Republic of Azerbaijan - Profit Tax

February 2006

Source: Ministry of Taxes of the Republic of Azerbaijan

The profit of a taxpayer is a difference between the income (except for the income that is exempt from tax) and expense deducted from income.
The tax paid from profit is defined as profit tax.

Taxpayers

Resident and non-resident enterprises in the Republic of Azerbaijan are payers of profit tax. Any foreign person who is not a physical person is treated as an enterprise that shall pay a profit tax, unless it proves that it is a joint ownership pursuant.
Branch-offices, structural divisions and other separate units of the legal entity established in accordance with the legislation of the Republic of Azerbaijan owning net balance, current or other accounts are not considered as profit taxpayers.

Taxable base

The profit of a resident-enterprise received both in the Republic of Azerbaijan and outside is a taxable base.
The taxable base for non-resident enterprise is a profit generated only from the sources in the Republic of Azerbaijan.
A non-resident enterprise operating in the Republic of Azerbaijan through its permanent establishment pays taxes on its profit connected with permanent establishment.
A non-resident enterprise operating in the Republic of Azerbaijan through its permanent establishment shall pay tax on its profit, i.e. on gross income generated from Azeri sources in relationship with the permanent establishment minus the amount of expenses incurred with respect to such income.
The gross income of a non-resident enterprise not connected with the permanent establishment is taxed at the source of payment without expenses being deducted.
Gross income of a non-resident enterprise received during a calendar year from an Azerbaijani source, not connected with the permanent establishment and generated through the transfer of property is taxed after the deduction of the expenses which relate to such income.

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