Here you can access most recent articles on legislative updates regarding Social Security Law, Taxation Law, Labor Law, and Immigration Law in Azerbaijan.
Tax Code amendmentsThe President of the Azerbaijan Republic approved amendments to the Tax Code to be valid from 01 January 2026.
General provisionsThe amendments aim to modernize tax administration, strengthen transparency, support digital reporting, enhance taxpayer compliance, and introduce major incentives for strategic sectors such as industry, technology, agriculture, transport, renewable energy, and public–private partnerships (PPP). A key pillar is the introduction of the new ‘Horizontal Monitoring’ tax supervision model.
Horizontal MonitoringHorizontal Monitoring represents a shift from traditional post-control audits to continuous cooperation between taxpayers and tax authorities. Key features include:
• Eligibility criteria: medium/large enterprise status, automated accounting, internal control system, non-risky taxpayer status
• Application deadline: 1 September preceding the monitoring year
• Monitoring period: previous calendar year; duration up to 6 months (extendable by 2 months)
• Field and desk audits cancelled for monitored periods (except transfer pricing and foreign information cases)
• Taxpayers must submit tax calculation files and internal control documentation via a government data-exchange platform
• If risks are disclosed before monitoring begins, penalties for tax understatement do not apply
Depreciation changes• Two allowed methods: straight-line and declining-balance (only available to Horizontal Monitoring participants)
• New fixed useful lives for assets:
– buildings: 44 years
– machinery: 14 years
– computers: 11 years
– vehicles: 14–19 years
• Capital repair costs added to asset value under strict rules
• Clear rules for switching depreciation methods
Administrative & Procedural Changes• New rules for taxpayer registration and deregistration (postal submissions restricted)
• All electronic documents must be submitted through the Electronic Cabinet platform
• Fishery activities partly recognized as agriculture for tax purposes
• Audit-related definitions clarified; outdated provisions removed
• Electronic tax invoices for international transportation services shall be issued before such transportation starts
• Electronic tax invoices for services rendered on a regular and ongoing basis shall be issued at the time the provision of services begins for each calendar month
Corporate Income Tax (CIT)• New rules for recognizing depreciation and tax base adjustments for assets acquired through state-funded investment projects
• Dividends paid by non-resident companies are taxed at 5%
• Updated treatment of state subsidies allocated for capital assets
Personal Income Tax (PIT)A new three-stage progressive PIT model applies from 2026. This replaces the long-standing temporary exemptions.
2026
• Monthly income up to 2,500 AZN — 3%
• Monthly income from 2,500 AZN to 8,000 AZN — 75 AZN plus 10% of the amount between 2,500 AZN and 8,000 AZN
• Monthly income over 8,000 AZN — 625 AZN plus 14% of the amount over 8,000 AZN
2027
• Monthly income up to 2,500 AZN — 5%
• Monthly income from 2,500 AZN to 8,000 AZN — 125 AZN plus 10% of the amount between 2,500 AZN and 8,000 AZN
• Monthly income over 8,000 AZN — 675 AZN plus 14% of the amount over 8,000 AZN
2028
• Monthly income up to 2,500 AZN — 7%
• Monthly income from 2,500 AZN to 8,000 AZN — 175 AZN plus 10% of the amount between 2,500 AZN and 8,000 AZN
• Monthly income over 8,000 AZN — 725 AZN plus 14% of the amount over 8,000 AZN
Value Added Tax (VAT)Major changes include:
• POS-terminal-based incentives for hospitality, medical providers, and individual practitioners (up to 50% turnover reduction for 3 years)
• VAT exemptions for industrial parks, technology parks, shipbuilding materials, renewable energy equipment, and PPP projects
• Expanded rules for exports, duty-free goods, and fish products
Excise Tax• New excisable goods: mobile devices and quadricycles
• Mobile devices taxed at 100 AZN per each next unit
• Increased excise rates for alcohol, tobacco, and vehicles
Sectoral Incentives• Shipbuilding: 3-year VAT exemption on imported materials
• Electric bus and electric vehicle production in industrial parks
• Local bus and truck production: 7–8-year incentives
• PPP and renewable energy projects receive long-term VAT incentives (up to 30 years)
Simplified taxFor persons engaged in public catering, the simplified tax is generally applied at a rate of 8% on taxable turnover. However, for services provided to the population and paid cashlessly via POS terminals, a reduced rate of 6% will apply for a three-year period starting from 01 January 2026, provided that the POS terminal is integrated with the cash register in a unified transaction system.
