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Nazrin Abdul

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As of December 1, 2024, Azerbaijan's tax system continues to demonstrate growth in both individual taxpayers and registered commercial entities. According to recent data from the State Tax Service, the total number of registered taxpayers in Azerbaijan has risen by 5.5 % compared to the same period in 2023, reflecting positive trends in both the individual and corporate sectors.

Growth in individuals vs. legal entity taxpayers

As of December 1, 2024, Azerbaijan's total registered taxpayer base reached 1,590,659 individuals and legal entities. Notably, 87.1% of this figure comprised individual taxpayers, while 12.9% represented legal entities and other organizations. This breakdown highlights the dominance of individual taxpayers in Azerbaijan's tax system, though the number of legal entities has also shown substantial growth.

When compared to last year, the number of taxpayers increased by 5.5%, with individuals growing by 5.3% and legal entities by 7.2 %. This suggests a steady rise in both sectors, with the corporate sector seeing a more significant expansion. The share of legal entities in the total taxpayers pool remains stable at 12.9 %, showing a consistent proportion relative to individual taxpayers.

Rise in commercial entities and digital registration trends

The number of commercial entities in Azerbaijan has witnessed an upward trend. As of December 1, the total number of registered commercial entities stood at 188,877, reflecting a 7.9% increase from the previous year. This growth indicates a thriving business environment, with more entrepreneurs establishing legal entities to operate in the Azerbaijani market.

The digitalization of state registration processes has significantly contributed to this growth. In the first eleven months of 2024, a total of 12,907 commercial entities underwent state registration, with a remarkable 89.2% of them being locally-invested enterprises. Foreign-invested entities accounted for 10.8% of the new registrations. Notably, 93.6% of local investment limited liability companies (LLCs) were registered electronically, with 10,713 entities using digital registration methods such as Asan Imza and FIN code. This shift towards digital platforms reflects the government's push for streamlined, efficient services that improve accessibility and reduce bureaucratic hurdles for business owners.

VAT payers and sectoral distribution

The number of active VAT payers within state-registered commercial entities has also increased. As of December 1, 39,847 commercial entities were registered as VAT payers, marking a 15.3% increase from the same period in 2023. VAT payers now make up 32.2% of the total commercial entity registrations, underscoring the importance of value-added tax in the country’s fiscal structure.

In terms of the forms of business entities, 91.4% of registered commercial entities are Limited Liability Companies (LLCs), which remains the most common form of business registration. A smaller proportion consists of joint-stock companies (1.2%), cooperatives (1.1%), and others.

Active commercial entities and economic activity

The number of active commercial entities as of December 1 was 123,682, marking a 10.9% increase compared to 2023. This indicates a robust and expanding business climate, with more companies maintaining operational status and contributing to the Azerbaijani economy.

The continued increase in active entities reflects an encouraging sign for economic growth, especially considering the growing number of VAT payers and the trend towards electronic business registration, which suggests a business environment that is both dynamic and adapting to modern trends.

In conclusion, Azerbaijan’s tax landscape in 2024 showcases positive growth across key sectors, particularly in the increase of registered individual taxpayers and the expansion of legal entities. The surge in the number of commercial entities, especially those opting for electronic registration, highlights the government's effective push for modernization in business practices.

The continued rise in the number of VAT payers and the steady increase in active commercial entities further reflect a thriving economy. These trends indicate that Azerbaijan is on a path toward greater economic diversification and improved tax compliance, which will be crucial in achieving sustainable growth and attracting further investment.

However, the high proportion of individual taxpayers compared to legal entities suggests that while the business environment is expanding, there is still potential for further development within the corporate sector. The coming years may see an even more substantial shift toward legal entity registrations, driven by ongoing government support and economic incentives.