Azerbaijan Republic Tax System

General provisions about tax system

In Azerbaijan Republic three type of tax are determined and paid: state tax, tax of autonomous republic, municipal tax.

State tax infers the tax the payment of which is compulsory throughout the territory of Azerbaijan Republic.

Tax of autonomous republic infers the tax determined by the legislation of Nakhichevan Autonomous Republic and payable in Nakhichevan Autonomous Republic.

Municipal tax infers tax and payments, determined and entered into force by the decision of municipalities and payable in the territories of municipalities. Other mandatory payments, applied by municipalities, are determined by relevant law.

Municipalities regulate the following elements of levying tax in their territories: tax concessions, as well as tax staff within the limits allocated by tax legislation.

Tax sums are levied in the following forms:

Directly from the source (deducting tax prior to getting income or salary);

By declaration (deducting tax after getting income or salary).

State tax includes:

1) Income tax

2) Profit tax

3) VAT – value added tax

4) Excise

5) Property tax of legal entities

6) Land tax of legal entities

7) Road tax

8) Industrial tax

9) Tax on simplified system

The limits of all state tax are allocated by legislation.  The amount of state tax, allocated for each separate year, may not prevail the amount, allocated annually, while adopting the law about State Budget, these amounts can be revised.

Tax of autonomous republic consist of abovementioned tax, levied in Nakhichevan Autonomous Republic.

Municipal tax include:

1)      land tax of individuals

2)      property tax of individuals

3)      industrial tax for extracting construction materials of local form

4)      profit tax of entities and organizations, referring to the property of municipalities

The parties of relations regulated by tax legislation are:

–         legal entities and individuals, recognized in relation to tax legislation as taxpayers;

–         legal entities and individuals, recognized in relation to tax legislation as tax agents;

–         State tax bodies of Azerbaijan Republic;

–         Customs bodies of Azerbaijan;

–         Financial bodies of Azerbaijan – for resolution the matters, indicated in tax legislation;

–         Governmental bodies, municipalities, other competent bodies and official persons.

Tax is mandatory, individual, gratuitous payment levied from taxpayers into state budget, local budgets, as well as target state funds in the form of alienation of money resources belonging to them with a view of financial maintenance of activity of state and municipalities.

Tax is considered allocated in the case, when taxpayers and subsequent elements of taxation are allocated:

1)      object of taxation

2)      taxable base

3)      taxation period

4)      tax rate

5)      the rule of deducting tax

6)      rule and periods of payment of tax

Tax privileges can be made available on the basis provided by tax law during the establishment of tax.The objects of taxation include income, profit, property, land, minerals, added value of presented goods (labor, service) and other objects of taxation.

Taxable base is quantities expression of taxable part of taxation object.