Taxes in Azerbaijan: corporate income tax.

1. taxpayers – the taxpayers of this tax are resident and non-resident enterprises in the Republic of Azerbaijan, as well as non-commercial organizations deriving income from entrepreneurial activity. In other words, corporate income tax applies to companies operating in Azerbaijan (LLCs, JSCs, etc.), non-commercial organizations (NGOs, foundations, public associations, etc. – to the extent they generate business income), and foreign companies operating through a permanent establishment in Azerbaijan. 2. tax object – the taxable object is the profit of the enterprise. Profit is defined as the difference between all income of the enterprise and the expenses incurred to generate that income, provided such expenses are deductible under the Tax Code. For resident enterprises, the taxable object includes income earned both within and outside Azerbaijan (including dividends, interest, royalties, etc.). Non-resident enterprises pay tax on profits derived through their permanent establishment in Azerbaijan. Certain income not connected with a permanent establishment is subject to withholding tax at source. This means that a company pays corporate income tax not on its total turnover, but on its net profit after deductible expenses. For example, if a company’s annual income is 200,000 AZN and its deductible expenses are 120,000 AZN, its taxable profit will be 80,000 AZN. 3. taxable base – the taxable base is the enterprise’s profit for the tax year, meaning the difference between total income and deductible expenses. Only expenses that are deductible under the Tax Code are included in the calculation. Tax-exempt income and related expenses are not included in the taxable base. 4. tax rate – corporate income tax is levied at a rate of 20 percent. This means that 20 percent of the company’s taxable profit must be paid to the state budget. 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.