Amendments to Social Insurance LawFor those operating in the non-oil and non-gas private sector, social insurance contributions apply as follows:
• Monthly income up to 200 AZN
– Total: 25%
– Employee contribution: 3%
– Employer contribution: 22%
• Monthly income from 200 AZN to 8,000 AZN
– Total: 25%
– Employee contribution: 6 AZN plus 10% of the amount between 200 AZN and 8,000 AZN
– Employer contribution: 44 AZN plus 15% of the amount between 200 AZN and 8,000 AZN
• Monthly income over 8,000 AZN
– Total: 21%
– Employee contribution: 786 AZN plus 10% of the amount over 8,000 AZN
– Employer contribution: 1,214 AZN plus 11% of the amount over 8,000 AZN
Income of insured individuals outside employment is subject to social insurance contributions as follows:
• Bar members and independent mediators — 15% of income (expenses excluded)
Amendments to Medical Insurance LawFor those operating in the non-oil and non-gas private sector, medical insurance contributions apply as follows:
Public sector and oil & gas sector
• Income up to 8,000 AZN
– Employer: 2%
– Employee: 2%
• Income over 8,000 AZN
– Employer: 0.5% of the amount exceeding 8,000 AZN
– Employee: 0.5% of the amount exceeding 8,000 AZN
Non-oil and non-public sector
• Income up to 2,500 AZN
– Employer: 2%
– Employee: 2%
• Income over 2,500 AZN
– Employer: 0.5% of the amount exceeding 2,500 AZN
– Employee: 0.5% of the amount exceeding 2,500 AZN
Additional provisions
• Tax-registered individuals (freelancers, private notaries, bar members):
– 4% of the minimum monthly salary
• Individuals without tax registration:
– 2% of income up to 8,000 AZN
– 1% of income exceeding 8,000 AZN
General provisionsThe amendments aim to modernize tax administration, strengthen transparency, support digital reporting, enhance taxpayer compliance, and introduce major incentives for strategic sectors such as industry, technology, agriculture, transport, renewable energy, and public–private partnerships (PPP). A key pillar is the introduction of the new ‘Horizontal Monitoring’ tax supervision model.
Horizontal MonitoringHorizontal Monitoring represents a shift from traditional post-control audits to continuous cooperation between taxpayers and tax authorities. Key features include:
• Eligibility criteria: medium/large enterprise status, automated accounting, internal control system, non-risky taxpayer status
• Application deadline: 1 September preceding the monitoring year
• Monitoring period: previous calendar year; duration up to 6 months (extendable by 2 months)
• Field and desk audits cancelled for monitored periods (except transfer pricing and foreign information cases)
• Taxpayers must submit tax calculation files and internal control documentation via a government data-exchange platform
• If risks are disclosed before monitoring begins, penalties for tax understatement do not apply
Depreciation changes• Two allowed methods: straight-line and declining-balance (only available to Horizontal Monitoring participants)
• New fixed useful lives for assets:
– buildings: 44 years
– machinery: 14 years
– computers: 11 years
– vehicles: 14–19 years
• Capital repair costs added to asset value under strict rules
• Clear rules for switching depreciation methods
Administrative & Procedural Changes• New rules for taxpayer registration and deregistration (postal submissions restricted)
• All electronic documents must be submitted through the Electronic Cabinet platform
• Fishery activities partly recognized as agriculture for tax purposes
• Audit-related definitions clarified; outdated provisions removed
• Electronic tax invoices for international transportation services shall be issued before such transportation starts
• Electronic tax invoices for services rendered on a regular and ongoing basis shall be issued at the time the provision of services begins for each calendar month
Corporate Income Tax (CIT)• New rules for recognizing depreciation and tax base adjustments for assets acquired through state-funded investment projects
• Dividends paid by non-resident companies are taxed at 5%
• Updated treatment of state subsidies allocated for capital assets
Personal Income Tax (PIT)A new three-stage progressive PIT model applies from 2026. This replaces the long-standing temporary exemptions.
2026
• Monthly income up to 2,500 AZN — 3%
• Monthly income from 2,500 AZN to 8,000 AZN — 75 AZN plus 10% of the amount between 2,500 AZN and 8,000 AZN
• Monthly income over 8,000 AZN — 625 AZN plus 14% of the amount over 8,000 AZN
2027
• Monthly income up to 2,500 AZN — 5%
• Monthly income from 2,500 AZN to 8,000 AZN — 125 AZN plus 10% of the amount between 2,500 AZN and 8,000 AZN
• Monthly income over 8,000 AZN — 675 AZN plus 14% of the amount over 8,000 AZN
2028
• Monthly income up to 2,500 AZN — 7%
• Monthly income from 2,500 AZN to 8,000 AZN — 175 AZN plus 10% of the amount between 2,500 AZN and 8,000 AZN
• Monthly income over 8,000 AZN — 725 AZN plus 14% of the amount over 8,000 AZN
Value Added Tax (VAT)Major changes include:
• POS-terminal-based incentives for hospitality, medical providers, and individual practitioners (up to 50% turnover reduction for 3 years)
• VAT exemptions for industrial parks, technology parks, shipbuilding materials, renewable energy equipment, and PPP projects
• Expanded rules for exports, duty-free goods, and fish products
Excise Tax• New excisable goods: mobile devices and quadricycles
• Mobile devices taxed at 100 AZN per each next unit
• Increased excise rates for alcohol, tobacco, and vehicles
Sectoral Incentives• Shipbuilding: 3-year VAT exemption on imported materials
• Electric bus and electric vehicle production in industrial parks
• Local bus and truck production: 7–8-year incentives
• PPP and renewable energy projects receive long-term VAT incentives (up to 30 years)
Simplified taxFor persons engaged in public catering, the simplified tax is generally applied at a rate of 8% on taxable turnover. However, for services provided to the population and paid cashlessly via POS terminals, a reduced rate of 6% will apply for a three-year period starting from 01 January 2026, provided that the POS terminal is integrated with the cash register in a unified transaction system.
