Azerbaijan

Capital gains

There is no separate capital gains taxation in Azerbaijan. Proceeds from the disposal of capital assets are included in ordinary taxable income.

Dividend income

Effective from 1 January 2024, dividends paid by a resident enterprise are taxed at the source of payment at the rate of 5%. Consequently, such dividends received by Azerbaijan legal entities (being profit taxpayers) are not subject to profit tax in Azerbaijan.

Interest income

Azerbaijani source interests paid by a resident or a non-resident’s PE, or on behalf of such establishment, shall be taxed at the source of payment at a rate of 10%.

Interest amounts received by local legal entities are subject to profit tax, and any tax withheld could be credited against due profit tax.

Royalty income

Royalty received by non-residents from an Azerbaijani resident and PE of a non-resident in Azerbaijan is taxed at the source of payment at the rate of 14%.

Royalty income received by Azerbaijan tax resident legal entities is subject to profit tax.

Foreign income

If an enterprise is considered as a CFC, its profit shall be taxed in the Republic of Azerbaijan (see the Group taxation section).

Any payment made to a low-tax jurisdiction is subject to withholding tax (WHT) at 10%.

A list of low-tax jurisdictions is approved by the presidential decree.

List of Countries and Territories with Preferential Taxation:

1. Andorra
2. Anguilla
3. Antigua and Barbuda
4. Aruba
5. The Bahamas
6. Barbados
7. Kingdom of Bahrain
8. Belize
9. Bermuda
10. British Virgin Islands
11. Brunei Darussalam
12. Jersey
13. Gibraltar
14. Dominica
15. Fiji
16. Hong Kong (PRC)
17. Cabo Verde
18. Cayman Islands
19. Union of the Comoros
20. Cook Islands
21. Labuan (Malaysia)
22. Guernsey
23. Grenada
24. Liberia
25. Liechtenstein
26. Macao (PRC)
27. Maldives
28. Marshall Islands
29. Mauritius
30. Isle of Man
31. Monaco
32. Montserrat
33. Nauru
34. Niue
35. Palau
36. Panama
37. Samoa
38. Saint Lucia
39. Saint Vincent and the Grenadines
40. Seychelles
41. Saint Kitts and Nevis
42. Thailand
43. Taiwan (PRC)
44. Turks and Caicos Islands
45. Trinidad and Tobago
46. Vanuatu
47. Virgin Islands (USA)