Tax Code of Azerbaijan
Tax Code of Azerbaijan is the primary tax law in Azerbaijan. The Code establishes general principles of taxation In Azerbaijan, sets the rules for determining, payment and collection of taxes, identifies the rights and responsibilities of taxpayers and tax authorities, as well as the liabilities for violation of tax legislation.
The Code was adopted by former President of Azerbaijan Heydar Aliyev on July 11, 2000 and entered into force in January 2001.
Structure
The Tax Code of Azerbaijan consists of 17 chapters and 221 articles. The chapters are as follows:| General part | Chapter 1. | General Provisions |
| General part | Chapter 2. | Taxpayer. Tax Agent |
| General part | Chapter 3. | State Tax Authorities |
| General part | Chapter 4. | Tax control |
| General part | Chapter 5. | Responsibility for violation of tax legislation |
| General part | Chapter 6. | Appealing against the decisions of tax authorities and actions or lack of action of their officials |
| General part | Chapter 7. | General provisions on tax payments |
| Special part | Chapter 8. | Income tax from natural persons |
| Special part | Chapter 9. | Profit tax from legal persons |
| Special part | Chapter 10. | Articles concerning income taxes of natural and profit taxes of legal persons |
| Special part | Chapter 11. | Value Added Tax |
| Special part | Chapter 12. | Excise taxes |
| Special part | Chapter 13. | Property Tax |
| Special part | Chapter 14. | Tax on land |
| Special part | Chapter 15. | Road tax |
| Special part | Chapter 16. | Mining tax |
| Special part | Chapter 17. | Simplified tax |
General provisions regarding tax relations, rights and responsibilities of taxpayers and tax agents, as well as tax agencies, tax control processes are defined, moreover, responsibilities for violation of tax legislation and the process of appealing of decisions of tax authorities are identified, finally general rules for tax payments are mentioned in the General part of the Code.
The Special part of the Code separately defines specific taxes like income tax, profit tax, VAT, tax on land, road tax, mining tax and simplified tax, as well as the procedures related to these taxes are detailed in this part.
Classification of taxes
Tax is defined as “a compulsory, individual and non-refundable payment made to the state or local budget in the form of collection of monetary means from taxpayers with the purpose of providing the financial basis to the state and municipal activities” in the Tax Code of Azerbaijan.The Code classifies the taxes in Azerbaijan into state, autonomy republic and municipal taxes based on the territory they cover. State taxes are obligatory in the whole territory of Azerbaijan and includes income tax of natural person, profit tax of legal entities, VAT, excise tax, property tax, land use tax, road fund tax, mining tax and simplified tax.
Parties of tax relations
- Parties of relations regulated by tax legislation are following:
- Individuals and legal entities recognized by this Code as taxpayers;
- Individuals and legal entities recognized by this Code as tax agents;
- State tax authorities of the Republic of Azerbaijan;
- Customs authorities of the Republic of Azerbaijan;
- Financial bodies of the Republic of Azerbaijan ;
- Others than tax and custom officers conducting the collection and transfer of funds from taxpayers to the budget according to this Code.
Taxpayer’s rights and responsibilities
Taxpayers are responsible for paying taxes and other obligatory fees determined in the Code; getting TIN from tax authorities; keeping records of revenues and expenses, as well as taxation objects; submitting tax report and required documents to the authorities.
Amendments
The Tax Code of Azerbaijan has been amended several times; the last amendments were made in December 2018 which is aimed to reduce the scale of tax evasion and “shadow economy”, expand the taxable base, improve tax administration, support the development of entrepreneurship and increase the economic efficiency of existing and new tax exemptions. According to the amendments, employees of non-oil sectors with a monthly salary up to 8.000 manat get 100% tax exemption, while the tax rate for the employees with a monthly salary more than 8.000 manat has reduced from 25% to 14%. Moreover, the simplified tax is set to be 2% throughout the country which was previously 4% in Baku and 2% in the regions.Micro-enterprises and small businesses got exemption from property tax, furthermore, startups in the small and medium businesses segment will not pay profit or income tax for a 3 years period after getting the certificate for startup activity. Small and medium business will be free from profit tax, land tax and value-added tax for a period of 7 years.