Review of construction sector in Azerbaijan (January-February 2014)

Azerbaijan has changed the conditions of real estate sale. This applies both to the taxation of income from the sale of property and restrictions on the sale of land plots.

According to Article 102.1.9 of the Tax Code of Azerbaijan, the income from the sale of real estate of the taxpayer, which was the place of residence for a period of more than three years, is exempt from income tax.

In other words, those willing to sell housing during three years [since its acquisition] will have to pay an income tax on the difference between buying and selling. The income tax rates in Azerbaijan are as follows:

The amount of annual taxable income

Tax sum

up to 30000 manat

14 percent

over 30000 manat

4200 manat + 25 percent of the sum exceeding 30000 manat

In case of having the second or third housing besides the place of residence, an income tax during the sale is paid regardless of the term of their acquisition.

Moreover, in case of increasing the cost of the housing over 120,000 manat [in accordance with the purchase/sale contract], the VAT payment [18 percent] is envisaged. A three-year grace period is not applied.

At the same time, the sale of a non-residential area is considered an entrepreneurial activity for legal and physical entities. According to the provisions of Chapter XI of the Tax Code, the income obtained from the sale of real estate is subject to VAT and income tax.

However, the individuals who not registered as VAT payers and having the volume of taxable transactions during any month (months) of consecutive 12-month period in the amount of 120,000 manat and less, are entitled to pay a simplified tax. The amount of the simplified tax is calculated by applying the rate of four percent in Baku and two percent - in other regions.

If the volume of taxable transactions during any month of the consecutive 12-month period exceeds 120,000 manat (except those specified in Articles 218.1.1.1 and 218.1.1.3 of the Tax Code), the entrepreneurs must apply for registration for VAT purposes within 10 days from the date specified in Article 157.3 .1 of the code.

The taxation of real estate has started since 2014, but the tax authorities have begun applying this provision since 2015.The construction work increased by 3.5 percent and hit 1.007 billion AZN in Azerbaijan in January-February 2015 compared to the same period of 2014, according to the Azerbaijani State Statistics Committee.

Some 63.1 percent of the total volume of construction work accounted for primary construction, reconstruction and expansion, 18.2 percent - overhaul, 6 percent - current repair and 12.7 percent - other construction work.

Commissioned:

Jan.-Feb. 2015

Compared to Jan.-Feb. 2014

residential buildings, total area, thousand sq. m

262,9

118,0

Hospitals

90

-

Secondary schools, educational facilities

150

55,6

Pre-school educational institutions, facilities

1697,5

100,5

Funds directed to fixed capital, in mln AZN

1282,3

137,3

Including:
- for the construction of production facilities

415,2

84,0

- for the construction of facilities in service sector

1247,0

113,6

According to the Azerbaijani State Statistics Committee, around 141,700 square meters of housing were commissioned in February compared to 102,400 square meters in the same period of 2014.

Around 262,900 square meters of housing have been commissioned since early 2015 or by 18 percent more than in the same period of 2014.

Primary and secondary housing markets

According to the MBA Group consulting company, the price on the real estate market of Baku increased by about two percent in January-February 2015. In January 2015, the property prices slightly declined by 0.18 percent [compared to January 2014]. As for the primary and secondary housing markets, a 0.3 percent decrease was observed. But in February, the prices began increasing. Thus, in general, the market growth hit 2.13 percent, while on primary and secondary housing - 2.1 percent.

Despite the activity on the real estate market reduced by 23 percent in January, the market revived in February. Compared to January, the activity on the real estate market increased by ten percent. There were more transactions on the real estate market in February than in January or March. First, January is the beginning of the year. Last year has not been summed up yet. The houses are often built or bought in February. But this year great activity is also partly connected with the change of the manat rate. A few buyers began to invest in real estate, so great activity was observed by late February.

Land market

According to "MBA Group" consulting company, the price on the land market of Baku increased by 5.15 percent in February 2015 compared to the same period of last year. In January 2015 the growth on this market amounted to only 0.6 percent.

The prices on the housing market of Baku are too high so most people can not buy apartments in the capital. Over the past two years, many potential buyers have passed from the primary and secondary housing markets to the land market.

