Taxes in Azerbaijan: personal income tax.

personal income tax 1. taxpayers – personal income tax applies to resident and non-resident individuals. A resident individual is taxed on worldwide income (income earned both inside and outside Azerbaijan). A non-resident individual is taxed only on income derived from sources in Azerbaijan.. 2. tax object – for both resident and non-resident individuals, the tax object is their income. income includes: income from employment (salary), income from entrepreneurial or independent activities and other income (interest, dividends, royalties, etc.), except income exempt from taxation under the Tax Code. 3. tax base – for residents, the tax base is the taxable income for the tax year, calculated as the difference between total annual income and deductible amounts permitted by law. For non-residents operating through a permanent establishment in Azerbaijan, the tax base is the difference between Azerbaijan-source income attributable to that permanent establishment and deductible expenses related to that income. In practical terms, individuals pay tax not on their entire gross income, but only on the “net” income remaining after lawful deductions. For example, if an individual earns 30,000 AZN during the year and the legally permitted deductions amount to 5,000 AZN, the taxable income will be 25,000 AZN. 4. Tax rates and calculation rules – 1. For individuals employed by taxpayers operating in the oil and gas sector and belonging to the public sector, tax is withheld from monthly employment income at the following rates: amount of taxable monthly income tax rate up to 2,500 manat 14 percent more than 2,500 manat more than 2,500 manat — 350 manat + 25 percent of the amount exceeding 2,500 manat 2. for individuals employed by taxpayers not operating in the oil and gas sector and belonging to the non-state sector, tax is withheld from monthly employment income at the following rates: From January 1, 2026 to January 1, 2027 amount of taxable monthly income tax rate up to 2,500 manat 3 percent from 2,500 manat to 8,000 manat 75 manat + 10 percent of the amount between 2,500 and 8,000 manat more than 8,000 manat 625 manat + 14 percent of the amount exceeding 8,000 manat from January 1, 2027 to January 1, 2028 amount of taxable monthly income tax rate up to 2,500 manat 5 percent from 2,500 manat to 8,000 manat 125 manat + 10 percent of the amount between 2,500 and 8,000 manat more than 8,000 manat 675 manat + 14 percent of the amount exceeding 8,000 manat from January 1, 2028 onward amount of taxable monthly income tax rate up to 2,500 manat 7 percent from 2,500 manat to 8,000 manat 175 manat + 10 percent of the amount between 2,500 and 8,000 manat more than 8,000 manat 725 manat + 14 percent of the amount exceeding 8,000 manat 5. tax payment deadline – the final annual payment and submission of the tax return must be completed no later than March 31 of the year following the reporting year. Current tax payments must be made to the state budget within 15 days after the end of each quarter.