FAQ

Azerbaijan's tax system is among the best in the world. Tax rates and tax payment methods in Azerbaijan are relatively simple and clear. Individual entrepreneurs and companies with a taxpayer identification number must obtain an online tax login and password by concluding an agreement with the tax authority or obtain an ASAN signature (electronic signature activated via a mobile phone number).

"How to pay tax in Azerbaijan?" the question can be answered on a technical basis. The answer would be that in order to submit tax documents online to pay taxes in Azerbaijan, it is necessary to enter the e-taxes.gov.az system and then enter the relevant treasury codes, by entering the appropriate code of taxes by online banking methods, all taxes are paid by bank transfer. is paid. In addition, it is possible to pay tax on the spot in any bank of Azerbaijan. It should be noted that tax payment receipts must be kept in this case. Paying taxes online through online banking systems is more recommended.

"How to pay tax in Azerbaijan?" may also apply to income tax in relation to employees: it should be noted that in such cases the employer (in relation to income tax) or the client (in the case of income from Azerbaijani sources, for example, when providing services in Azerbaijan, etc.) pays the relevant taxes to the state by deducting them at the source of payment .

Contact us for additional questions about tax rates, taxes and other mandatory payments, insurance in Azerbaijan. For our team of tax accountants, it will be an honor to provide you with support and services in tax and accounting work in Azerbaijan.

Types of Contracts

A contract is a two-way deal. A contract is a form of agreement that involves at least two parties. Types of contracts can be divided into two types: civil contract and labor contract. Types of contracts can be classified according to other criteria, for example, contracts for compensation and contracts without compensation; Real Contracts (concluded by the presentation of an object) and consensual contracts (concluded by the assumption of an obligation). Depending on the type of contract, it can be concluded orally, in writing or by notary. 

Civil contract - types of commercial contract

Types of civil contracts, i.e. types of commercial contracts, are mainly contracts related to the provision of goods, performance of works and provision of services. An example of a contract of purchase and sale of goods, a contract of storage of goods. Contracts for the performance of works are usually considered contractual contracts: construction contracts, repair contracts, as well as other contracts resulting in the delivery of a finished product are included here. Contracts related to the provision of services can include consulting services of various types, technical support contracts, rental services, financial services, etc. 

It is illegal to enter into a service contract with a company if there is an actual labor relationship between the company and the person. The signs of labor relations are following the work regime, receiving wages, the right to leave and other rights and relations provided for the employee in the Labor Code. 

Contract forms 

The contract form should be chosen depending on the type of contract. Forms of contract are usually not defined or approved by law. Since the principle of voluntariness of the parties to the contract is based on the free market economy, the parties must determine the terms of the contract themselves. In this case, the necessary conditions specified in the law for a specific type of contract must be followed. Contract terms that contradict the necessary conditions in the law will be considered invalid. 

During the drafting of the contract forms, depending on the types of contracts, the recommendations of non-lawyers in that field should be obtained. For example, when drawing up a construction contract, getting the opinion of a construction and engineering expert is useful in terms of more detailed information about the progress of construction, technical processes and risks. In any case, based on these opinions, regardless of the type of contract, it should be included in the conditional contract form by a lawyer. 

For more detailed information on contract types, contract features, contract forms, contract conditions, or for advice, contact us
İNFO@PHM.AZ

A general 10% withholding tax is levied on a non-resident's income in Azerbaijan. In most cases, VAT is also charged. It should be noted that withholding tax at the source of payment, refund of withheld tax are frequently asked questions by non-residents. It should be emphasized that the income tax withheld at the source of payment is collected from the revenues obtained from the Azerbaijani source due to the provision of services. 

Taxes withheld at source may be withheld in accordance with the applicable double taxation treaty. Depending on the terms of the relevant agreement, it is possible to draw up a DTA form and pay the tax abroad (in the country of registration) instead of at the source of payment in Azerbaijan with prior approval by the tax authority. Under a double tax treaty, such tax paid can be reclaimed or the non-resident exempted from paying that amount of tax in his home state (tax credit).  

