Azerbaijan VAT Calculator: Calculate Your Tax 2025

AZERBAIJAN VAT CALCULATOR

VAT (Value Added Tax) in Azerbaijan is a key federal tax, managed and collected by the State Tax Service under the Ministry of Taxes. The standard VAT rate in Azerbaijan is 18%, which applies to most goods and services.

Azerbaijan operates under three key tax regimes, each designed for different industries:

1 : Statutory Tax Regime
This applies to all companies in Azerbaijan, except those in the oil and gas sector.

2 : Production Sharing Agreements (PSAs)
The PSA tax regime governs companies involved in more than twenty active PSAs ratified by the Milli Majlis, mainly in the energy sector.

3 : Host Government Agreements (HGAs)
The HGA tax regime applies to companies in major infrastructure projects like the Baku-Tbilisi-Ceyhan oil pipeline and the South Caucasus pipeline, covering tax rules for energy exports.

Each regime has specific rules for businesses in Azerbaijan, especially those in oil, gas, and energy. Understanding these is crucial for tax compliance.

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Azerbaijan Value Added Tax (VAT): Types, Rates & Much More

In Azerbaijan, Value Added Tax (VAT) plays a crucial role in the country’s tax system, impacting both local businesses and international trade. VAT rates in Azerbaijan are structured to cater to different sectors of the economy. There are three main types of VAT rates: the standard rate, the zero rate, and exemptions. The standard VAT rate in Azerbaijan is set at 18%, which applies to most goods and services.

Certain products and services benefit from the zero VAT rate, typically related to exports and specific sectors like international transport. Additionally, certain goods and services are exempt from VAT altogether, ensuring tax relief for specific industries or essential products. Understanding these VAT rates is vital for businesses operating in Azerbaijan to ensure compliance and optimize their tax obligations.

Azerbaijan Currency Notes

Standard VAT Rate in Azerbaijan

The standard VAT rate in Azerbaijan is set at 18%. This rate applies to most goods and services within the country, including imports.

Zero-Rated VAT in Azerbaijan

Certain transactions qualify for a zero VAT rate. These include:

  • Export of goods and services.
  • Imports under specific regimes (PSA and HGA) with VAT exemption certification.
  • Goods and services related to international transport, including cargo, passenger transportation, and services directly linked to international flights.
  • Investments in fixed assets, like shares in the charter fund of an enterprise, provided they do not involve acquiring property in exchange.
  • Gold and valuables supplied to the Central Bank of Azerbaijan.

VAT Exemptions in Azerbaijan

Azerbaijan also applies VAT exemptions to specific transactions, including:

  • Financial services.
  • Sales of participation interests or shares in a legal entity.
  • Paid educational services.
  • Investment of property (other than fixed assets) into an enterprise’s charter fund, with certain conditions.
  • Imports of fixed assets related to leasing agreements.

These exemptions are essential for businesses in sectors like agriculture, education, and finance, ensuring reduced tax burdens.

Key VAT Registration Guidelines in Azerbaijan

Any individual or company registered for VAT in Azerbaijan, or required to register, is considered a taxable person. Registration is mandatory when:

  • Taxable income exceeds AZN 200,000 within 12 months.
  • A single taxable transaction exceeds AZN 200,000.

Additionally, VAT payments for e-commerce services provided by non-residents are also subject to VAT collection from the local bank on behalf of the buyer.

Understanding Taxable Amount and Base in Azerbaijan VAT

The taxable amount in Azerbaijan is calculated based on the value of goods and services, excluding VAT but including any customs and excise duties. For imports, the value of goods is determined according to customs laws.

The VAT payable is the difference between output VAT (collected on taxable supplies) and input VAT (paid on business purchases).

When is VAT Payable in Azerbaijan?

The taxable point for VAT purposes is typically when payment is received, except for non-monetary transactions, such as barter or in-kind exchanges. For goods and services provided on credit, VAT is due when the payment is actually made.

Customs Duties in Azerbaijan

The Customs Code of Azerbaijan defines the procedures for customs duties and trade. The rules address the following areas:

Key Features of Azerbaijan Customs Duties:

  • Bonded Warehouses & Duty-Free Zones: Azerbaijan allows the establishment of bonded warehouses and duty-free zones to facilitate international trade.
  • Temporary Imports & Reprocessing: Specific rules apply to temporary imports and the processing of foreign goods in Azerbaijan.
  • Re-importation and Re-exportation: Procedures are in place for the re-import and re-export of goods.
  • Adherence to International Standards: Azerbaijan follows the international classification system for goods, aligned with World Trade Organization (WTO) principles.