Amendments to Social Insurance LawFor those operating in the non-oil and non-gas private sector, social insurance contributions apply as follows:
• Monthly income up to 200 AZN
– Total: 25%
– Employee contribution: 3%
– Employer contribution: 22%
• Monthly income from 200 AZN to 8,000 AZN
– Total: 25%
– Employee contribution: 6 AZN plus 10% of the amount between 200 AZN and 8,000 AZN
– Employer contribution: 44 AZN plus 15% of the amount between 200 AZN and 8,000 AZN
• Monthly income over 8,000 AZN
– Total: 21%
– Employee contribution: 786 AZN plus 10% of the amount over 8,000 AZN
– Employer contribution: 1,214 AZN plus 11% of the amount over 8,000 AZN
Income of insured individuals outside employment is subject to social insurance contributions as follows:
• Bar members and independent mediators — 15% of income (expenses excluded)
Amendments to Medical Insurance LawFor those operating in the non-oil and non-gas private sector, medical insurance contributions apply as follows:
Public sector and oil & gas sector
• Income up to 8,000 AZN
– Employer: 2%
– Employee: 2%
• Income over 8,000 AZN
– Employer: 0.5% of the amount exceeding 8,000 AZN
– Employee: 0.5% of the amount exceeding 8,000 AZN
Non-oil and non-public sector
• Income up to 2,500 AZN
– Employer: 2%
– Employee: 2%
• Income over 2,500 AZN
– Employer: 0.5% of the amount exceeding 2,500 AZN
– Employee: 0.5% of the amount exceeding 2,500 AZN
Additional provisions
• Tax-registered individuals (freelancers, private notaries, bar members):
– 4% of the minimum monthly salary
• Individuals without tax registration:
– 2% of income up to 8,000 AZN
– 1% of income exceeding 8,000 AZN
Tax Code amendments
The President of the Azerbaijan Republic approved amendments to the Tax Code to be valid from 01 January 2025.
General provisions
• Tax authority has right to apply market price on transactions on the basis of expert opinion.
• Penalty for failure to provide transfer price return on time increased from 2000 AZN to 6000 AZN.
Value Added Tax (VAT)
• Provision of services by shipbuilding and ship repair enterprises for the repair of ships, other marine and water vehicles, hydrotechnical facilities based on the order of a non-resident is subject to 0% VAT.
Personal Income Tax (CIT and PIT)
75% of income up to 45,000 AZN per calendar year of individuals engaged in below activities shall be exempt from personal income tax.
• software development
• project-design and decoration services
• translation
• advertising
• investigation and research
• services provided in the field of science, education, culture and sports
• legal, independent auditor, accounting and financial advisory services
• journalism
• Marketing
• Evaluation activity
• delivery of orders and courier activities, except cargo transportation by motor vehicles
• tourism guidance
• export of services
• If salaried employee terminates his employment with individual engaged in the above activities and provides as an entrepreneur partially or fully similar services to his former employer then he is not allowed to benefit tax exemption within 1 year.
• If an individual engaged in the above activities is also engaged in another field of activity, he may use the right to tax exemption providing his revenue from such activity is not less than 50% of total revenue.
• Dividend paid by persons who perform system integration, software preparation and development activities outside the technology park as a resident of the technology park is tax exempt for a period of 10 years starting from the reporting year in which the registration certificate of the technology park is received.
Corporation income tax
• Tax for repatriation of net profit by branch and representative offices to parent company is now decreased from 10% to 5%.
Living minimum change
The President signed Decree on approval of changes to the Law on living minimum in the Azerbaijan Republic from 01 January 2025. In accordance with the Decree living minimum in country is 285 AZN, for working population it is 305 AZN, 232 AZN for pensioners and 246 AZN for children.
Minimum monthly salary change
The President signed Decree dd 23.12.2024 to fix monthly minimum salary of 400 AZN in country from 01 January 2025.
The President of the Azerbaijan Republic approved amendments to the Tax Code to be valid from 01 January 2025.
General provisions
• Tax authority has right to apply market price on transactions on the basis of expert opinion.
• Penalty for failure to provide transfer price return on time increased from 2000 AZN to 6000 AZN.
Value Added Tax (VAT)
• Provision of services by shipbuilding and ship repair enterprises for the repair of ships, other marine and water vehicles, hydrotechnical facilities based on the order of a non-resident is subject to 0% VAT.
Personal Income Tax (CIT and PIT)
75% of income up to 45,000 AZN per calendar year of individuals engaged in below activities shall be exempt from personal income tax.
• software development
• project-design and decoration services
• translation
• advertising
• investigation and research
• services provided in the field of science, education, culture and sports
• legal, independent auditor, accounting and financial advisory services
• journalism
• Marketing
• Evaluation activity
• delivery of orders and courier activities, except cargo transportation by motor vehicles
• tourism guidance
• export of services
• If salaried employee terminates his employment with individual engaged in the above activities and provides as an entrepreneur partially or fully similar services to his former employer then he is not allowed to benefit tax exemption within 1 year.
• If an individual engaged in the above activities is also engaged in another field of activity, he may use the right to tax exemption providing his revenue from such activity is not less than 50% of total revenue.
• Dividend paid by persons who perform system integration, software preparation and development activities outside the technology park as a resident of the technology park is tax exempt for a period of 10 years starting from the reporting year in which the registration certificate of the technology park is received.