One of the last questions related to buying property is whether foreigners can buy property in Azerbaijan. According to the laws of Azerbaijan, property is divided into two parts: movable property (personal property) and immovable property (immovable property - immovable property).

Any foreigner has the same rights as a local citizen in buying private property in Azerbaijan. A foreigner can buy real estate (real estate) in Azerbaijan, except land. In other words, if you are a foreigner or a stateless person, you can buy a house, villa, apartment and other property, but not land. Therefore, as a foreigner, you enjoy the same rights as local citizens, except for land.

Buying property in Azerbaijan usually involves the following processes:

1. Finding a suitable property, physical inspection and agreement on price and terms;

2. Signing the purchase and sale agreement at a notary (Note: it can be executed with a power of attorney approved by a notary, it is not necessary for a foreigner to be physically present in Azerbaijan);

3. Along with the stage of the notary contract, the property is applied to the state registry.

4. To obtain a registration document of ownership

In newly built buildings and structures in Azerbaijan, ownership documents (ownership documents) are usually not available, and instead an internal sales contract is concluded with the buyer (investor). This requires legal support to analyze the contract and check for collateral / encumbrances or possible frauds during transactions. A possible problem stems from the fact that property without a title deed is not registered and therefore does not enter the state register of real estate. Any claims of third parties, transactions on property, loads are not recorded for the same reason. Therefore, it requires special attention.

It may be possible to buy land indirectly by registering a company (legal entity). Again, this brings property taxes (higher in companies) and property risks and additional risks that must be analyzed and properly planned for in a given situation.

There are taxes and related costs in property transactions depending on the situation. If properly planned and optimized, it is possible to legally reduce such excess taxes and costs.

A foreigner can freely sell or sell the property and transfer the proceeds like any local. Azerbaijani legislation does not discriminate between a foreigner or a local person in relation to such rights.

Please contact us for more information or questions.

It is possible to obtain Azerbaijani citizenship in accordance with the law on citizenship. This requires 5 years of uninterrupted permanent residence, a legal source of income, compliance with the Constitution and laws of Azerbaijan, and knowledge of the Azerbaijani language.

In practice, a foreigner must start the process by obtaining a residence permit. After staying in Azerbaijan for 2 years with a temporary residence permit, it is possible to apply for permanent residence. The 5-year period is calculated from the date of issuance of the permanent residence document. After learning the Azerbaijani language, a person must pass an appropriate exam and have a legal source of income.

Applications are submitted to the State Migration Service, and the authority to grant Azerbaijani citizenship belongs to the President.

Please contact us for more information or questions. 

Yes, for most of the services, our team can provide such services before you come to Azerbaijan. For this, we will need a power of attorney in the appropriate form, and we will present the content of the power of attorney, taking into account the circumstances of the case. 

Employees in the non-oil industry, where the monthly salary is less than 8000 AZN, have 0% income tax.  

In Azerbaijan, VAT is 18%, 0% on some products and services, and exemptions apply. 

• In Azerbaijan, the profit tax is 20% of the company's net profit. The following tax credits and different interest rates apply: 

• Business entities that provide services to individuals without registering as a taxpayer and business entities with an annual turnover of less than AZN 200,000 will pay a simplified tax in the amount of 2% of their turnover. (excluding expenses) 

• 75% tax concessions are applied to micro-entrepreneurial entities with an annual turnover of less than AZN 200,000 and less than 10 employees, i.e., the profit tax will be 5%. 

• No such requirement has been specified. 

• Yes, it can be. The domestic shareholder or director requirement is not defined by legislation. 

No such minimum amount has been specified. 

• The rules for registering a company (Limited Liability Company) in Azerbaijan are simplified, and minimal documents are required, such as an application form and the company's founding documents (charter and founding decision). The registration authority is the Ministry of Taxes. 

  See here for more information.