On December 28, 2023 the President of the Republic of Azerbaijan Ilham Aliyev signed a decree on the application of Law No. 1033-VIQD of Azerbaijan dated December 5, 2023 “On amendments to the Tax Code of the Republic of Azerbaijan.” The amendments to the Tax Code of Azerbaijan Republic came into force on January 1, 2024.  We would like to highlight changes that may be interested in, in inter alia:

1. The withholding tax rate for dividends paid by the resident enterprise is reduced from 10% to 5%;

2. The norms and procedure for deduction from income the representation expenses, housing and food expenses related to employees, will be determined by the relevant authority; and

3. The compensations paid by the employer are not included in the taxable base for income tax of an individual, within the limits determined by the relevant authority: (i) representation expenses; (ii) accommodation and meal expenses related to employees;

4. Physical persons with deposits in the national currency (AZN) in local banks, including in the branches of foreign banks in Azerbaijan, are exempt from tax on monthly interest income in the manner shown below:

• interest income up to 200 AZN - without time limitation;

• when the deposit is placed for 18 months or more; and

• in case if deposit is repaid not earlier than 18 months, the full amount of income - for three years.

5. When calculating taxable capital gain on alienation of participation interest or shares, other expenses (such as consulting service fee, payment of state duty or other fees in connection of the sale of shares if applicable  and provided that supporting document(s) is/are available) incurred in connection with the income obtained through those transactions is also allowed to be deducted.

6. The interest paid on financial leasing transactions and alienation within financial leasing agreements of the assets (fixed assets) obtained within the framework of operations exempt from VAT.

We hope that above said is helpful and acceptable.

We remain at your entire disposal for any information and/or assistance you should need from us. 

 For more information, please contact us at ana@mwp.kz, ztd@mwp.kz.