well as material assistance provided by the body (institution) determined by the relevant executive authority, has been extended by an additional 3 years to a total of 6 years from January 1, 2023.

Income obtained from the reduction of VAT amounts when calculating VAT to the state budget by individuals engaged in public catering activities has also been exempted from income tax.

Corporate Profit Tax

Amendments are envisaged in the concept of the taxable object of profit tax. The amount of funds allocated from the state budget and attributed to assets (except for funds allocated within the framework of the state investment program of the state budget to state enterprises for investment projects meeting the criteria determined by the relevant body (institution)), to the extent of the amount of depreciation calculated in accordance with Article 114 of this Code for fixed assets and intangible assets acquired or installed with such funds (excluding the amount of depreciation calculated on repair costs incurred at the taxpayer's own expense and attributed to the value of fixed assets), has been determined as the taxable object.

Exemptions and Reliefs

The exemption period from profit tax for income (including advertising income) obtained by media entities (excluding audiovisual media entities) from their activities, as well as material assistance provided by the body (institution) determined by the relevant executive authority, has been extended by an additional 3 years to a total of 6 years from January 1, 2023.

Income obtained from the reduction of VAT amounts when calculating VAT to the state budget by persons engaged in public catering activities has also been exempted from income tax.

Amendments to Depreciation Deductions and Amounts Deducted from Income for Depreciable Assets

Depreciation deductions by taxpayers accepted for horizontal monitoring are calculated using the straight-line or declining balance method, and by other taxpayers only using the declining balance method (excluding depreciation deductions for intangible assets). Annual depreciation rates for the following depreciable assets are determined using the declining balance method:

• capitalized costs for land improvement, buildings, structures and installations - up to 7 percent;
• machinery and equipment - up to 20%;
• computing equipment that is a product of high technology - up to 25 percent;
• vehicles - up to 25 percent;
• working animals - up to 20 percent;
• costs incurred for geological exploration work and preparation work for extraction of natural resources - up to 25 percent;
• other fixed assets - up to 20 percent.

Annual depreciation rates using the straight-line method for depreciable assets are determined as follows:

• capitalized costs for land improvement, buildings, structures and installations - 44 years;
• machinery and equipment - 14 years;
• computing equipment that is a product of high technology - 11 years;
• air, rail and water transport vehicles - 29 years;
• industrial, sports cars, sports motorcycles, sports bicycles and other similar sports transport vehicles - 9 years;
• service transport vehicles - 19 years;
• motor vehicles - 14 years;
• working animals - 14 years;
• costs incurred for geological exploration work and preparation work for extraction of natural resources - 11 years;
• intangible assets - 10 years for those with unknown useful life, for those with known useful life - according to the years of use;
• other fixed assets - 14 years.

Depreciation deductions using the declining balance method are made separately for each structure for buildings, structures and installations (hereinafter - structures), and depreciation deductions using the straight-line method are made separately for each depreciable asset.

For the purposes of calculating depreciation using the declining balance method, the residual value at the end of the tax year for fixed assets (asset) consists of the amount determined by the following procedure (but not less than zero):

To the residual value at the end of the previous year for fixed assets (asset) (the value remaining after deducting the depreciation amount calculated for that year) is added the value of fixed assets (asset) received during the current year in accordance with Article 143 of the Tax Code, as well as the portion of repair costs exceeding the limitation determined in accordance with Article 115 of this Code in the current year, and the residual value of fixed assets provided, liquidated or when the residual value is less than 500 manats or 5 percent of the initial value during the tax year is deducted. The increase from revaluation of fixed assets (asset) (positive difference resulting from revaluation) is not added to the residual value at the end of the tax year of fixed assets (asset) for depreciation calculation purposes.

When calculating depreciation using the declining balance method, when the residual value of a fixed asset at the end of the year is less than 500 manats or 5 percent of its initial value, the amount of the residual value is deducted from income.

Notwithstanding other provisions, only 40 percent of depreciation calculated in accordance with the relevant article on assets acquired or installed with funds allocated to state enterprises from state capital investment expenditures (investment expenditures) of the state budget and attributed to charter capital before January 1, 2026, as well as with funds allocated within the framework of the state investment program of the state budget for investment projects meeting the criteria determined by the relevant body (institution) after January 1, 2026, is deducted from income.

