Tax guide 2020 Foreign nationals coming to Azerbaijan - Deloitte
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Tax guide 2020 Foreign nationals coming to Azerbaijan
Abbreviations 06 Arrival, Registration and Work Permits 07 Tax Residency Status, Taxes and Tax Rates 14 Filing Requirements 22 Tax Payments 28 Taxable Income 32 Social Insurance Contributions 36 Unemployment Insurance 40 Compulsory Medical Insurance 42 Double Tax Treaties 46 Contacts 48
Tax guide 2020
Deloitte is pleased to provide
you with this brief overview
of the Azerbaijani personal tax
and compliance procedures.
For your convenience, this guide
is presented as a list of FAQs
Welcome to Azerbaijan!
With the Azerbaijani tax system undergoing constant
rapid development, we recommend that you
use this brochure for general guidance purposes only.
Azerbaijan currently has three taxation regimes —
a statutory regime, a PSA regime, and an HGA regime.
Since most PSAs in Azerbaijan are similar, we will be referring
to the Azeri-Chirag-Guneshli PSA throughout this brochure.
We will provide you with information on these three taxation
regimes in turn (for each question, answer 1 will be related
to the statutory taxation regime, answer 2 to the PSA
taxation regime, and answer 3 to the HGA taxation regime).
Please contact us to discuss your specific situation.
05
Tax guide 2020 Tax guide 2020
Abbreviations Arrival, Registration
and Work Permits
PSA Production Sharing Agreement Question Answer
Do I have 1. No, there is no such requirement.
HGA Host Government Agreement
to notify the tax However, if you are engaged
AZN Azerbaijani Manat authorities in entrepreneurial activity
upon my arrival/ in Azerbaijan and are planning
USD U.S. Dollar
departure? to leave the country, you must file
PIT Personal Income Tax a final tax return within 30 days
of ceasing your activities.
VAT Value Added Tax
SIC Social Insurance Contributions 2. No, there are no such requirements
with regard to PSAs.
SSPF State Social Protection Fund
Compulsory Medical Insurance 3. No, there are no such requirements
CMIC
Contributions with regard to HGAs.
DTT Double Taxation Treaty
06 07
Tax guide 2020 Tax guide 2020
Question Answer Question Answer
Do I need 1. Yes. Registration with the State Do I require 1. If you are planning to visit
to register with Migration Service at the place of stay, a visa to enter Azerbaijan, you must obtain
the Azerbaijan must be performed within fifteen Azerbaijan? a visa if there is a visa regime
state authorities days of your arrival in Azerbaijan. If so, where applicable between Azerbaijan
upon arrival? This requirement is applicable do I obtain it? and your country of residence.
only if you intend to stay A visa can be obtained at Azerbaijani
for more than fifteen days embassies and consulates in your
in Azerbaijan. You or the host party country of residence or other
may file an application (together with designated countries. Alternatively,
your passport) to the State Migration it is possible to obtain an electronic
Service via post, email or in person. visa (for any type of visa) online
through the website: www.evisa.gov.
2. Yes, the above rules az. Such visa shall be considered an
also apply under PSAs. e-visa. Please note that an e-Visa is
only a single entry visa valid for the
3. Yes, the above rules period of 90 days and the period of
also apply under HGAs. stay under an e-visa cannot exceed
30 days. E-visas shall be printed
and provided at the border along
with a passport to be stamped.
2. The same rules apply
with regard to PSAs.
3. The same rules apply
with regard to HGAs.
08 09Tax guide 2020 Tax guide 2020
Question Answer
within a calendar year within specific
Do I require 1. Yes, foreign individuals wishing
fields of business (i.e. mining industry,
a work permit to work in Azerbaijan must obtain
processing industry, electricity, gas, steam
to work a work permit from the State
and air conditioning supply, information
in Azerbaijan? Migration Service of the Republic
and communication, finance and
If so, how do of Azerbaijan through their
insurance, education, transport, water
I obtain a permit, employers. A work permit is issued
supply, waste water and refuse treatment);
for how long for an unlimited number of times
is it valid, each being no more than one year.
