Azernews.Az

By Leman Mammadova

Since January 2019, new income tax benefits have entered into force for individual entrepreneurs in Azerbaijan, Trend reports.

Benefits will be valid only for entrepreneurs engaged in retail trade. They will be exempt from income tax in the amount of 25 percent of the volume of non-cash sales within three years.

For example, the total income of an entrepreneur is 1,000 manats ($ 588), including 800 manats ($ 471) earned from non-cash sales, and the total expenditures amount to 700 manats ($ 412). As a result, there is an income of 300 manats ($ 176), and from this amount, excluding benefits, the entrepreneur must pay income tax of 60 manats ($ 35).

After applying benefits, the amount that the entrepreneur will have to pay as income tax will be 48 manats ($ 28).

Azerbaijan's tax legislation in undergoing major changes. New amendments to the Tax Code have already came into force in Azerbaijan as of January 1, 2019.

Amendments cover five directions: ensuring transparency of taxation, expansion of the taxation base, modernization of tax administration, supporting entrepreneurship development which is important for both economic development and taxpayers' rights, the application of tax incentives to increase economic efficiency.

New amendments mainly aimed at entrepreneurship development in Azerbaijan, and envisage not to increase the burden of the taxation base, but to increase the taxation of those operating in the "shadow".

According to the amendments to tax legislation, startups in Azerbaijan will be exempt from profit tax and income tax for three years starting from January 1, 2019.

In addition, employees in Azerbaijan’s private sector who are not involved in the oil and gas sector will be exempt from income tax for a period of seven years, according to the amendments.

Presently, the income tax rate is 14 percent from income of up to 2,500 manats ($ 1 471) per month. Above this amount, the tax rate is 25 percent plus 350 manats ($ 205).

If an employee has two or more jobs, the income tax from each job will be calculated separately.

Meanwhile, the Ministry of Taxes has developed a calculator for salaries for 2019.

Moreover, microbusiness entities in Azerbaijan will pay profit tax and income tax after deducting benefits. As many as 75 percent of monthly income and profits of microbusiness entities will be exempt from the payment of the profit tax and income tax.

In addition, micro-entrepreneurs (startups) who received a special document confirming their innovative activities will be exempt from profit tax and income tax for a period of three years.

In Azerbaijan, microbusiness entities are companies with an annual income of up to 200,000 manats ($ 1 471) and a staff of up to ten people.

The draft amendments to the Tax Code also envisage the expansion of the list of individuals engaged in entrepreneurship - fixed taxpayers individually, including hairdressers, tailors and waiters. This is one of the privileges for small businesses. In addition, they will also be released from submitting a quarterly declaration to the tax authority.

It should be noted that the number of mobile tax inspections in Azerbaijan in 2018 has dropped three times compared to last year. A moratorium on business inspections is in effect in Azerbaijan until January 2021, but they do not apply to tax audits of companies with annual turnover exceeding 120,000 manats ($ 70 609).

New tax and customs benefits may be offered to residents of the High-Tech Park of Azerbaijan’s National Academy of Sciences (ANAS).

Recently, being ranked 28th, Azerbaijan significantly improved its position in 'Paying Taxes 2019' rating.

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