Corporation income tax
• Tax for repatriation of net profit by branch and representative offices to parent company is now decreased from 10% to 5%.
Living minimum change
The President signed Decree on approval of changes to the Law on living minimum in the Azerbaijan Republic from 01 January 2025. In accordance with the Decree living minimum in country is 285 AZN, for working population it is 305 AZN, 232 AZN for pensioners and 246 AZN for children.
Minimum monthly salary change
The President signed Decree dd 23.12.2024 to fix monthly minimum salary of 400 AZN in country from 01 January 2025.
New tax rules
The Cabinet of Ministers of Azerbaijan adopted Decree #365 dd 30 July 2024 approving Rules for the taxpayer's access to the vendor's information held by the tax authority.
The Decree made pursuant to the Tax Code requirement to obtain relevant documents to verify the vendor’s business reputation, financial status and resources to provide required goods, works and services.
Such information will be provided through electronic cabinet and disclosed by tax authorities based on consent from vendor and include date of registration, name of controlling tax authority, legal representative, information on registered business objects, registered capital, status of tax payer whether it is risky tax payer or not, criminal records, overdue tax and other mandatory liabilities, turnover, number of employees and declared average monthly salary, value of fixed assets, information on purchased goods for the period no longer than past 3 years.
Labor Code changes
On 28 June 2024 the President signed Decree approving changes to the Labor Code.
Employment contracts now will be concluded in electronic format and must be signed electronically by Parties.
Also, conclusion of the collective employment agreement has now been abolished. Work seniority register is no longer required. The employment history of employees will be determined based on their employment records in the electronic information system.
Initial employment contract must be re-drafted and re-signed if any amendment made.
Termination of employment contract during probation period can be made with 3 day notice now in electronic format as well.
If an employee has written consent (either in paper or electronic format) with another employer, his employment contract can be terminated on the chosen date.
Fixed-term employment contract shall be automatically extended for the period specified in the contract unless one of the Parties notifies one week before expiration in paper or electronic format other party about termination.
Tax Code changes
Tax Code changes approved on June 6, 2024 by the President of Azerbaijan introducing tax exemptions for COP29 from 01 March 2024 for the next 9 months based on confirmation letter issued by the Azerbaijan Ministry of Ecology and Natural Resources.
Such tax exemptions relate to the payments made to non-residents at source of payment as outlined below:
• The income of non-resident individuals providing goods, works and services is exempted from personal income tax;
• Royalty income paid to a non-resident legal entity for the right to use intangible assets or the granting rights of use is exempted from profit tax;
• Income for provided works and services by non-resident legal entities are exempted from profit tax;
• Payments made to non-resident persons for provided works and services and import of goods are exempted from Value Added Tax (VAT).
Business trip rates
The Azerbaijan Cabinet of Ministers approved Decree # 200 on 04 April 2024 with amendments to the Norms of Business Trip Expenses.
The daily norm of business trip expenses within the country increased in Baku from 90 AZN to 125 AZN, in Nakhchivan - from 70 AZN to 100 AZN, in Ganja and Sumgayit cities - from 70 AZN to 95 AZN, in other cities, regional centres, urban-type settlements, and villages - from 65 AZN to 90 AZN.
The percentage of hotel expenses included in the daily norm of business trip expenses within Azerbaijan reduced from 80% to 70%.
Business trip rates for abroad also changed.
Migration rules
New requirements have been established for foreigners to obtain residence permits based on foreign investment in legal entities and entrepreneurial activities.
According to the decision, the head of a legal entity with foreign investment or the founder who owns at least 51 percent of the shares (shares) of that legal entity, can apply for temporary residence permit if amount of the paid-up registered capital is minimum 50,000 AZN (29,412$US).
Annual revenue of such legal entity must also exceed 100,000 AZN (58,824$US).
In order to apply for permanent residence permit register capital of the legal entity must be minimum 100,000 AZN (58,824$US) and annual revenue shall exceed 200,000 AZN (117,648 $US)
The Cabinet of Ministers of Azerbaijan adopted Decree #365 dd 30 July 2024 approving Rules for the taxpayer's access to the vendor's information held by the tax authority.
The Decree made pursuant to the Tax Code requirement to obtain relevant documents to verify the vendor’s business reputation, financial status and resources to provide required goods, works and services.
Such information will be provided through electronic cabinet and disclosed by tax authorities based on consent from vendor and include date of registration, name of controlling tax authority, legal representative, information on registered business objects, registered capital, status of tax payer whether it is risky tax payer or not, criminal records, overdue tax and other mandatory liabilities, turnover, number of employees and declared average monthly salary, value of fixed assets, information on purchased goods for the period no longer than past 3 years.
Labor Code changes
On 28 June 2024 the President signed Decree approving changes to the Labor Code.
Employment contracts now will be concluded in electronic format and must be signed electronically by Parties.
Also, conclusion of the collective employment agreement has now been abolished. Work seniority register is no longer required. The employment history of employees will be determined based on their employment records in the electronic information system.
Initial employment contract must be re-drafted and re-signed if any amendment made.
Termination of employment contract during probation period can be made with 3 day notice now in electronic format as well.