A work permit is issued upon
and what
your employer’s application to the
is the timeframe However, you do not require a work
State Migration Service. Generally the
and cost permit if you are:
timeframe for obtaining a work permit
of obtaining it? – a permanent resident
is 20 working days after the submission
of Azerbaijan
of the complete application package.
– married to an Azerbaijani citizen,
The state fee payable for a work permit
provided your spouse is registered
and for any extension of the term
at his/her place of residence
of the permit is AZN 350 for up to three
– engaged in entrepreneurial
months, AZN 600 for up to six months,
activity
AZN 1,000 for one year.
– employed in a managerial position
at an organization established
2. The same conditions apply with regard
under an international agreement
to PSAs. Prior to the submission of the
– employed at a diplomatic
application to the State Migration Service,
representative office
the endorsement of the State Oil Company
or an international organization
of the Azerbaijan Republic needs to be
– the head or deputy head
obtained.
of a branch or representative
office of a foreign legal
3. The same conditions apply with regard
entity in Azerbaijan
to HGAs. Prior to the submission of the
– the head or deputy head of a
application to the State Migration Service,
local legal entity with foreign
the endorsement of the State Oil Company
shareholder
of the Azerbaijan Republic needs to be
– assigned on business trips not
obtained.
10 exceeding 90 days cumulatively 11Tax guide 2020 Tax guide 2020
Question Answer Question Answer
Do I require 1. Your work permit serves as the basis Do I need a local 1. Yes, if you are locally employed
a temporary for obtaining a temporary residence contract? at an Azerbaijani entity,
residence permit? permit. Temporary residence or if you are employed at a branch
If so, how do permits are initially issued for up or representative office of a foreign
I obtain one to one year based on the submitted legal entity in Azerbaijan and have
and for how long application and may subsequently not concluded an employment
is it valid? be extended for no more than two agreement with the head office
years at a time. The timeframe of that foreign legal entity.
for obtaining a temporary residence
permit is 20 working days after 2. The same rules apply with regard
submission of the complete to PSAs.
application package.
3. The same rules apply with regard
In order to qualify for a temporary to HGAs.
residence permit as a private
entrepreneur, foreign nationals
engaged in entrepreneurial activity
must have at least five full time
or 10 part time employees hired
under legally-binding employment
agreements. At least 80 percent
of these employees must be
Azerbaijani citizens.
2. The same rules apply with regard
to PSAs.
3. The same rules apply with regard
to HGAs
12 13Tax guide 2020 Tax guide 2020
Tax Residency
Status, Taxes
and Tax Rates
Question Answer Question Answer
What are the tax 1. You are considered an Azerbaijani To what taxes 1. Tax residents are generally taxed
residency rules tax resident if you have been will my income at the rates detailed in the table
in Azerbaijan? physically present in Azerbaijan be subject? below. These rates are applied
for a period of more than 182 days What rates to their worldwide income paid
cumulatively in a calendar year will apply? in cash and/or in-kind:
(regardless of nationality).
Monthly Taxable Income Tax Rates
2. Under PSAs there are three tax
Up to AZN 2,500 14%
residency rules for expatriate
employees: AZN 350 + 25% of the amount
Over AZN 2,500
– An expatriate employee spending exceeding AZN 2,500
more than 30 consecutive days
in a calendar year in Azerbaijan Reduced tax rates will be in force for a seven years period
for ordinary business purposes starting from 1 January 2019 for employees of the private
becomes a tax resident. Income and non-oil and gas sectors.
earned after the 30th day
is taxable in Azerbaijan. Monthly Taxable Income Tax Rates
– Individuals spending less than 30 Up to AZN 8,000 0%
consecutive days but more than
14% of the amount exceeding
90 cumulative days in Azerbaijan Over AZN 8,000
AZN 8,000
in a calendar year also become tax
residents. Income earned after An income of AZN 200 is exempt from taxation if the monthly
the 90th day becomes taxable. income is below AZN 2,500, and an income of AZN 2,400 is
– Individuals on rotation exempt if the annual income is below AZN 30,000.
and expatriates whose primary
place of employment is Azerbaijan All individuals engaged in
are also considered to be tax entrepreneurial activity will be taxed
residents if they spend more than at a fixed rate of 20 percent. Taxable
90 cumulative days in Azerbaijan income from non-entrepreneurial
in a calendar year. These individuals activities will be taxed at the rate of
are taxed from the first day of their 14 percent.
presence in Azerbaijan.