It is profitable to buy a small land plot and to build a one-storey or two-storey house for 60,000-70,000 manat than to pay a lot of money for an apartment. The most popular districts are Binagadi and Absheron districts. Land plots are often bought there, the expert said.

Rental market

Other situation is observed on the rental market. According to the MBA Group consulting company, the average price on rental housing in Baku reduced by 4.5 percent in February.

In January, the rental prices increased by 1.5 percent, but in February, its cost decreased by 4.5 percent compared to the same period of 2014. The beginning of the year, i.e. January-March is off-season months for rental housing. The revival is observed in the end of summer - August and September-October. The recession is mainly observed on the market in the first half of the year.

Construction material market

The companies engaged in building material production in Azerbaijan, produced goods worth 59.6 million AZN in January-February 2015, or 24 percent more than in the same period of 2014, according to the Azerbaijani State Statistics Committee's report.

During this period, Azerbaijan produced 375,500 metric tons of cement (a 14.9-percent increase versus the same period of 2014) and 32,800 metric tons of gypsum plaster (a 10-percent growth), the report said.

Azerbaijan also produced 2,600 metric tons of ready-mixed concrete (a 60.6 percent decrease), 38,100 metric tons of asphalt (a 9.8 percent decrease), 208,700 cubic meters of precast concrete building structures (a 35.9 percent growth), 1466,9 metric tons of processed marble, travertine, alabaster and items made of them (a 3.1 times decrease).

