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Procedure for taxation of interest on savings is changes in Azerbaijan

26 December 2023 16:39 (UTC+04:00)
Procedure for taxation of interest on savings is changes in Azerbaijan
Asim Aliyev
Asim Aliyev
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From next year the procedure of taxation of interest income on bank deposits will change in Azerbaijan, Azernews reports.

According to information, for 7 years, starting from February 1, 2016, annual interest income paid by local bank and branch of foreign bank operating in Azerbaijan on deposits of individuals was exempted from income tax. As the grace period ends on February 1 this year, from this date banks will tax interest income on deposits at source at the rate of 10 percent.

To reduce the tax burden on the public and encourage the placement of long-term savings, new changes have been introduced in the Tax Code depending on the amount of interest income on bank deposits. Thus, if a local bank and a branch of a foreign bank in Azerbaijan place a deposit of individuals in national currency in each bank (branch of a foreign bank in Azerbaijan) for a period of 18 months or more, and the amount of the deposit is paid not earlier than after 18 months, the full part of the interest income is exempt from tax for a period of 3 years.

In addition, the legislation has been amended to exempt from personal income tax up to 200 AZN of monthly interest income accrued on deposits in national currency in each bank. In other cases, interest income will be subject to withholding tax by banks at the rate of 10 percent. This will apply to both interest income in national and foreign currency.

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