14 15Tax guide 2020 Tax guide 2020
The income of sole entrepreneurs as micro or small entrepreneurs
operating in the industrial parks is are exempt for three years from
exempt from taxation. Moreover, the date of obtaining a startup
50 percent exemption on personal certificate and
income tax is considered for
• a portion of income of small-
individuals who get an investment
medium enterprise (“SME”) cluster
promotion certificate.
member individual entrepreneur
earned from the provision of
Along with the above exemptions,
goods (services, works) under the
starting from 2019 new income tax
contract concluded with an SME
exemptions have been stipulated in
cluster company spent for capital
the tax legislation;
expenditures are exempt from
• dividend income of individuals who income tax for seven years.
are the founders (shareholders) of
a resident entity is exempt from
In addition, the income tax amount
income tax if a resident entity is not
payable by the entrepreneurs
registered for VAT purposes, and
engaging in trading and public
the taxable turnover of such entity
catering activities for the provision
is up to AZN 200,000 in a 12-month
of goods under retail sale, is
period,
decreased by 25 percent of the tax
• 50 percent of a taxpayer’s income amount generated from the income
from the provision of shares and received via POS terminals for a
participating interests owned at three year period starting from 1
least for a three year period, January, 2019.
• 75 percent of the individual
If you conduct business activity in
entrepreneurs’ income from
Azerbaijan, and the volume of your
entrepreneurial activities classified
taxable operations does not exceed
as a micro-entrepreneur,
AZN 200,000 in any consecutive
• income of startups from such 12-month period, you have a right
activities performing their to register as a simplified taxpayer.
business as individuals classified
16 17Tax guide 2020 Tax guide 2020
The maximum amount of taxable Income from the sale of residential
operations that enables individual and non-residential property,
entrepreneurs to become simplified including property acquired from
taxpayers is set as AZN 200,000 in persons engaged in construction, is
any consecutive 12-month period. subject to simplified tax at a rate of
AZN 15 per square meter multiplied
If your income exceeds the above
by the location zone rate, which
threshold, you will be obligated
varies from 0.5 to 4.0. The rate
to register for VAT purposes.
for non-residential buildings is1.5
regardless of the location.
Simplified tax is calculated from the
revenue received from the supply of
goods, services and work at the rate 2. PIT rates applied under PSAs to
of two percent. Azerbaijani tax residents’ income
earned as a direct result of their
employment in Azerbaijan are as
Persons engaged in public catering
follows:
activities whose taxable turnover
exceeds AZN 200,000 in any month Monthly Taxable Income Tax Rates
within consecutive twelve months
are entitled to register as simplified Up to AZN 2,500 14%
taxpayers at the rate of eight AZN 350 + 25% of the amount
percent. Over AZN 2,500
exceeding AZN 2,500
Sole entrepreneurs’ cash
withdrawals from their bank 3. The same PIT rates as above apply
accounts are subject to simplified under HGAs after you become a tax
tax at a rate of one percent, which resident.
shall be withheld by local banks,
branch offices of foreign banks
in the Republic of Azerbaijan,
and national operators of postal
services.
18 19Tax guide 2020 Tax guide 2020
Question Answer Question Answer
Do I pay tax 1. Yes. If you have been physically present Are there 1. Yes. The Azerbaijani government
in Azerbaijan in Azerbaijan for a period of less any special tax offers an investment promotion
if I qualify than 183 days in a calendar year, exemption rules? certificate that grants exemption
as a non-resident you will qualify as a non-resident If yes, which from several types of taxes for
for tax purposes? for tax purposes and will be taxed industries are seven years in those industries that
at the above rates on your Azerbaijani- they applicable are considered to be high priority.
