Tax Code of Azerbaijan () is the primary tax law in

Azerbaijan Azerbaijan (, ; az, Azərbaycan ), officially the Republic of Azerbaijan, , also sometimes officially called the Azerbaijan Republic is a transcontinental country located at the boundary of Eastern Europe and Western Asia. It is a part of th ...

. 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 Heydar Alirza oghlu Aliyev ( az, Һејдәр Әлирза оғлу Әлијев, italic=no, Heydər Əlirza oğlu Əliyev, ; , ; 10 May 1923 – 12 December 2003) was a Soviet and Azerbaijani politician who served as the third president of Aze ...

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 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 A value-added tax (VAT), known in some countries as a goods and services tax (GST), is a type of tax that is assessed incrementally. It is levied on the price of a product or service at each stage of production, distribution, or sale to the en ...

, 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 (Article 11). The Code classifies the taxes in

into state, autonomy republic and municipal taxes based on the territory they cover. State taxes are obligatory in the whole territory of

and includes

income tax An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or profits earned by them (commonly called taxable income). Income tax generally is computed as the product of a tax rate times the taxable income. Tax ...

natural person In jurisprudence, a natural person (also physical person in some Commonwealth countries, or natural entity) is a person (in legal meaning, i.e., one who has its own legal personality) that is an individual human being, distinguished from the bro ...

, profit tax of

legal entities In law, a legal person is any person or 'thing' (less ambiguously, any legal entity) that can do the things a human person is usually able to do in law – such as enter into contracts, sue and be sued, own property, and so on. The reason for ...

, VAT,

excise tax file:Lincoln Beer Stamp 1871.JPG, upright=1.2, 1871 U.S. Revenue stamp for 1/6 barrel of beer. Brewers would receive the stamp sheets, cut them into individual stamps, cancel them, and paste them over the Bunghole, bung of the beer barrel so when ...

property tax A property tax or millage rate is an ad valorem tax on the value of a property.In the OECD classification scheme, tax on property includes "taxes on immovable property or net wealth, taxes on the change of ownership of property through inheri ...

, 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 (related to solving the issues envisaged by this Code); * 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 have the rights to get comprehensive written information about taxes and tax regulations; take advantages of tax privileges in the cases regulated by this Code; demand timely return or redemption of overpaid or overcharged taxes; receive copies of documents prepared as the result of tax inspection; follow no decisions and requirements of tax officials that do not comply with the Code; require not to reveal confidential information; demand full payment of damages resulting from illegal acts or actions (inaction) of tax authorities, and appeal to the court on the actions or inaction of tax officials in accordance with the Code. Taxpayers are responsible for paying taxes and other obligatory fees determined in the Code; getting TIN (taxpayer’s identification number) 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 Baku (, ; az, Bakı ) is the capital and largest city of Azerbaijan, as well as the largest city on the Caspian Sea and of the Caucasus region. Baku is located below sea level, which makes it the lowest lying national capital in the world a ...

and 2% in the regions.{{Cite web, url=http://azertag.az/xeber/Vergi_Mecellesine_deyisiklikler_5_istiqamet_uzre_edilib-1220513, title=Amendments to the Tax Code made in five directions, website=azertag.az, language=az, access-date=2018-12-17

Micro-enterprise A micro-enterprise (or microenterprise) is generally defined as a small business employing nine people or fewer, and having a balance sheet or turnover less than a certain amount (e.g. €2 million or PhP 3 million). The terms microenterprise and ...

s and

small business Small businesses are types of corporations, partnerships, or sole proprietorships which have fewer employees and/or less annual revenue than a regular-sized business or corporation. Businesses are defined as "small" in terms of being able to ap ...

es got exemption from

, furthermore,

startups A startup or start-up is a company or project undertaken by an Entrepreneurship, entrepreneur to seek, develop, and validate a scalable business model. While entrepreneurship refers to all new businesses, including self-employment and businesses t ...

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.

References