Calculation and deduction of depreciation deductions from income by taxpayers accepted for horizontal monitoring is carried out as follows:

• taxpayers accepted for horizontal monitoring choose one of two possible depreciation methods for calculating depreciation deductions during the current year and provide information to the tax authority by April 15. The depreciation method chosen by taxpayers is not changed for 3 years. For taxpayers liquidated before April 15 during the year, the depreciation method from the previous year is applied;
• calculation of depreciation deductions using the declining balance method is carried out in accordance with Article 114 of this Code, taking into account Article 115.9 of this Code. When transitioning from the declining balance method to the straight-line method for fixed assets, the annual depreciation amount is calculated by dividing the residual value of those fixed assets as of the transition date by the remaining useful life as of that date;
• annual depreciation amounts using the straight-line method are calculated by dividing the initial value of those fixed assets by their useful life determined by Article 114.3-1 of this Code. When applying this method, major repair costs determined by Article 115.9 of this Code and the portion of current repair costs exceeding the limitation for those fixed assets are added to their initial value, and the initial value formed in this way is divided by the useful life of the fixed asset determined by Article 114.3-1 of this Code, and the resulting amount is deducted from income in equal portions for each year starting from the year the fixed asset was repaired;
• when transitioning from the straight-line method to the declining balance method, the annual depreciation amount is calculated by multiplying the residual value of those fixed assets by the depreciation rate determined in accordance with Article 114.3 of this Code;
• when horizontal monitoring of a taxpayer is terminated or the taxpayer is removed from horizontal monitoring, depreciation deductions in that reporting year are calculated in accordance with Article 114.11.2 of this Code;
• when applying the straight-line depreciation method, major repair costs determined by Article 115.9 of this Code and the portion of current repair costs exceeding the limitation are added to the initial value of fixed assets for depreciation calculation purposes. The increase from revaluation of fixed assets (asset) (positive difference resulting from revaluation) is not added to the initial value of fixed assets (asset) for depreciation calculation purposes.

Amounts for major repair costs incurred in accordance with the procedure determined by the relevant body (institution) by taxpayers accepted for horizontal monitoring in accordance with the relevant norms of the Code and current repair costs exceeding the limitation determined in Article 115.1 of the Code are attributed to the increase in the residual value of fixed assets at the end of the current tax year. Current repair costs incurred within the norm by those taxpayers are deducted from income in accordance with the requirements of Articles 115.1-115.8 of this Code.

Tax Withholding at Source from Rental Fees

A 10 percent tax is withheld at source from income obtained from renting residential areas (except for accommodation facilities located in hotels and hotel-type facilities) owned by individuals to individuals. When rental fees are paid by an individual who is not registered as a taxpayer, the lessor themselves or the tax agent they appoint pays the tax at a 10 percent rate in accordance with this article and is registered for tax purposes and submits a return in accordance with Articles 33 and 149 of this Code. If tax has been withheld from individuals receiving income from rental fees in accordance with Article 124.1 of this Code or paid by them, tax is not withheld again from such income.

The following have also been added to cases where income or loss is not recognized:

• Subsidies allocated from the state budget and attributed to assets for the purpose of acquiring or installing assets that are not depreciated in accordance with the relevant article;
• Subsidies allocated from the state budget and attributed to assets for the purpose of acquiring or installing depreciable assets in accordance with the appropriate procedure.

Value Added Tax

Foreign-origin fish products will be excluded from agricultural products for which the trade margin is determined as the taxable object when sold wholesale and retail for a period of 5 years from January 1, 2022.

When determining the volume of taxable transactions in accordance with the relevant article, the taxpayer's turnover formed on the basis of non-cash payments made through POS terminals for retail trade and services provided to persons not registered with the tax authority is taken into account by applying a 0.5 coefficient.

50 percent of the turnover formed on the basis of non-cash payments made through POS terminals for services provided to the population during the reporting period by persons engaged in public catering activities, medical institutions and individuals engaged in private medical practice is deducted from their total taxable turnover for medical institutions and individuals engaged in private medical practice for a period of 3 years from January 1, 2024, and for persons engaged in public catering activities for a period of 3 years from January 1, 2026.

