Azerbaijan

Overview

Last reviewed - 10 February 2021

Azerbaijan is located on the south-eastern frontiers of the European continent and serves as the geographical bridge between Europe and Central Asia; it is also a convenient economic and energy route from Northern Europe to the Middle East. Azerbaijan is bounded by the Caspian Sea to the east, Russia to the north, Georgia to the northwest, Armenia to the west, and Iran to the south. It has a presidential republic form of government, with Baku as the capital. The official currency in Azerbaijan is the Azerbaijani manat (AZN), and the official language is Azerbaijani.

With a history of industrial development of more than 100 years, Azerbaijan proved to be an economic powerhouse in the Southern Caucasus throughout the turmoil of the Soviet Union collapse in the early 1990s. After Azerbaijan regained its independence in 1991, the Republic conducted a lengthy period of transition from a Soviet-style command economy into a modern, market-driven economy, concentrated on the production and export of its hydrocarbon resources.

Azerbaijan is a member of the United Nations (UN), the Organization for Security and Co-operation in Europe (OSCE), the North Atlantic Treaty Organization's (NATO) Partnership for Peace, the Euro-Atlantic Partnership, the World Health Organization (WHO), GUAM Organization for Democracy and Economic Development, the European Bank for Reconstruction and Development (EBRD), the Council of Europe, the International Monetary Fund (IMF), and the World Bank. Azerbaijan holds observer status in the Community of Democracies and in the World Trade Organization (WTO). Azerbaijan supports the demilitarisation of the Caspian Sea basin and the preservation of the Southern Caucasus as a nuclear-free zone. In October 2011, Azerbaijan, for the first time in the history of the country, was elected a member to the UN Security Council.

Azerbaijan is a leading exporter of oil and natural gas. Oil production under the first production sharing agreements (PSAs) with the Azerbaijan International Operating Company (AIOC) began in November 1997.

Meanwhile, in spite of the fact that oil remains a key driver of gross domestic product (GDP), the non-oil sector is rapidly growing in Azerbaijan. Thus, non-oil growth was 11.1% in 2018 in comparison with 2017 and was largely driven by information technology (IT) and telecommunication, non-oil industrial production, agriculture, and transportation.

On 21 February 2015, Azerbaijan’s Central Bank devalued the manat 33.5% against the United States dollar and 30% against the euro. The highest appreciation of the real exchange rate of Azerbaijan’s national currency since the devaluation of 2015 occurred in the last 10 months of 2020. In 2020, the real exchange rate of the manat in the non-oil sector rose by 6.6%.    

PwC Azerbaijan's Tax and Legal practice is the largest team in Azerbaijan, consisting of 31 tax specialists and lawyers at the top of their profession. We are organised around different aspects of tax and law, reflecting the need for in-depth specialist knowledge in each key area. We recognise that, in many cases, knowledge of tax and law must be embedded in a thorough understanding of the industry. We have therefore developed specialised teams along industry lines, allowing us to quickly assemble a team with the required tax and legal skills, as well as the relevant industry knowledge. As a result, we speak our clients’ language and can meet their requirements through understanding their overall business situation, not just narrow individual issues.

PwC Azerbaijan offers a wide range of tax and legal services, including:

  • International tax planning.
  • Tax compliance services.
  • Accounting services.
  • Payroll services.
  • International Assignment Services.
  • Customisation of strategy and operations in new economic environment - tax considerations.
  • Tax and legal aspects of mergers and acquisitions (M&A).
  • Transfer pricing.
  • Indirect tax and customs.
  • Personal income tax management and reporting.
  • Developing an efficient tax function.
  • Corporate and company law.
  • Contract law and legal drafting.
  • Equity funding and foreign lending.
  • Intellectual property (IP), anti-trust, and consumer law.
  • Employment and immigration law.
  • Dispute settlement, arbitration, and mediation.
  • Construction and real property law.
  • Anti-trust and competition.
  • Licensing.
  • Banking and finance.
  • Special tax regimes, production sharing contracts, and tax protocols.
  • Tax risk management.
  • IFRS transition and tax adjustments.
  • Company establishments and dissolution.
  • Tax structuring. 
  • Security agreements.

Quick rates and dates

Corporate income tax (CIT) rates
Headline CIT rate (%)

20

Corporate income tax (CIT) due dates
CIT return due date

31 March

CIT final payment due date

31 March

CIT estimated payment due dates

Advance quarterly tax payments by 15th day of the month following the end of the quarter.

Personal income tax (PIT) rates
Headline PIT rate (%)

25

Personal income tax (PIT) due dates
PIT return due date

31 March

PIT final payment due date

31 March

PIT estimated payment due dates

31 March

Value-added tax (VAT) rates
Standard VAT rate (%)

18

Withholding tax (WHT) rates
WHT rates (%) (Div/Int/Roy)

Resident: 10 / 10 / 14;

Non-resident: 10 / 10 / 14

Capital gains tax (CGT) rates
Corporate capital gains tax rate (%)

Capital gains are subject to the normal profit tax rate.

Individual capital gains tax rate (%)

25

Net wealth/worth tax rates
Headline net wealth/worth tax rate (%)

NP

Inheritance and gift tax rates
Inheritance tax rate (%)

Exempted if received by immediate family members; otherwise, 25%.

Gift tax rate (%)

Exempted if received by immediate family members; otherwise, 25%.

NA stands for Not Applicable (i.e. the territory does not have the indicated tax or requirement)

NP stands for Not Provided (i.e. the information is not currently provided in this chart)

All information in this chart is up to date as of the 'Last reviewed' date on the corresponding territory Overview page. This chart has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this chart without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this chart, and, to the extent permitted by law, PwC does not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this chart or for any decision based on it.