Customs Duty Rates

Customs duties in Azerbaijan are generally based on the value of goods being imported. The rates can range from 0% to 15%, depending on the type of goods.

  • Exemption for Temporary Imports: Goods imported temporarily (usually for up to one year) may be eligible for full or partial duty relief.
  • PSA Regime: Under the PSA (Production Sharing Agreement) regime, contractors and their affiliates can import and export goods free of import duties, particularly for hydrocarbon activities.

Excise Duties in Azerbaijan

Excise duties are taxes levied on specific goods, including tobacco, alcoholic beverages, and motor vehicles. These duties are imposed on both imported and locally produced goods.

Types of Excise Goods Subject to Duty:

  • Motorcycles and Vehicles: Taxed on state registration.
  • Tobacco Products & Alcohol: Includes cigarettes, cigars, vodka, wine, and beer.
  • Luxury Goods: Such as light vehicles, yachts, and imported platinum, gold, and jewelry.

Excise Duty Rates

Rates vary depending on the type of goods. Below are some notable excise duties on items produced in Azerbaijan:

  • Alcoholic Beverages:
    • Vodka, strong drinks: AZN 4.8 per litre.
    • Sparkling wines: AZN 0.2 per litre.
  • Cigarettes & Tobacco:
    • Cigarettes: AZN 45.5 per 1,000 items.
    • Hookah tobacco: AZN 22 per kg.
  • Other Items:
    • E-cigarette liquids: AZN 100 per litre.
    • Disposable e-cigarettes: AZN 2 per unit.

Excise rates for petroleum products and certain vehicles are also established by the Cabinet of Ministers.

Property Tax in Azerbaijan

Property tax applies to both movable and immovable property owned by individuals and legal entities in Azerbaijan.

Property Tax Rates

  • Legal Entities: Taxed at 1% of the average annual book value of taxable property.
  • Individuals: Tax is based on the area of the building, varying between AZN 0.1 and AZN 0.4 per square meter, depending on location.
    • In Baku, property tax rates range from AZN 0.4 per square meter.
    • Tax is applied only to the area exceeding 30 square meters in residential areas.

Exemptions from Property Tax

Certain entities and property types are exempt from property tax, including:

  • Agricultural Producers: Including those producing goods industrially.
  • Small & Medium Enterprises (SMEs): Property used for SME operations is exempt for up to 7 years from registration.

Land Tax in Azerbaijan

Land tax applies to land resources in Azerbaijan, whether owned or leased by individuals or companies.

Land Tax Rates

  • Agricultural Land: AZN 0.06 per unit for land used for farming.
  • Other Land: Tax rates for industrial, commercial, and residential land range from AZN 2 to AZN 20 per 100 square meters, depending on the location and purpose of the land.

Exemptions

Certain types of land, such as public land used for state purposes, are exempt from land tax.

Other Key Taxes in Azerbaijan

  • No Transfer Taxes: There are no specific taxes on the transfer of immovable property in Azerbaijan. However, notary fees and related sale duties may apply.
  • Stamp Duties: There are no stamp duties in Azerbaijan, but state notary fees apply to certain transactions.

Azerbaijan also imposes taxes on employee salaries and social security contributions:

  • Personal Income Tax: Rates range from 0% to 25% depending on the employee’s salary.
  • Social Security: Employers contribute 22% of employees’ gross income, while employees contribute 3%.
  • Unemployment & Medical Insurance: Employers pay a 0.5% unemployment insurance contribution, and 2% for medical insurance, with the same amounts withheld from employees.

Other Relevant Taxes in Azerbaijan

Road tax is included in the price of fuel, which is indirectly paid by automobile owners through fuel purchases. The rate is AZN 0.02 per litre for petrol, diesel, and liquid gas.

Mining tax is levied on the extraction of minerals in Azerbaijan. The tax rates depend on the type of mineral being extracted:

  • Crude Oil: 26% of the wholesale price.
  • Natural Gas: 20% of the wholesale price.
  • Metals & Non-Metallic Minerals: Rates vary, with non-metallic minerals taxed at AZN 0.04 to AZN 10 per cubic metre.