• Tax regime gets softer for the affected businesses

Tax regime gets softer for the affected businesses

Yunis Salayev , Managing Partner |

04 June 2020

As informed earlier draft law proposed by Government of the Republic of Azerbaijan has been enacted. On 2 June 2020 Milli Majlis made amendments to the Tax Code of the Republic of Azerbaijan with the aim to introduce long awaited tax discounts and holidays for businesses affected by the COVID-19 pandemic.

According to the amendments businesses affected by the pandemic are exempted from property and land taxes and depending on the chosen taxation method such businesses will be provided with additional tax discounts for one year starting from 1 January 2020, which include the following:

  • For taxpayers operating under corporate income tax (profit tax) regime – 75% of the profit.
  • For payers of simplified tax who operate in public catering and passenger transportation sectors – 50%.

Additional measures include:

  • Decrease of WHT rate on real estate lease for individuals – from 14% to 7%;
  • Exemption from quarterly profit tax advance payments and related reporting for 1 year;

Deadline extensions:

  • Payment of 2019 taxes – until 1 September 2020;
  • Payment of income and property taxes for 2019 for taxpayers who are not considered as micro-businesses – until 1 September 2020;
  • Right to choose the simplified tax method for 2020 by those who operate in public catering sector and are registered for VAT – until 1 September 2020;
  • Postponement of calculation of interest for unpaid taxes, compulsory state social insurance and unemployment insurance premiums – until 1 January 2021.

Draft legislation also considers special discounts for micro-businesses such as 50% reduction to simplified taxes (from 2% to 1%), extension of deadlines for declaring and paying simplified, profit and property taxes for first and second quarter of 2020 until 1 September 2020.

In addition, expenses made by any taxpayer with the aim to take necessary preventive measures (including disinfection) in order to prevent the epidemic and protect the population shall be deductible from income without any restriction. Also, certain types of products necessary for food and medical needs of the population, and import of similar products shall be temporarily exempt from VAT.