Seven injured in fire at Magellan Corpus Christi, Texas, tank farm
Seven injured in fire at Magellan Corpus Christi, Texas, tank farm
Trump urges Georgia governor to call special session of state legislature
Trump urges Georgia governor to call special session of state legislature
U.S. COVID-19 deaths top 280,000: Johns Hopkins University
U.S. COVID-19 deaths top 280,000: Johns Hopkins University
Loading Bars
Latest
Seven injured in fire at Magellan Corpus Christi, Texas, tank farm
Turkmenistan releases indicators of agro-industrial sector
Portugal to ease COVID-19 restrictions during Christmas, but not for New Year: PM
Trump urges Georgia governor to call special session of state legislature
U.S. COVID-19 deaths top 280,000: Johns Hopkins University
WHO reports over 645,000 new daily cases of COVID-19
Kia recalls 295,000 U.S. vehicles for fire risks
Moscow's death toll from confirmed COVID-19 cases rises by 72 to 9,349
23 dead, 1 rescued in China mine accident
Buy/sell operations at Iran Mercantile Exchange revealed
Joint statement from UK PM Johnson and EU's von der Leyen
Death toll from COVID-19 continues to rise as Turkey undergoes 1st weekend lockdown in months
Weekly review of Azerbaijani currency market
Gasoline and diesel imports to Georgia increase
Iran declares details of exports from Isfahan Province
Airport in Uzbekistan to buy gas equipment via tender
Students of Azerbaijan British College prepare report of post-occupation state of nature in Azerbaijani Kalbajar region
UK records another 15,539 coronavirus cases with 397 deaths
Violence erupts during Paris protest against police brutality
Remittance inflows from Azerbaijan to Georgia up
Iranian Energy Exchange announces products to be on sale on December 6
Azerbaijani, Russian FMs discuss 10 November statement for ceasefire in Karabakh
Children's becoming victims of war crimes is unacceptable - UNICEF
French photographer talks trip to Azerbaijani Kalbajar liberated from Armenian occupation (PHOTO/VIDEO)
Plan & Budget Organization reveals volume of oil to be sold by Iran next year
Armenian opposition demand Pashinyan's resignation before December 8
Kyrgyzstan allows entry of foreigners and stateless persons
Rouhani calls for broadening Iran-Thailand ties
US gov’t donates 26,000 PCR testing kits to Georgia
Effectiveness of Turkish-made weapons was proven during Karabakh hostilities - Turkish Defense Minister
5.3-magnitude quake hits 49 km SW of Gazipasa, Turkey
PM Johnson and EU chief seek to break Brexit impasse
Azerbaijan teaches a lesson how Nations are built to fight against enemies
U.S. sets record of 227,885 COVID-19 cases in one day: Johns Hopkins University
Azerbaijan names day of holding military parade on victory in Patriotic War (PHOTO/VIDEO)
Today flags with star and crescent embellishing Karabakh sky - Turkey's president
Bahar Azadi gold coin price continues to fall
BTK railway project plays important role for logistics dev't in Georgia
Uzbekneftegaz to buy casing pipes via tender
Demand for Turkish steel on Iran's construction market down
Azerbaijan extends COVID-19-related quarantine in some cities, districts
Azerbaijan confirms 4,323 new COVID-19 cases, 2,180 recoveries
Largest volume of metallurgical products falls on Uzbekistan’s Navoi region
Death toll from COVID-19 pandemic in Iran exceeds 50,000
Value of Iranian mining companies increases
Iran talks expenses on construction in Kohgiluyeh & Boyer-Ahmad Province
Preacher appointed to Khudavang monastery in Azerbaijan's Kalbajar
Azerbaijan presents first locally manufactured high-tech prostheses (PHOTO)
Azerenergy issues time framing to restore power plants in liberated Sugovushan (VIDEO)
Georgia reports new record-high 5,450 coronavirus cases
Russia, Kazakhstan reach agreements on anti-COVID vaccine production
Volume of trade turnover in Turkmenistan increases
Uzbekistan reveals its COVID-19 data for December 5
Armenians destroyed all historical, religious items in churches of Azerbaijan - Albano-Udi Orthodox community
Albanian-Udi Christian Community returns to Khudavang monastery in Kalbajar (VIDEO)
Oil market still to see some bumpy months
Indicators of Turkmenistan’s construction, industrial sector increase
Azerbaijani oil prices continue to rise
Azerbaijan reduces imports of Turkish-made carpets
Iran announces date for launch of Ardabil-Mianeh railway
Azerbaijan gives martyr status to civilians killed due to Armenia's attacks on peaceful cities
Azerbaijani Bar Association appeals to int'l organizations regarding Armenian aggression
UK Maritime Trade Operations says aware of attack on vessel off Yemen coast
Number of enterprises put into operation in Iran's Kermanshah Province soars
Special offer for volunteers!
Iran discloses details of exports from Fars Province
Baku - leading capital of CIS in terms of economic activity index - Gazprombank
Data of Turkmen transport, communication sector revealed
Azerbaijani banking sector's overall profit drops
Turkmenistan exceeds plan for oil and gas condensate production
Iranian currency rates for December 5
Loan portfolio of trade, services sector in Azerbaijan grows
Кazakhstan Electricity Grid Operating Company opens tender for vehicle maintenance
Foreign investment in Iran increases
GDP growth observed in Turkmenistan
LNG share in Turkey’s natural gas imports reaches 43% in H1 this year
U.S. not extending TikTok divestiture deadline, but talks will continue
ADB allocates $2.5 mln to support Georgia amid pandemic
Italy's retail sales climb higher in October, pushed by demand for electronic equipment
4 regions in coronavirus red zone in Kazakhstan
Iran's UNESCO envoy urges condemnation of assassination of Iranian scientist
France's daily COVID-19 infections continue to fall
Embassy of Japan in Georgia reveals volume of trade turnover between two countries
Arab League welcomes Kuwait's efforts to "heal Arab rifts"
World Bank grants Morocco 400-mln-USD loan
Azerbaijan slows down imports of Turkish-made leather goods
Additional costs could add up to 2.8 billion dollars, Tokyo 2020 says
Trump to withdraw most troops from Somalia as part of global pullback
UK, EU call in leaders to save trade talks
Palestinian teen killed by Israeli forces in protest
Azerbaijan discloses volume of liabilities in banking sector
Heydar Aliyev Center, Flame Towers and Baku Olympic Stadium illuminated with Azerbaijani flag (PHOTO)
NY Times publishes article on the fate of Ciraqli village during Karabakh conflict
South Africa's second largest crude refinery shutdown after blast
1st China-bound freight train departs on 12-day journey from Istanbul
Chip shortages could slow automotive production, VW and suppliers say
Russia, India kick off joint naval drills in Indian Ocean
NCDC to study COVID-19 reinfection cases
Turkey reports over 32,736 new COVID-19 cases
Azerbaijan unveils funds value received by Armed Forces Relief Fund as of December 1
All news