If an employee has written consent (either in paper or electronic format) with another employer, his employment contract can be terminated on the chosen date.
Fixed-term employment contract shall be automatically extended for the period specified in the contract unless one of the Parties notifies one week before expiration in paper or electronic format other party about termination.
Tax Code changes
Tax Code changes approved on June 6, 2024 by the President of Azerbaijan introducing tax exemptions for COP29 from 01 March 2024 for the next 9 months based on confirmation letter issued by the Azerbaijan Ministry of Ecology and Natural Resources.
Such tax exemptions relate to the payments made to non-residents at source of payment as outlined below:
• The income of non-resident individuals providing goods, works and services is exempted from personal income tax;
• Royalty income paid to a non-resident legal entity for the right to use intangible assets or the granting rights of use is exempted from profit tax;
• Income for provided works and services by non-resident legal entities are exempted from profit tax;
• Payments made to non-resident persons for provided works and services and import of goods are exempted from Value Added Tax (VAT).
Business trip rates
The Azerbaijan Cabinet of Ministers approved Decree # 200 on 04 April 2024 with amendments to the Norms of Business Trip Expenses.
The daily norm of business trip expenses within the country increased in Baku from 90 AZN to 125 AZN, in Nakhchivan - from 70 AZN to 100 AZN, in Ganja and Sumgayit cities - from 70 AZN to 95 AZN, in other cities, regional centres, urban-type settlements, and villages - from 65 AZN to 90 AZN.
The percentage of hotel expenses included in the daily norm of business trip expenses within Azerbaijan reduced from 80% to 70%.
Business trip rates for abroad also changed.
Migration rules
New requirements have been established for foreigners to obtain residence permits based on foreign investment in legal entities and entrepreneurial activities.
According to the decision, the head of a legal entity with foreign investment or the founder who owns at least 51 percent of the shares (shares) of that legal entity, can apply for temporary residence permit if amount of the paid-up registered capital is minimum 50,000 AZN (29,412$US).
Annual revenue of such legal entity must also exceed 100,000 AZN (58,824$US).
In order to apply for permanent residence permit register capital of the legal entity must be minimum 100,000 AZN (58,824$US) and annual revenue shall exceed 200,000 AZN (117,648 $US)
Belə ki, Azərbaycan Respublikası Prezidentinin 12 avqust 2024-cü il tarixli Fərmanı ilə həmin dəyişikliklər qüvvəyə minmişdir.
Əmək məcəlləsinə edilmiş əsas dəyişikliklər barədə aşağıda qeydləri görə bilərsiniz:
- Əmək müqavilələrinin elektron qaydada bağlanması
Belə ki, dəyişiklikdən sonra artıq əmək müqaviləsi elektron informasiya sistemində elektron sənəd formasında bağlandıqda əmək münasibətləri yaranır. Əvvəl isə əmək münasibətləri elektron informasiya sisteminə gücləndirilmiş elektron imza vasitəsilə daxil edilmiş əmək müqaviləsi bildirişinin qeydiyyata alınmasından və bu barədə işəgötürənə elektron qaydada məlumat verilməsindən sonra yaranırdı.
- Əmək müqaviləsinin formasında dəyişiklik
- Əmək müqaviləsi bağlanılarkən əmək kitabçasının istənilməsi tələbinin aradan qaldırılması
- Əlavə sənədlər istənilməsinin qadağan edilməsi
Əmək münasibətlərinə girən işçidən aidiyyatı dövlət informasiya sistemlərindən və ehtiyatlarından əldə edilməsi mümkün olan, Əmək Məcəlləsində nəzərdə tutulmamış, habelə işin (vəzifənin) xüsusiyyətlərinə uyğun gəlməyən sənədlərin tələb edilməsi qadağandır.
Yəni əgər işəgötürən özü lazımi sənədləri aidiyyatı dövlət informasiya sistemlərindən və ehtiyatlarından əldə edə bilirsə, artıq həmin sənədlərin işçilərdən tələb edilməsi qadağan edilir.
- Müddətli əmək müqaviləsinə xitam verilməsi qaydasında dəyişiklik
müddətli əmək müqaviləsinin bitməsinə azı bir həftə qalmış tərəflərdən heç biri digər tərəfi müddətin bitməsinə görə müqaviləyə xitam verilməsi barədə yazılı formada (kağız daşıyıcıda və ya elektron informasiya sistemi vasitəsilə) xəbərdar etməzsə, həmin əmək müqaviləsində göstərilən müddətə uzadılır.
Yəni əvvəl müddətli əmək müqaviləsinə xitam verilməsi üçün əmək müqaviləsinin müddətinin bitməsi kifayət edirdisə, indi bunun üçün tərəflərin ən azı bir həftə öncə bir-birilərini xəbərdar etməsi gərəkli olacaq.
- Əmək müqavilələrinə 2014-cü il iyulun 1-dək xitam verilmiş işçilərin əmək stajı onların əmək kitabçası əsasında müəyyən edilir.
Decree of Cabinet of Ministers
Azerbaijan Cabinet of Ministers adopted Decree # 492 dd 22 November 2024 approving Rules for norms of representation expenses, housing and meal expenses of employees, milk and preventive nutrition for employees working in harmful working conditions and meal for ship crew members on marine transport for tax purpose.
As per the Rules, VAT is included in the tax-deductible expense norms.