Exemptions and Zero (0) Rate VAT

The following exemption periods have been extended:

• the exemption period from VAT for the provision of media products produced by media entities (excluding audiovisual media entities), as well as for work performed and services provided directly related to media activities to media entities (excluding audiovisual media entities) by non-resident persons who do not create a permanent representation in the Republic of Azerbaijan has been extended by an additional 3 years to a total of 6 years from January 1, 2023;
• the provision of non-performing (toxic) assets within the framework of resolution and rehabilitation measures of insolvent banks in accordance with the procedure determined by the relevant executive authority, as well as the provision of assets of a bank within the framework of bankruptcy proceedings has been extended by 5 years to a total of 14 years from January 1, 2017;
• import of equipment and materials within the framework of reconstruction projects of large oil refineries (with annual processing capacity of at least 3 million tons of crude oil) based on the certifying document of the body (institution) determined by the relevant executive authority has been extended by 3 years to 8 years from January 1, 2021.

The scope of application of the following exemptions has been limited:

• import of equipment, technological equipment and installations whose list is approved by the relevant body (institution) based on the certifying document of the relevant executive authority by the managing organization or operator of industrial or technology parks for the purpose of creating infrastructure of industrial or technology parks created by the body (institution) determined by the relevant executive authority, production areas, as well as conducting scientific research and experimental design work;
• import of equipment, technological equipment and installations whose list is approved by the relevant body (institution) based on the certifying document of the relevant executive authority for the purpose of construction of production areas, conducting scientific research and experimental design work and production by legal entities and individuals engaged in entrepreneurial activity without creating a legal entity who are residents of industrial or technology parks created by the body (institution) determined by the relevant executive authority - for a period of 10 years from the date the resident is registered in the industrial and technology park;
• import and sale of equipment for seed cultivation, poultry farming and beekeeping, including laboratory equipment intended for use in these areas, as well as machines for cleaning, sorting or calibrating seeds, grains and dry legumes whose list is approved by the relevant body (institution);
• import of veterinary preparations used for prevention, diagnosis and treatment of farm animals and poultry whose list is approved by the relevant body (institution);
• import for the purpose of industrial production (assembly) of buses powered only by electric motor without seats, handles and monitors by residents of industrial parks based on a certifying document issued by the relevant body (institution) and sale of those buses imported by residents of industrial parks with seats, handles and monitors installed - for a period of 1 year from January 1, 2026;
• sale of passenger cars produced in the territory of the Republic of Azerbaijan provided that industrial assembly is carried out in full production form, and technological operations for painting and welding stages are simultaneously performed - for a period of 7 years from January 1, 2027.

A number of additional exemptions are envisaged:

• import of all types of goods for the purposes of this activity by shipbuilding and ship repair enterprises based on the certifying document of the body (institution) determined by the relevant executive authority - for a period of 3 years from May 1, 2026;
• import and sale of fertilizers and pesticides whose list is approved by the body (institution) determined by the relevant executive authority;
• sale of cargo vehicles produced in the territory of the Republic of Azerbaijan, as well as import of spare parts for cargo vehicles for production purposes by legal entities based on the certifying document of the body (institution) determined by the relevant executive authority - for a period of 7 years from January 1, 2026;
• import of equipment, technological equipment and installations by a contractor of a private partner or project company under a public-private partnership agreement that provides for the right to use tax incentives, for construction work (if imported goods are attributed to the value of that project) - during the period envisaged for carrying out construction work in the public-private partnership agreement.

The exemption from VAT for import of all types of goods for the purposes of this activity by a resident of an industrial park engaged in activities determined by the relevant executive authority in an industrial park created by the relevant body (institution) based on the certifying document of the relevant executive authority has been abolished.

Zero (0) Rate VAT

VAT will be levied at a zero (0) rate on the provision of goods, including excisable goods with a special mark related to sale in duty-free shops that are produced in the territory of the Republic of Azerbaijan, to duty-free shops.

Export by foreigners and stateless persons of goods acquired in the territory of the Republic of Azerbaijan from taxpayers registered as sellers under the procedure for refund of value added tax in accordance with Article 165.3 of the Tax Code that are not intended for production or commercial purposes has been removed from the list of transactions subject to zero (0) rate VAT.

Excise Taxes

According to the amendments, for excisable goods produced in the territory of the Republic of Azerbaijan, the taxable transaction (tax base) is considered the quantity of goods produced.

The following are also added to the list of excisable goods:

• quadricycles subject to state registration;
• mobile devices.

For mobile devices, the amount of the taxable transaction is their quantity. 1 mobile device is exempt from excise tax during a calendar year.

In addition to export of excisable goods, provision to duty-free shops of excisable goods with a special mark related to sale in duty-free shops that are produced in the territory of the Republic of Azerbaijan is also subject to zero rate taxation.

