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Azerbaijan changes procedure for calculating social insurance rates for business entities

5 May 2020 16:58 (UTC+04:00)
Azerbaijan changes procedure for calculating social insurance rates for business entities

By Ayya Lmahamad

Azerbaijani Parliament adopted in the first reading the amendments to the law "On Social Insurance" on May 1.

The amendment implies changing the procedure for calculating social insurance rates for business entities.

Currently, the rate on mandatory state social insurance for persons receiving income from activities not related to hired work is set depending on the sphere of activity. Thus, the rate of social insurance in the amount of 50 percent of the minimum monthly wage is applied to business entities in the construction and trade spheres, while in other spheres – 25 percent.

According to the new amendment proposed in the law, 100 percent of mandatory state social insurance at the rate of 50 percent of the minimum monthly wage will be paid in the construction industry and 25 percent of the minimum wage in other areas of entrepreneurial activity in Baku, 90 percent in Sumgayit and Ganja, 80 percent in other cities, 60 percent in settlements and administrative- territorial units which are centers of regions, and in rural areas – 50 percent.

Additionally, mandatory state social insurance for individuals is provided in the following order:

- for hosts at weddings, festivals and other events, as well as those involved in performing, dancing and other similar activities, will be calculated at 5 percent of the minimum monthly salary;

- for those carrying out activities in the sphere of individual photo, audio-video services (excluding photo studios) at the rate of 5 percent of the minimum monthly salary;

- for shoemakers – 3 percent of the minimum monthly salary;

- for those repairing watches, TV sets, refrigerators and other household appliances – 3 percent of the minimum monthly salary;

- for individuals who are housekeepers in private houses and apartments, caring for the sick, elderly and children, nannies, personal drivers, persons providing cleaning services in private households, gardeners, cooks, security guards and waiters – 3 percent of the minimum monthly salary;

- for individuals operating in calligraphy workshops – 3 percent of the minimum monthly salary;

- for individuals engaged in private hairdressing – 3 percent of the minimum monthly salary;

- for individuals engaged in private tailoring, 3 percent of the minimum monthly salary.

Compulsory state social insurance for individuals using agricultural land in their ownership (excluding those paying state compulsory social insurance, working in other areas), and able-bodied individuals of first and second disability group of family farming, as well as for each family member from 15 years, except for children under 18 with disabilities, depending on the land plot, will be calculated at the following rates of minimum monthly wage:

- up to 5 hectares - at the rate of 2 percent;

- 5 to 10 hectares - at the rate of 6 percent;

- over 10 hectares - at the rate of 10 percent.

According to the amendment, for taxpayers carrying out passenger and cargo transportation by vehicles and who received the distinguished service medal in the manner prescribed upon the Tax Code, social insurance payments will be at the rate of 6 percent of the minimum monthly wage.

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