sourced employment income. to? Moreover, small-medium enterprise
Non-residents are taxed on their members and companies enjoy
income obtained from other several tax exemptions for seven
Azerbaijan sources as follows: years from the date they receive
A. dividends — 10% a certificate of an SME cluster
B. Interest, including loan interest company or SME cluster member.
paid in connection with financial Startups classified as a micro or
leasing transactions — 10% small entrepreneurship are exempt
C. Royalties and rent — 14% from certain taxes for three years
D. International freight or from the date of obtaining a startup
communication — 6% certificate. Also, 75 percent of the
E. Insurance and re-insurance fees income of individual entrepreneurs
— 4% and profit of legal entities from
F. Other Azerbaijani-sourced income entrepreneurial activities classified
— 10% as a micro-entrepreneurship are
G. Payments to countries with exempt from income tax and profit
preferential taxation —10%. tax respectively.
Azerbaijani-sourced income 2. No.
includes income related to duties
performed or services rendered 3. No.
in Azerbaijan and income from
property located in Azerbaijan,
irrespective of where it is paid.
2. No.
20 3. No. 21Tax guide 2020 Tax guide 2020
Filing Requirements
Question Answer Question Answer
Do I need to file 1. No, provided your only income What 1. The tax year is a calendar year.
a tax return is from employment, which is the tax year
in Azerbaijan? is subject to withholding tax, in Azerbaijan? 2. Under PSAs the tax year is also
deducted by the entity or individual a calendar year.
from which you receive the income
3. Similarly, under HGAs the tax year
However, if you are engaged is a calendar year.
in entrepreneurial activity
in Azerbaijan you have to file
either a PIT return or a simplified
tax return.
VAT payers must file VAT returns
on a monthly basis.
2. No. However, an employer
is responsible for filing a return
to the tax authorities regarding all
Azerbaijan PIT payments made
during the calendar quarter in
respect of foreign employee tax
residents.
3. No. However, an employer
is responsible for filing a return
to the tax authorities regarding
all Azerbaijani PIT payments made
during the calendar quarter in
respect of foreign employee tax
residents.
22 23Tax guide 2020 Tax guide 2020
Question Answer
When do I have 1. Your employer is responsible for 2. Your employer is responsible for
to file a tax filing quarterly PIT returns by the filing a return to the tax authorities in
return? 20th day of the month following regard to PIT payments made during
the calendar quarter. the calendar quarter in respect of its
foreign employee tax residents by
Individual entrepreneurs are obliged the 20th day of the month following
to file a PIT return on 31 March of the end of the calendar quarter. In
the year following the tax year at the addition, the employer must provide
place of tax registration (residence). State Tax Service under the Ministry
This deadline can be extended of Economy with a summary of all
by up to three months upon filing Azerbaijani PIT payments made
an application, provided that the during the calendar year in respect
amount of tax due is paid. of its foreign employee tax residents
in the form of an addendum to the
The deadline for filing a simplified PIT return for the fourth quarter.
tax return is the 20 day
of the month following the end 3. Similarly, under HGAs, your
of the calendar quarter. employer is responsible for filing
a return to the tax authorities
If you cease your entrepreneurial in regard to PIT payments made
activity during the tax year, you during the calendar quarter
are required to file a tax return in respect of its tax resident
within 30 days. foreign employees by the 20th day
of the month following the end
VAT payers must file VAT of the calendar quarter.
returns no later than the 20th
of the month following the end
of the calendar month.
24 25Tax guide 2020 Tax guide 2020
Question Answer Question Answer
Is there any 1. No, unless you are an entrepreneur In what currency 1. All income received should be
requirement subject to PIT. If you are, you should I report reported in AZN.
for filing advance may be required to file quarterly my taxable
tax returns advance tax calculations income? 2. Your employer should report your
in Azerbaijan? by the 15th day of the month taxable income in AZN or USD.
following the calendar quarter.
3. Your employer should report your
2. No. taxable income in AZN or USD.
3. No.
Question Answer
Are there 1. Yes, penalties may be charged
Question Answer penalties in an amount up to AZN 40.
Can joint returns 1. No. for late filing
be filed (taxpayer of tax returns? 2. The same penalty applies
and spouse)? 2. No. to taxpayers working under
the PSA regime.
3. No.
3. The same penalty applies
to taxpayers working under
the HGA regime.