Amendments are also envisaged in excise rates applied to drinking alcohol, beer, alcoholic beverages, tobacco products and their substitutes, energy drinks, single-use electronic cigarettes, hookahs and their substitutes, and liquid for electronic cigarettes produced in the Republic of Azerbaijan:

• drinking alcohol (including non-denatured ethyl alcohol) per liter - 5.0 manats;
• vodka, concentrated drinks and concentrated drink materials, liqueur and liqueur products - 5.0 manats per liter;
• cognac and cognac materials - 5.0 manats per liter;
• cigarillos (thin cigars) - 55.0 manats per 1000 pieces;
• cigarettes made from tobacco and their substitutes - 55.0 manats per 1000 pieces;
• energy drinks - 3.3 manats per liter;
• non-concentrated alcoholic beverages not provided for in this article (alcohol content not exceeding 9 percent) - 0.5 manats per liter;
• for quadricycles, per cubic centimeter of engine volume - 0.5 manats;
• per unit of mobile devices - 20.0 manats.
• When the production date of passenger cars imported to the Republic of Azerbaijan is more than 7 years, excise tax is calculated by applying an increasing coefficient of 1.5 for gasoline-engine passenger cars and 2.0 for diesel-engine passenger cars to the amount calculated based on Articles 190.4.1 and 190.4.1-3 of this Code

Payment to the mandatory health insurance fund of the portion of excise rates applied to excisable goods determined by the Code as established by the Law of the Republic of Azerbaijan "On Health Insurance" has been abolished.

Property and Land Tax Exemptions and Reliefs

For taxation purposes, the value of an enterprise's and individual entrepreneur's property is reduced by the value of the following property (within 75 percent of their value only for fixed assets used by taxpayers operating in the education, healthcare, culture and sports sectors for the purposes of these sectors):

The exemption from property and land tax, respectively, for property and land owned (on the balance sheet) by the relevant body (institution) and acquired in exchange for problem assets (debts) that it acquired based on the decision of the body (institution) determined by the relevant executive authority within the framework of resolution and rehabilitation measures of insolvent banks, and whose list it has agreed with the body (institution) determined by the relevant executive authority, has been extended by an additional 5 years to a total of 12 years from January 1, 2019.

Road and Mining Tax

A higher road tax rate has been established for automobile gasoline, diesel fuel and liquefied gas for some vehicles. Road tax for automobile gasoline, diesel fuel and liquefied gas produced in the territory of the Republic of Azerbaijan and directed to domestic consumption (sold wholesale) is calculated at 0.07 manats per liter and is added to the wholesale price (including VAT and excise tax). Road tax for imported automobile gasoline, diesel fuel and liquefied gas is calculated at 0.07 manats per liter and is added to the customs value determined in accordance with the Customs Code of the Republic of Azerbaijan but not lower than their wholesale market price (including import duty, excise tax and VAT).

The distribution of road tax determined by this article among targeted budget funds within the state budget is determined by the relevant body (institution).

The rate of mining tax has also been changed. Thus, the mining tax rate for crude oil extracted from the subsurface is set at 12 manats per ton of crude oil, and for natural gas and condensates at 15 manats per thousand cubic meters of natural gas and condensates.

The mining tax rate for ore minerals (all types of metals) extracted from the subsurface is set at 3 percent of their wholesale price.

Mining tax is calculated by applying the relevant tax rates to each ton of crude oil extracted from the subsurface for minerals specified in Article 216.1 of the Code, per thousand cubic meters of natural gas and condensates, to the wholesale price of minerals extracted from the subsurface for minerals specified in Article 216.1-1 of the Code, and per cubic meter of minerals extracted from the subsurface for minerals specified in Article 216.2.

Simplified Tax

When determining the volume of taxable transactions in accordance with the relevant norm, the taxpayer's turnover formed on the basis of non-cash payments made through POS terminals for retail trade and services provided to persons not registered with the tax authority is taken into account by applying a 0.5 coefficient.

The exemption of income (including advertising income) obtained by media entities (excluding audiovisual media entities) from their activities, as well as material assistance provided by the body (institution) determined by the relevant executive authority, from simplified tax has been extended by an additional 3 years to a total of 6 years from January 1, 2023.

According to the noted amendments, a change has been made to the simplified tax rate, and a 6 percent rate has been established for a period of 3 years from January 1, 2026 for the taxable object formed on the basis of non-cash payments made through POS terminals for services provided to the population. Non-cash payments must be made through a POS terminal integrated into a unified transaction system with a control-cash apparatus.