Norms are fixed as outlined below:
1. milk and preventive nutrition for employees working in harmful working conditions – 5 AZN per day. Meal expense of such employees is 5 AZN per day in addition.
2. meal for ship crew members on marine transport – 25 AZN per day in the Caspian Sea and 25 USD per day outside the Caspian Sea
3. meal expenses of employees - 5 AZN per day when paid to catering company on the basis of electronic tax invoice or reimbursed directly to employee. Reimbursement to employee shall be made in non-cash way. Meal expenses paid for days when employees are not at work (due to leave, illness, etc.) or are on business trips are not tax-deductible expenses
4. 50% of housing expenses incurred for employees’ house and apartment rental are tax deductible now but not more than 1% of annual revenue providing rental agreement is notarized and payment to landlord or reimbursement to employee are made in non-cash form.
5. 50% of representation expenses are tax deductible now but not more than 1% of annual revenue providing expenses paid by bank and documented pursuant to provisions of the Tax Code. Representation expenses include costs associated with the official reception and/or service of participants at events held to develop cooperation and business. They include visa and visa extension fees for guests, meet and greet services, transport services for the event, hotel, meal, translation, purchase of souvenirs for guests. The Decree specifies that representation expenses exclude entertainment, leisure organization for guests, medical diagnostics and treatment.
Migration Code change
According to the change made to the Azerbaijan Migration Code on October 22, 2024 work permits will be issued and provided electronically from 01 November 2024.
Azerbaijan Cabinet of Ministers adopted Decree # 492 dd 22 November 2024 approving Rules for norms of representation expenses, housing and meal expenses of employees, milk and preventive nutrition for employees working in harmful working conditions and meal for ship crew members on marine transport for tax purpose.
As per the Rules, VAT is included in the tax-deductible expense norms.
Norms are fixed as outlined below:
1. milk and preventive nutrition for employees working in harmful working conditions – 5 AZN per day. Meal expense of such employees is 5 AZN per day in addition.
2. meal for ship crew members on marine transport – 25 AZN per day in the Caspian Sea and 25 USD per day outside the Caspian Sea
3. meal expenses of employees - 5 AZN per day when paid to catering company on the basis of electronic tax invoice or reimbursed directly to employee. Reimbursement to employee shall be made in non-cash way. Meal expenses paid for days when employees are not at work (due to leave, illness, etc.) or are on business trips are not tax-deductible expenses
4. 50% of housing expenses incurred for employees’ house and apartment rental are tax deductible now but not more than 1% of annual revenue providing rental agreement is notarized and payment to landlord or reimbursement to employee are made in non-cash form.
5. 50% of representation expenses are tax deductible now but not more than 1% of annual revenue providing expenses paid by bank and documented pursuant to provisions of the Tax Code. Representation expenses include costs associated with the official reception and/or service of participants at events held to develop cooperation and business. They include visa and visa extension fees for guests, meet and greet services, transport services for the event, hotel, meal, translation, purchase of souvenirs for guests. The Decree specifies that representation expenses exclude entertainment, leisure organization for guests, medical diagnostics and treatment.
Migration Code change
According to the change made to the Azerbaijan Migration Code on October 22, 2024 work permits will be issued and provided electronically from 01 November 2024.
The President of the Azerbaijan Republic approved amendments to the Tax
Code to be valid from 01 January 2022. The Law was published on 31
December 2021.
General provisions
- Contract date and number as well as series and number of e-
invoice if payment made for goods, services and works
- For foreign trade - series and number of import declaration and invoice date and number
- Contract or invoice date and number if payment made as per loan agreement and payment description shall mention loan
- Contract or invoice date and number if advance payment made
Failure to meet the above requirements will result in penalty of 100 AZN per payment order.
- paper, plastic and glass products intended for utilization.
- Used tires intended for utilization
- Supply of raw leather
- Receipt of agricultural products from agricultural producers
VALLUE ADDED TAX (VAT)
Excise tax
Excise tax rates will change as below:
- Vodka, cognac and cognac materials, liquor and liquor materials – 4
AZN per liter
- Champagne – 2.6 AZN per liter
- Vine and vine materials – 0.2 AZN per liter
- Beer and beer containing drinks (excluding non-alcoholic ones) – 0.4
AZN per liter
- Energetic drinks – 3.1 AZN per liter
- Liquid for electronic cigarettes – 100 AZN per liter
- Cigarettes – 38.5 AZN per 1000 pcs
- Cigars – 1 AZN per pcs
Property tax
Value of cars now will be subject to property tax.
Medical Insurance rate changes
Mandatory medical insurance contributions for those working in non-oil and
non-gas sector shall be 2% on employee and 2% on employer from 01
January 2022.
Non-cash payments Law
The law introduces number of new restrictions for use of cash.
Below payments can be made in non-cash form only:
Minimum monthly salary change
The President signed Decree to fix monthly minimum salary of 300 AZN in
country from 01 January 2022.
Code to be valid from 01 January 2022. The Law was published on 31
December 2021.
General provisions
- Tax payers, excluding subjects of micro and small entrepreneurship, engaged in production activity must file tax return on norms of consumption of raw materials and materials required per unit of produced product by 31 January each year. In case of any change in norm consumption or production of new products tax payers shall file adjusted tax return within calendar year.