26 27Tax guide 2020 Tax guide 2020
Tax Payments
Question Answer Question Answer
How is tax paid 1. PIT can be paid either via If I have to pay tax 1. If your only income is from
in Azerbaijan? withholding at source when personally, how employment in Azerbaijan,
the paying entity is obligated do I do this? your employer is responsible
to do so, or personally if you for withholding income tax
are obligated to file a tax return. and remitting it to the State Budget.
Payers of simplified tax and VAT However, if you receive income from
are obliged to pay tax personally. entrepreneurial activity and you are
a PIT payer, the income tax due for
2. Under PSAs, PIT is paid the current year should be paid in
via withholding at source advance to the State Budget by only
by the employer. a wire transfer from your personal
bank account by the 15th day of the
3. Under HGAs, PIT is paid month following each quarter. It
via withholding at source should be noted that the amount
by the employer. of advance payments should not
be less than 75 percent of the total
income tax due for that specific tax
year. The final payment should be
made before filing an annual income
tax return, i.e. before 31 March of
the following year.
If you are a simplified tax payer you
are obliged to make a tax payment
no later than the 20th day of the
month following the end of the
calendar quarter.
28 29Tax guide 2020 Tax guide 2020
Question Answer
If you generate income from the sale Can my 1. Yes, your employer must remit
of residential and non-residential employer make the taxes to the State Budget
property, the simplified tax shall be tax payments on your behalf.
withheld and paid by notary. on my behalf?
2. Employers are required to make
If you are a VAT payer you should these payments on your behalf
make a tax payment no later than in accordance with PSAs.
the 20th day of the month following
the end of the calendar month. 3. Employers are required to make
these payments on your behalf
2. No, you do not have to pay in accordance with HGAs.
any PIT personally.
3. No, you do not have to pay Question Answer
any PIT personally. Are there any 1. Yes, late payment interest is charged
penalties for late at a rate of 0.1 percent of the tax
payment of tax? payable for each day of delay.
Question Answer
In what currency 1. Azerbaijani PIT should be paid 2. Under PSAs, an employer should
do I pay tax? in AZN. pay interest at a rate of LIBOR
+ 4 percent per annum for each day
2. Under PSAs, an employer may pay of delay of the tax payment.
the Azerbaijan PIT of its foreign
employee tax residents in AZN 3. Under HGAs, an employer should
or USD. pay interest at a rate of LIBOR
+ 3.5 percent per annum for each
3. Under HGAs, an employer may pay day of delay of the tax payment.
the Azerbaijan PIT of its foreign
employee tax residents in AZN
or USD.
30 31Tax guide 2020 Tax guide 2020
Taxable Income
Question Answer
What aspects 1. Employment income, including: 2. Under PSAs, almost all income
of my – Salary of foreign employees earned
remuneration – Bonuses in Azerbaijan is taxable, including
are taxable? – Other in-kind benefits. wages, salaries, bonuses, personal
travel costs, education expenses
Income from investments, for family members, etc.
including:
– Dividends 3. Similarly, in accordance with
– Interest HGAs, almost all income of foreign
– Rent employees earned in Azerbaijan
– Royalties is taxable, including wages, salaries,
– Capital gains Miscellaneous: bonuses, personal travel costs,
– Inheritance education expenses for family
– Gifts members, etc.
– Winnings from sports gambling
Income from entrepreneurial
activity, including income from:
– Supply of goods
– Provision of services
– Performance of work.
32 33Tax guide 2020 Tax guide 2020
Question Answer Deductions include all expenses
What income 1. There are several types of income incurred within income – generating
can I exclude that are exempt from tax activities, with specific exceptions
or deduct from in Azerbaijan. These include: provided for by the law
taxable income? – Gifts, financial aid and inheritance
received from family members 2. According to PSAs, income such
– Alimony as housing allowance, meals,
– Sale of immovable property transportation expenses are not
where a taxpayer has registered taxable provided that they are
and resided during at least well supported (e.g. by a rental
five years agreement, checks, invoices, etc.).
