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Azerbaijan may introduce unified tax on salary

Business Materials 25 May 2018 13:09 (UTC +04:00)
Azerbaijan may introduce a unified tax on salary
Azerbaijan may introduce unified tax on salary

Baku, Azerbaijan, May 25

By Anvar Mammadov - Trend:

Azerbaijan may introduce a unified tax on salary, Taxes Minister Mikayil Jabbarov said May 25 at a conference dedicated to the Entrepreneurs’ Day.

This issue is being discussed as part of amendments to Azerbaijan’s Tax Code, he added.

“This issue is very important for all taxpayers,” Jabbarov said. “This step is aimed at reducing the tax burden and facilitating the taxation of salaries. The unified tax will be applied to salary and its rate will be substantially lower than that in the current legislation.”

The minister noted that this step will also have an impact on the fight against informal employment.

“This reform helps to reduce the level of informal employment, and stimulates the declaration of real salaries,” Jabbarov said.

Presently, the maximum income tax rate in Azerbaijan is 25 percent, and the maximum limit of monthly income taxed at a rate of 14 percent is 2,500 manats. At the same time, the annual income of individuals (not engaged in entrepreneurial activity) taxed at a rate of 14 percent is 30,000 manats.

If the monthly salary exceeds 2,500 manats, the income tax is calculated as follows: 350 manats (14 percent tax on 2,500 manats) plus 25 percent tax levied on the amount exceeding 2,500 manats. The annual income exceeding 30,000 manats is taxed as follows: 4,200 manats (14 percent tax on 30,000 manats) plus 25 percent tax levied on the amount exceeding 30,000 manats.

This is while a 20 percent tax is levied on taxable income of individuals engaged in entrepreneurial activity without the creation of a legal entity.

(1.7 manats = 1 USD on May 25)

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