Tax system

The Tax Code of the Republic of Azerbaijan came into effect on January 1, 2001 and resulted in substantial improvement of the Azerbaijani taxation system.

The Tax Code is the central instrument for regulating tax issues. It sets forth the powers and duties of the tax authorities, the rights and obligations of the taxpayers, the penalties for violation of tax legislation, rules for appealing against the actions and inactions of tax authorities, tax administration procedures, and regulations for all types of taxes collected in Azerbaijan.

The tax issues that need more detailed regulation are governed by legislative acts of the state authorities at different levels, primarily the Cabinet of Ministers and the Ministry of Taxes.

The following taxes are collected at three levels - (I) state, (II) the Nakhchivan Autonomous Republic, and (III) municipal/local:

  1. Personal Income Tax (PIT);
  2. Corporate Profit Tax (CPT);
  3. Value Added Tax (VAT);
  4. Excise Tax;
  5. Corporate Property Tax;
  6. Corporate Land Tax;
  7. Road Tax;
  8. Mining Tax;
  9. Simplified Tax;
  10. Individual Property Tax;
  11. Individual Land Tax.

In cases involving payment of customs duties, tax control is exercised by the customs authorities.

The Tax Code differentiates three taxation regimes: standard, simplified, and special. The bulk of individual entrepreneurs and more than half of SMEs operate according to a simplified tax regime.

The Tax Code allows the establishment of special tax regimes. Such regimes may provide for various exemptions and simplified tax administration procedures. A special tax-exempt status accorded to businesses engaged in agricultural production may serve as an example of special tax regimes.