Tax in Azerbaijan

Who is the tax authority?

Azerbaijan's State Tax Service (Dovlet Vergi Xidmeti, STS) sits under the Ministry of Economy following the 2019 reorganization. The predecessor body was the Ministry of Taxes; STS assumed all its functions. Customs is administered separately by the State Customs Committee.

Filings flow through the e-Tax electronic services portal at taxes.gov.az. Electronic invoicing has been mandatory for VAT-registered entities since 2017. Disputes proceed through STS internal review, the Tax Disputes Commission, and then the administrative courts.

The credentialed Azerbaijani accounting profession is CPA Azerbaijan, regulated by the Chamber of Auditors. The legal foundation is the Tax Code of the Republic of Azerbaijan, supplemented by successive Presidential Decrees and Parliamentary Laws.

What is the tax year and when are returns due?

Azerbaijan's tax year is the calendar year (1 January through 31 December). Personal annual returns are due 31 March of the following year. Wage earners have income tax withheld monthly by employers and generally owe no additional filing obligation.

Corporate annual returns are also due 31 March. Quarterly advance corporate tax instalments apply for taxpayers above specified revenue thresholds. EDV (VAT) returns are filed monthly by the 20th of the following month.

Who counts as an Azerbaijani tax resident?

An individual is an Azerbaijani tax resident if physically present in Azerbaijan for at least 182 days in a calendar year, or if maintaining their centre of vital interests in Azerbaijan. The two tests apply independently.

Residents are taxed on worldwide income. Non-residents pay tax only on Azerbaijani-source income at flat or schedular rates. Treaty tie-breaker rules apply when two jurisdictions both treat a person as resident under their domestic laws.

Azerbaijan's STS issues Tax Residency Certificates for outbound residents needing to claim treaty relief abroad. Foreign-derived certificates may be required to claim reduced withholding rates in Azerbaijan.

What are the personal income tax rates?

Azerbaijan taxes employment income in two bands:

Dividend income paid to resident individuals carries a 10% withholding tax (final). Capital gains on non-business individual holdings are taxed at 14% flat. A temporary 0% rate applied to private-sector non-oil-and-gas employees on monthly income up to AZN 8,000 through 2025 under post-pandemic stimulus legislation — check current STS guidance for any extension.

Mandatory social insurance contributions apply in addition to income tax. Employee-side and employer-side rates differ by sector. Salaried employees have most obligations handled by monthly employer withholding.

How does corporate tax work?

Azerbaijan's corporate income tax (CIT) is 20% flat on Azerbaijani-source taxable profit. Special zones offer significantly lower rates for qualifying entities.

Withholding tax on dividends paid to non-residents is 10% (treaty rates apply). Royalties and technical services carry a 14% default WHT. Interest carries a 10% default. Tax losses carry forward for 5 years. Pillar Two has not yet been formally transposed; in-scope MNE groups should monitor STS legislative releases.

Oil, gas, and mining companies operate under Production Sharing Agreements (PSAs) that largely override the standard CIT framework. PSA provisions are negotiated bilaterally with SOCAR and the government.

What about EDV and indirect taxes?

EDV (Elave Deyar Vergisi) is Azerbaijan's VAT. The standard rate is 18% under the Tax Code. Electronic invoicing has been mandatory for EDV-registered businesses since 2017.

The EDV registration threshold is AZN 200,000 annual turnover. Reverse-charge applies to imported services. Foreign suppliers providing B2C cross-border digital services are subject to EDV registration requirements. Excise tax applies to alcohol, tobacco, fuel, and specified other goods.

How are cryptoassets taxed?

Azerbaijan has no dedicated cryptoasset tax framework as of 2026. The Central Bank of Azerbaijan positions cryptoassets as not legal tender under its advisory guidance.

What is the treaty network?

Azerbaijan maintains approximately 55 active bilateral double tax treaties. The network covers major CIS states, EU members, Asia, and the Middle East. Azerbaijan signed the OECD Multilateral Instrument (MLI) on 7 June 2017 with successive ratification steps; MLI modifications including the Principal Purpose Test (PPT) anti-abuse rule are in force for many treaty partners.

Azerbaijan also operates under the CIS Multilateral Convention, which provides baseline treaty coverage among former Soviet states. The CRS framework has been progressively adopted, expanding automatic exchange of financial account data.

Where does Azerbaijan sit regionally?

Azerbaijan anchors the South Caucasus / CIS tax cohort. The region mixes post-Soviet progressive PIT systems with energy-state fiscal structures. The wider cohort spans five distinct archetypes:

Currency framework: the Manat (AZN)

Azerbaijan's currency is the Manat (AZN, ISO 4217). Since the 2015 devaluation, the Central Bank of Azerbaijan (CBA) has managed the Manat within a narrow de-facto peg against the US Dollar at approximately AZN 1.70 per USD.

Petroleum tax regime: PSAs override standard CIT

Oil, gas, and mining companies in Azerbaijan generally operate outside the standard Tax Code framework. Production Sharing Agreements (PSAs) negotiated with the government and SOCAR (the State Oil Company of Azerbaijan Republic) define a separate fiscal regime.

Companies entering Azerbaijan in energy-adjacent sectors should determine early whether their activities fall under the standard Tax Code or a PSA. The distinction affects tax rates, reporting timelines, and audit exposure.

Common pitfalls for foreigners

Several recurring issues trip up foreign individuals and companies operating in Azerbaijan:

When should an Azerbaijani situation call for a tax pro?

Some situations are manageable through the STS e-Tax portal. Others carry enough complexity that professional guidance is warranted:

• Income falls under the PSA framework (oil, gas, or mining operations in Azerbaijan)
• Cross-border income involving one of Azerbaijan's ~55 treaty partners — withholding rate determination requires the bilateral treaty text
• Qualifying for or maintaining Alat FEZ or Hi-Tech Park 0% CIT status
• Businesses approaching or crossing the AZN 200,000 simplified-tax turnover threshold
• Transfer pricing documentation for transactions with related parties under the Tax Code TP rules
• STS audit notice, assessment letter, or back-tax demand received
• Dual-residency situation involving Azerbaijan and a CIS or neighbouring state
• Crypto or digital-asset income where STS classification is uncertain
• Setting up an entity where the PSA vs standard CIT distinction is unresolved

The 8 firms listed on this page include the Big Four and leading regional firms active in Baku. All are regulated by the Chamber of Auditors of Azerbaijan.

This page is general information. It is not personal guidance for any specific situation. Tax rules change. Always verify current figures on the STS website at taxes.gov.az or with a licensed Azerbaijani practitioner before filing.