Employees in Azerbaijan to be exempt from income tax
By Narmina Mammadova
The new 2019 brings many changes to the country's legislation. Many amendments to existing laws have already been adopted in various fields. One of them is the amendment of tax legislation.
Working in the private sector (with the exception of the oil and gas sector) employees will be exempted from income tax for a period of seven years in Azerbaijan from January 1, 2019.
This is provided for by amendments to tax legislation, approved on the eve by Azerbaijani President Ilham Aliyev’s decree.
The exemption applies to a monthly income of up to 8,000 manats. If the monthly income exceeds 8,000 manats, the income tax rate will be 14 percent.
At present, the income tax rate is 14 percent if the income amounts to 2,500 manats per month. Above this amount, the tax rate is 25 percent + 350 manats.
If an employee has two or more jobs, the income tax is calculated separately.
The non-taxable income tax amount also increases from 173 to 200 manats. Unlike the previous amendment, this will apply to all sectors, including the oil and gas sector.
New amendments to the Tax Code come into force in Azerbaijan from January 1, 2019. They provide for new benefits and exemptions, as well as expanding the tax base, introducing new generation cash registers, improving tax administration and other measures.
According to government estimates, these reforms may lead to some reduction in revenues to the state budget under the item “income tax” at the initial stage. However, in subsequent years, as economic activity grows in the country and the share of the “shadow economy” decreases, due to strengthening tax administration, there will be an increase in budget revenues for this type of tax.
In the state budget for 2019 income tax revenues are provided in the amount of 880 million manats. For 2018, revenues for this type are provided in the amount of 1.196 billion manats.
Earlier it became known that the salaries of unemployed persons who found a job, will be subsidized next year.
This will allow entrepreneurs to expand and develop their companies.
There is also an active struggle against informal employment in Azerbaijan.
As a result of the work carried out in this direction, the number of people working on the basis of labor contracts has increased by 100,000.
In addition, more than 2 million jobs were opened in Azerbaijan, including 1.6 million permanent jobs, and nominal salary increased by 6.6 times in past 10 years.
During the reporting period, the minimum salary in Azerbaijan has increased by 5.2 times.
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