Amendments to Requirements for Obtaining a "Distinction Mark"

The requirements to attach a payment document confirming payment of simplified tax, mandatory state social insurance and mandatory health insurance contributions for that activity to a taxpayer's application to obtain a "Distinction Mark" and to clearly indicate the series and number of the state registration plate of the motor vehicle in the payment document have been abolished.

Legal entities and individuals engaged in entrepreneurial activity without creating a legal entity that carry out passenger transportation with motor vehicles are issued a "Distinction Mark" after they pay the calculated tax, mandatory state social insurance and mandatory health insurance contributions in full to the state budget and information about these payments is obtained by the relevant body (institution).

A "Special Distinction Mark" is issued electronically through the information system of the relevant body (institution) within five working days after application by taxpayers who own motor vehicles.

Taxpayers who have obtained a "Special Distinction Mark" must apply electronically through the information system of the body (institution) determined by the relevant executive authority at least one working day in advance for cancellation of the "Special Distinction Mark" when selling or leasing motor vehicles, as well as when using them for other purposes not provided for in this article.

Specifics of Taxation Applied in Liberated Territories and Nakhchivan Autonomous Republic

The provisions related to the specifics of taxation applied in liberated territories, except for the following exemption, also apply to the Nakhchivan Autonomous Republic:

• Import of equipment, technological equipment and installations, as well as raw materials and materials by residents of liberated territories registered for VAT purposes in economic activity sectors and commodity nomenclatures whose list is approved by the relevant body (institution) is exempt from VAT for a period of 10 years from January 1, 2023.

The following tax exemptions apply to residents of the Nakhchivan Autonomous Republic for a period of 10 years from January 1, 2026:

• Residents of liberated territories are exempt from profit (income), property, land and simplified tax for a period of 10 years from January 1, 2023.
• Dividend income of shareholders (participants) of legal entities that are residents of liberated territories is exempt from tax for a period of 10 years from January 1, 2023.

A resident of the Nakhchivan Autonomous Republic means legal entities and individuals registered for tax purposes in the Nakhchivan Autonomous Republic or in a centralized manner and operating directly in the territory of the Nakhchivan Autonomous Republic.

In addition, the following exemptions are also envisaged:

• Import of raw materials and materials for production, scientific research and experimental design work purposes by legal entities and individual entrepreneurs who are residents of industrial or technology parks created by the body (institution) determined by the relevant executive authority and located in the territory of the Nakhchivan Autonomous Republic based on the certifying document of the body (institution) determined by the relevant executive authority is exempt from VAT for a period of 10 years from January 1, 2026.
• Import of raw materials and materials for production and provision of services (performance of work) purposes by legal entities and individual entrepreneurs who are residents of the Nakhchivan Autonomous Republic and have received an investment promotion document based on the certifying document of the body (institution) determined by the relevant executive authority is exempt from VAT for a period of 10 years from January 1, 2026.
• Import of equipment, technological equipment and installations, as well as raw materials and materials for production purposes by legal entities and individual entrepreneurs who are residents of industrial neighborhoods created by the body (institution) determined by the relevant executive authority and located in the territory of the Nakhchivan Autonomous Republic based on the certifying document of the body (institution) determined by the relevant executive authority is exempt from VAT for a period of 10 years from January 1, 2026.

Amendments to the Law of the Republic of Azerbaijan "On Social Insurance"

Amendments are envisaged in mandatory state social insurance contributions.

Specifically, mandatory state social insurance contributions from monthly income from salaried work of insured persons working for insurers belonging to the non-state sector without activities in the oil and gas sector are paid at the following rates:

• for entrepreneurial activity - at 2 percent of income (before deducting expenses), subject to not being less than 15 percent and not more than 100 percent of the minimum monthly wage;
• for individuals engaged individually (without hiring employees) in the types of activities provided for in this article:
• hosting, musicianship, dancing, ashug performance, joke-telling and other similar activities at weddings, celebrations and other events, individual photo, audio-video services (excluding photo studios) - at 8 percent of the minimum monthly wage;
• shoemaker, cobbler, barber, tailor activities, repair of watches, televisions, refrigerators and other household appliances, operation of painting workshops, home servant service in private houses and apartments, care for patients, elderly and children, nanny, individual driving, cleaning in households, gardener, cook, guard and those serving customers in catering facilities (waiter), individuals engaged in individual veterinary service practice - at 5 percent of the minimum monthly wage;
• individuals using agricultural land in their ownership (excluding those working in other sectors and paying mandatory state social insurance contributions) and able-bodied family members of family farms (persons aged from 15 years to the age limit determined by Article 7 of the Law of the Republic of Azerbaijan "On Labor Pensions", excluding persons with 61-100 percent impairment of body functions and children with disabilities), mandatory state social insurance contribution for each is calculated at the following rates of the minimum monthly wage depending on the area of land:

when up to 5 hectares - at 5 percent;

when from 5 hectares to 10 hectares - at 7.5 percent;

when over 10 hectares - at 12.5 percent

• Passenger transportation with motor vehicles by obtaining a "Distinction Mark" in the manner determined by the Tax Code of the Republic of Azerbaijan - at 6 percent of the minimum monthly wage.
• Members of the Bar Association of the Republic of Azerbaijan and independent mediators - at 15 percent of income (after deducting expenses).

Payment of mandatory state social insurance contributions at 6 percent of the minimum monthly wage for freight transportation activities with motor vehicles individually (without hiring employees) has been abolished until January 1, 2026.

Mandatory state social insurance contributions by the following individuals are paid when obtaining a "Receipt for payment of fixed amount on simplified tax, mandatory state social insurance and mandatory health insurance contributions":

• individuals engaged in hosting, musicianship, dancing, ashug performance, joke-telling and other similar activities at weddings, celebrations and other events, individual photo, audio-video services (excluding photo studios)
• individuals engaged in shoemaker, cobbler, barber, tailor activities, repair of watches, televisions, refrigerators and other household appliances, operation of painting workshops, home servant service in private houses and apartments, care for patients, elderly and children, nanny, individual driving, cleaning in households, gardener, cook, guard and those serving customers in catering facilities (waiter), individual veterinary service practice
• individuals using agricultural land in their ownership (excluding those working in other sectors and paying mandatory state social insurance contributions) and able-bodied family members of family farms (persons aged from 15 years to the age limit determined by Article 7 of the Law of the Republic of Azerbaijan "On Labor Pensions", excluding persons with 61-100 percent impairment of body functions and children with disabilities)

Persons engaged in passenger transportation activities with motor vehicles by obtaining a "Distinction Mark" pay mandatory state social insurance contributions when obtaining a "Distinction Mark".

Subsidization of Mandatory State Social Insurance Contributions

In addition to liberated territories, mandatory state social insurance contributions in the Nakhchivan Autonomous Republic are subsidized at the expense of the state budget in the following portions and periods.

Mandatory state social insurance contributions paid in accordance with Articles 14.3 and 14.4 of the Law by insurers who are residents of the Nakhchivan Autonomous Republic, belong to the non-state sector, and operate directly in production, including processing and extraction sectors (excluding the oil and gas sector) in accordance with the classification of types of economic activities approved by the body (institution) determined by the relevant executive authority are subsidized at the expense of the state budget in the following portions and periods:

• 14-1.1-1.1. from January 1, 2026 to January 1, 2029 - at 100 percent;
• 14-1.1-1.2. from January 1, 2029 to January 1, 2032 - at 80 percent;
• 14-1.1-1.3. from January 1, 2032 to January 1, 2034 - at 60 percent;
• 14-1.1-1.4. from January 1, 2034 to January 1, 2036 - at 40 percent.

Mandatory state social insurance contributions paid in accordance with Articles 14.5.1 and 14.5.1-1 of the Law by insurers who are residents of the Nakhchivan Autonomous Republic and belong to the non-state sector (excluding insurers operating in oil and gas, finance and motor vehicle freight transportation sectors, as well as contractor insurers providing goods (works and services) at the expense of the state budget (excluding resident contractors carrying out production activities in the Nakhchivan Autonomous Republic) are fully subsidized at the expense of the state budget until January 1, 2036.

Subsidization of paid mandatory state social insurance contributions is carried out at the expense of the state budget within 45 (forty-five) working days after the end of the reporting submission period provided in the third paragraph of the second part of Article 10 of this Law, as well as after the end of a quarter for individuals operating by obtaining a "Receipt for payment of fixed amount on simplified tax, mandatory state social insurance and mandatory health insurance contributions" in accordance with the relevant articles of this Law and "Distinction Mark" in accordance with the relevant article.

Amendments to the Law of the Republic of Azerbaijan "On Non-Cash Settlements"

Acceptance of waste oils has also been added among goods that can be purchased in cash by taxpayers from individuals who are not taxpayers.