- New definition of controllable enterprise added to the Tax Code as an overseas company with over 50% shares owned by Azerbaijani resident. Notification of such enterprises must be filed to the tax authorities within 90 days after each year end.
- Tax payers must provide access to hard and soft data upon request from the tax authorities. Subjects of medium (when number of employees ranges from 51 to 250 and revenue ranges from AZN 3M to AZN 30M) and large entrepreneurship (when number of employees exceeds 251 and revenue exceeds AZN 30M) must provide such access also to their financial statements.
- Transportation of commercial goods by road must be supported with electronic consignment note and electronic waybill. Rules of usage of such documents shall be declared by the Cabinet of Ministers and then this requirement will become valid.
- Tax payers, excluding those engaged in oil-gas and public sectors, shall provide tax authorities with Notification on goods to be imported into country before import made. Such information shall include place of storage (offloading) and customer if goods ordered. Form of the notification shall be declared by the Cabinet of Ministers. The tax authorities now have right to visit storage place and inspect the goods within 3 working days after import of such goods. Such inspection shall be formalized by a protocol. Failure to provide notification to the tax authorities on time or with distorted information will result in penalty of 2% of invoice value of imported goods for subjects of micro entrepreneurship and 5% for others.
- VAT registered tax payers must file Notification on debtors and creditors together with annual profit (income) tax return. Form of the return shall be approved by the Cabinet of Ministers. Failure to provide such notification will result in penalty of 100 AZN. This change will apply to subjects of small entrepreneurship from 01 January 2023 for 2022 and shall be filed by 31 March 2023.
- Tax payers shall include below information in their payment order when remitting funds:
- Contract date and number as well as series and number of e-
invoice if payment made for goods, services and works
- For foreign trade - series and number of import declaration and invoice date and number
- Contract or invoice date and number if payment made as per loan agreement and payment description shall mention loan
- Contract or invoice date and number if advance payment made
Failure to meet the above requirements will result in penalty of 100 AZN per payment order.
- Tax authorities may remotely audit profit (income) tax returns within 60 working days. In the meantime other tax returns will continue being audited remotely within 30 working days as before.
- Sale of goods with e-invoice by Seller without detailed information of sold goods will result in reduction of purchase value of such goods by dividing value by 1.2
- Payments made by legal entities and tax registered individuals of income of individuals without tax registration such as bonuses, financial aid, advocates from bureaus shall be taxed at 14% rate at source of payment.
- Income of individuals without tax registration from provision of below products will be subject to 5% now instead of 2% tax at source of payment:
- paper, plastic and glass products intended for utilization.
- Used tires intended for utilization
- Supply of raw leather
- Receipt of agricultural products from agricultural producers
- Business trips within country shall be tax deductible as per supporting receipts (excluding daily rates) within fixed norms. In case of absence of hotel receipt only 50% of daily rate shall be considered as tax deductible cost.
- Repair costs of rented off-balance fixed assets shall be capitalized and depreciated as per rates applicable on each category of fixed assets.
- Transportation between destination points outside Azerbaijan as well as transit transportation shall not be subject to taxation in Azerbaijan within provisions of Article 125 of the Tax Code.
- Subjects of micro entrepreneurship may keep records of revenue and expenses on accrual or cash basis. Subjects of small, medium and large entrepreneurship must use accrual method only. This change will be valid for subjects of small entrepreneurship from 01 January
- 2023.
- Invoices from companies (including branches and representative offices in other countries) established/registered or having bank accounts in countries with preferential taxation are subject to additional tax of 10% on accrual basis now. These countries include Andorra, Angila, Antigua and Barbuda, Aruba, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Cabo Verde, Cook Islands, Dominica, Fiji, Gibraltar, Grenada, Hong Kong (CPR), Jersey, Liberia, Liechtenstein, Maldives, Marshall Islands, Monaco, Montserrat, Niue, Palau, Panama, Saint Vincent and the Grenadines, Samoa, St. Kitts and Nevis, St. Lucia, Thailand, Taiwan (CPR), Trinidad and Tobago, Turks and Caicos Islands, Vanuatu, Virgin Islands (US).
VALLUE ADDED TAX (VAT)
- VAT exemption will apply on import of media products, books, textbooks, irrigation and other facilities, machines of agricultural nature; provision of agro-technical services to producers of agricultural products; import and sale of hybrid cars with production date no more than 3 years and engine volume below 2500 cubic centimeters- for 3 years; import and sale of chargers of 2nd and 3rd levels for electric cars- for 3 years;
- Forwarding services provided for international and transit transportation shall be subject to VAT at 0% rate.
- VAT paid to customs on goods imported into country on temporary regime can be claimed only after the goods moved to ‘free circulation’ (permanent) customs regime.
- Tax payers engaged in wholesale and retail sale of agricultural products cannot claim VAT on purchased agricultural products for 3 years starting from 01 January 2022.
Excise tax
Excise tax rates will change as below:
- Vodka, cognac and cognac materials, liquor and liquor materials – 4
AZN per liter
- Champagne – 2.6 AZN per liter
- Vine and vine materials – 0.2 AZN per liter
- Beer and beer containing drinks (excluding non-alcoholic ones) – 0.4
AZN per liter
- Energetic drinks – 3.1 AZN per liter
- Liquid for electronic cigarettes – 100 AZN per liter
- Cigarettes – 38.5 AZN per 1000 pcs
- Cigars – 1 AZN per pcs
Property tax
Value of cars now will be subject to property tax.
