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

Azerbaijan Azerbaijan, officially the Republic of Azerbaijan, is a Boundaries between the continents, transcontinental and landlocked country at the boundary of West Asia and Eastern Europe. It is a part of the South Caucasus region and is bounded by ...

. 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 Milli Majlis at the initiative of the former President of Azerbaijan

Heydar Aliyev Heydar Alirza oghlu Aliyev (10 May 1923 – 12 December 2003) was an Azerbaijani politician who was a Soviet party boss in the Azerbaijan Soviet Socialist Republic from 1969 to 1982, and the third president of Azerbaijan from October 1993 to ...

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 or goods and services tax (GST), general consumption tax (GCT)) is a consumption tax that is levied on the value added at each stage of a product's production and distribution. VAT is similar to, and is often compared wi ...

, 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 br ...

, profit tax of

legal entities In law, a legal person is any person or 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 the term "''legal'' person" is t ...

, 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 (whose rate is expressed as a percentage or per mille, also called ''millage'') 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 Wealth t ...

, 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.

Tax Audits

Tax inspections under Azerbaijani Tax Code are operative-tax measure, on-site tax audit and of-site tax audits.

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 (, ; ) is the Capital city, capital and List of cities in Azerbaijan, largest city of Azerbaijan, as well as the largest city on the Caspian Sea and in the Caucasus region. Baku is below sea level, which makes it the List of capital ci ...

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. euro, €2 million or Philippine peso, PhP 3 million). The ter ...

s and

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

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 includes all new businesses including self-employment and businesses tha ...

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

Tax codes Law of Azerbaijan