– Compensation fees for damages
– Certain business-related expenses 3. Similarly, according to HGAs,
– Dividend income of individuals in determining Azerbaijan taxable
who are the founders income, foreign employees are
(shareholders) of a resident entity entitled to apply the exemptions
is exempt from income tax if a provided by the Tax Code as
resident entity is not registered detailed in the answer above.
for VAT purposes, and the taxable
turnover of such entity is up to
200,000 manats within any month
(months) in a 12-month period
and the entity keeps records
of its income and expense in
accordance with the respective
legislation.
– Annual interest income paid
to individuals by a local bank
or a branch of a foreign bank
in Azerbaijan for seven years
beginning from 1 February 2016.
34 35Tax guide 2020 Tax guide 2020
Social Insurance
Contributions
Question Answer Individual entrepreneurs carrying
Do I pay SIC 1. Yes. SIC are charged at a out operations in trade and
in Azerbaijan rate of three percent of your construction are obligated to pay 50
while I am Azerbaijani-sourced income. In percent of the minimum monthly
on an assignment addition, employers are required salary set in Azerbaijan, i.e. AZN 125;
or engaged to pay SIC at a rate of 22 percent in other fields they are obligated
in entrepreneurial of the gross income of employees. to pay 25 percent of the minimum
activity? How are Your employer is responsible monthly salary, i.e. AZN 62.5. Please,
SIC paid? for remitting three percent and note that minimum monthly salary
22 percent SIC on the day of is AZN 250 as of 1 September 2019.
salary payment than the 15th day
of the month following the calendar 2. Foreign employees of contractors
month to which the SIC is related. and foreign subcontractors
operating under PSAs
The income of insured persons are exempt from SIC.
working in private and non-oil and
gas sectors is subject to SIC at the 3. Foreign employees of contractors
following rates for a seven-year and foreign subcontractors
period starting from 1 January 2019. operating under HGAs
are exempt from SIC.
Monthly Total Social insurance contribution
Taxable Income rates
Deduction Paid at
from income the expense
of insured of the insurer
Up to AZN 200 25% 3% 22%
AZN 6 + 10% AZN 44 + 15%
of the amount of the amount
Over AZN 200 25%
exceeding AZN exceeding AZN
200 200
36 37Tax guide 2020 Tax guide 2020
Question Answer Question Answer
Does my 1. Yes. SIC applies at a rate of 22 Do I need 1. If your only income is from
employer pay percent of the gross income. If an to file a report employment, your employer
SIC? If yes, what employee is employed in a private to the SSPF is responsible for filing a report
is the applicable and non-oil and gas sectors, the SIC in Azerbaijan? to the State Tax Service under the
SIC rate? rate will be 15 percent of the gross If yes, when do Ministry of Economy in respect
income paid at the expense of the I have to file of its foreign employees by the 20th
employer. the report? day of the month following the end
of the calendar quarter.
2. No.
If you are an entrepreneur, it will
3. No. be your responsibility to file
a report to the Ministry of Taxes
by the 20th day of the month
following the end of the calendar
quarter.
2. No.
3. No.
38 39Tax guide 2020 Tax guide 2020
Unemployment
Insurance
2. Foreign employees of contractors
Question Answer
and foreign subcontractors
Is unemployment 1. Employees as insured parties,
operating under PSAs are
insurance a employers as insurers and the SSPF
exempt from any contributions
mandatory social as an intermediary government
of the Azerbaijani state social
contribution? entity managing the process
insurance and other payments
How are of the unemployment insurance
of a similar nature.
unemployment are subjects of the Law “On
insurance unemployment insurance” dated
3. Foreign employees of contractors
contributions 30 June 2017 which is effective
and foreign subcontractors
paid? starting from 1 January, 2018.
operating under HGAs are exempt
from any contributions of Azerbaijan
Unemployment insurance
state social insurance and other
contributions are mandatory and
payments of a similar nature.
charged at a rate of 0.5 percent
of your Azerbaijani-sourced
income. In addition, employers are
required to pay unemployment
insurance contributions at a rate
of 0.5 percent of the gross income Question Answer
of employees. Your employer How is the 1. Your employer is responsible
is responsible for remitting 0.5 reporting of the for filing a report to the State
percent as your portion and unemployment Tax Service under the Ministry
0.5 percent as its portion on the insurance carried of Economy with regard to the
day of salary payment but no later out? unemployment insurance paid
than the 15th day of the month during a calendar quarter in respect
following the calendar month to of its foreign employees by the 20th
which the unemployment insurance day of the month following the end
contribution is related. of the calendar quarter.