Medical Insurance rate changes
Mandatory medical insurance contributions for those working in non-oil and
non-gas sector shall be 2% on employee and 2% on employer from 01
January 2022.
Non-cash payments Law
The law introduces number of new restrictions for use of cash.
Below payments can be made in non-cash form only:
- Sale of cars at car salons
- Retail sale for amounts over 2,000 AZN per deal (excluding furnitureand appliances)
- Sale of furniture and appliances for amounts over 10,000 AZN perdeal
- Medical services provided by medical organizations for amountexceeding 500 AZN per transaction
Minimum monthly salary change
The President signed Decree to fix monthly minimum salary of 300 AZN in
country from 01 January 2022.
On 7 may 2021 the Azerbaijan President signed Decree approving changes to the Labor Code.
The Decree lists cases that are considered labor relationships between the parties and states that they are not allowed to be formalized with a service contract. A written employment contract must be concluded from the day one of these cases is discovered rather than services contract. The cases are as follows:
1. The contract between the Parties provides detailed information about the employee and the employer, the contract includes the employee's place of work, position, profession, term of the contract, employee's job function and responsibilities, work and rest time, salary, vacation time;
2. Labor book presented and recorded;
3. Relationships between the parties took the form of recruitment to a profession or position, holding a position on a competitive basis, employment on a quota basis;
4. Relationships between the parties arises in connection with the performance of work (services) related to the main activity of the employer.
5. Employee substitutes another person on temporary basis;
6. Extension of the service contract;
7. Payment for the work (service) performed in the service contract consists of a monthly salary, supplement and bonuses.
8. If the employment contract contains issues provided for in Articles 10, 77, 112, 179 and 186 of the Labor Code (the employee's main responsibilities, types of leave, disciplinary liability for violation of labor and executive discipline.);
Law on suspension of the audits
The President signed Decree on approval of changes to the Law on suspension of the audits.
According to the Law audits to be conducted by the local authorities other than those connected to the tax, customs, fire protection, radiation safety,
construction safety and health of population (medicament and food quality control) get suspended till 01 January 2022.
The Decree lists cases that are considered labor relationships between the parties and states that they are not allowed to be formalized with a service contract. A written employment contract must be concluded from the day one of these cases is discovered rather than services contract. The cases are as follows:
1. The contract between the Parties provides detailed information about the employee and the employer, the contract includes the employee's place of work, position, profession, term of the contract, employee's job function and responsibilities, work and rest time, salary, vacation time;
2. Labor book presented and recorded;
3. Relationships between the parties took the form of recruitment to a profession or position, holding a position on a competitive basis, employment on a quota basis;
4. Relationships between the parties arises in connection with the performance of work (services) related to the main activity of the employer.
5. Employee substitutes another person on temporary basis;
6. Extension of the service contract;
7. Payment for the work (service) performed in the service contract consists of a monthly salary, supplement and bonuses.
8. If the employment contract contains issues provided for in Articles 10, 77, 112, 179 and 186 of the Labor Code (the employee's main responsibilities, types of leave, disciplinary liability for violation of labor and executive discipline.);
Law on suspension of the audits
The President signed Decree on approval of changes to the Law on suspension of the audits.
According to the Law audits to be conducted by the local authorities other than those connected to the tax, customs, fire protection, radiation safety,
construction safety and health of population (medicament and food quality control) get suspended till 01 January 2022.
Medical insurance implementation will start from 01 January 2021 in Azerbaijan apart from Baku and Sumgait starting from April 2021. The contributions for mandatory medical insurance will be as follows:
Activity type Monthly income
Up to 8,000 AZN Over 8,000 AZN
Responsibility Employer Employee Employer Employee
Public and oil
sector 2% 2% AZN 160+0.5% AZN 160+0.5
of amount %of amount
exceeding exceeding
8,000 AZN 8,000 AZN
Non- oil and AZN 80+0.5% of AZN 80+0.5%
non- public amount of amount
sector in 2020 1% 1% exceeding exceeding
8,000 AZN 8,000 AZN
Non- oil and AZN 160+0.5% of AZN 160+0.5
non- public 2% 2% amount of amount
sector from exceeding exceeding
2021 8,000 AZN 8,000 AZN
Tax registered
individuals
(freelancers, 4% of minimum monthly salary
private
notaries, bar
members)
Individuals 2% of income 160 AZN +1% of amount
without tax exceeding 8000 AZN
registration
Medical insurance contributions shall be paid within 15 days after month end
In addition to the above below payments shall be paid as follows:
- Motor petrol, diesel fuel and liquid gas produced in Azerbaijan for domestic
consumption and imported into Azerbaijan -0.02 AZN per liter;
- Vodka, enhanced drinks and beverage drinks – 0.2 AZN of excise rate per liter
- Beer (excluding non-alcoholic ones) -0.05 AZN of excise rate per liter
- Slim cigars and cigarettes made from tobacco and its substitutes -1.5 AZN of excise rate on 1000 pieces
- Energy drinks -0.1 AZN of excise rate per liter