Taxation

The Ministry of Taxes of the Republic of Azerbaijan sets tax policy and collects taxes in Azerbaijan. For the purposes of this review, we will concentrate on corporate taxation.

Currently, there are three different types of tax regimes in Azerbaijan. The companies that work predominantly in the oil & gas sector under Production Sharing Agreements (PSAs) are subject to the oil consortium tax regime. Companies working under Host Government Agreements (HGAs) are subject to the HGA tax regime. The statutory tax regime is applicable to all other legal entities. The statutory tax regime is regulated by the Tax Code and numerous regulatory legal acts. The tax legislation in force is regarded as one of the best pieces of legislation among the transition economies. 

All Azerbaijani enterprises, representative offices, branches, and individuals engaged in business activities (as well as foreign entities and individuals conducting business activity in Azerbaijan through a permanent establishment (“PE”) as defined under the Tax Code) must register with the tax authorities, regardless of whether or not their activities are taxable in Azerbaijan. Divisions which have not established a PE are subject to a separate regime. 

Double Taxation Treaties 

Azerbaijan has signed bilateral treaties for the avoidance of double taxation with 45 countries. Double taxation treaty negotiations are currently underway with Denmark, India, Kyrgyzstan, Spain, Malta and Macedonia. For the list of double taxation treaties please see this table.