2. No.
3. No.
40 41Tax guide 2020 Tax guide 2020
Compulsory Medical
Insurance
Question Answer
However, it is worth mentioning, that for
Is CMIC a 1. Yes. Recent changes to the Law
employees engaged in private and non-
mandatory social “On Medical Insurance” introduced
oil and gas sectors the Law “On Medical
contribution? compulsory medical insurance
Insurance” provides 50% discount for
How are CMIC which will be effective from 1 April
the portion of salary up to AZN 8,000
paid? 2020. As a part of the state social
until 1 January 2021. Thus, CMIC rates
insurance program, compulsory
effective for the period April-December
medical insurance will ensure
2020 are presented in the table below:
provision of medical services to the
Your employer is required to pay CMIC
insured persons in accordance with
service package.
The employees and employers are Monthly Total Compulsory Medical
obliged to make the following CMIC Taxable Income Insurance Contribution rates
payments:
Deduction Paid at
from income the expense
of insured of the insurer
Up to AZN 8,000 2% 1% 1%
Monthly Total Compulsory Medical
Taxable Income Insurance Contribution rates AZN 160 + 0,5% AZN 160 + 0,5%
of the amount of the amount
Deduction Paid at Over AZN 8,000 1%
exceeding AZN exceeding AZN
from income the expense
8,000 8,000
of insured of the insurer
Up to AZN 8,000 4% 2% 2%
at the same time with salary payment
AZN 160 + 0,5% AZN 160 + 0,5%
but not later than the 15th day of the
of the amount of the amount
Over AZN 8,000 1% month following the month to which
exceeding AZN exceeding AZN
the CMIC is related.
8,000 8,000
42 43Tax guide 2020 Tax guide 2020
Answer Question Answer
2. Foreign employees of contractors How is the 1. Your employer is responsible for
and foreign subcontractors reporting of the filing a report to the State Tax
operating under PSAs are exempt unemployment Service under the Ministry of
from CMIC. insurance carried Economy with regard to the CMIC
3. Foreign employees of contractors out? paid during a calendar quarter in
and foreign subcontractors respect of its foreign employees by
operating under HGAs are exempt the 20th day of the month following
from CMIC. the end of the calendar quarter.
2. No.
3. No.
44 45Tax guide 2020 Tax guide 2020
Double Tax Treaties
Question Answer Question Answer
Is it possible 1. You should find out if your home How can I claim 1. In order to claim the exemption,
for an expatriate country has concluded a DTT a DTT exemption? you need to file a tax return
to be exempt with Azerbaijan. Some DTTs contain and an application for the
from Azerbaijani provisions providing exemption exemption. You should also
income taxes? from Azerbaijani tax for certain be prepared to provide the
types of income. Azerbaijani tax authorities with
an official confirmation from
2. The same should be considered the tax authorities of your
if you fall under the PSA country of residence. In addition,
taxation regime. the Azerbaijani tax authorities
may request confirmation of the
3. The same should be considered taxes paid in your home country.
if you fall under the HGA Both documents must be issued
taxation regime. by the tax authorities of the country
of tax residency. Obtaining DTT
relief in Azerbaijan has historically
been a complicated and time-
consuming process.
2. The same procedures apply if you
fall under the PSA taxation regime.
3. The same procedures apply if you
fall under the HGA taxation regime.
46 47Tax guide 2020 Contacts Notes Please do not hesitate to contact us: Nuran Kerimov Partner Tax&Legal Department nkerimov@deloitte.az Our Baku Office Address: Deloitte and Touche LLAC Baku White City Office Building 25E Nobel Ave., Baku, AZ1025, Azerbaijan Tel: +994 (12) 404 12 10 Fax: +994 (12) 404 12 11 www.deloitte.az 48
Tax guide 2020 Tax guide 2020 Notes 50 51
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