Temporary tax regime due to coronavirus pandemic
In June 2020, the Tax Code of Azerbaijan was amended by a new Chapter that introduced a temporary tax regime due to significant changes in economic conditions as a result of the spread of the coronavirus pandemic. The temporary tax regime was applicable beginning from 1 January 2020.
From 1 January 2020, for the period of one year, the following exemptions and privileges will be applied to taxpayers operated in the areas directly affected by the pandemic:
- Full amount on property and land taxes is exempted (100%).
- Profit (income) is exempted in the amount of 75%.
- 50% of the simplified tax amount for taxpayers engaged in catering and passenger transportation, which are payers of the simplified tax, is exempted.
- Reduction of the withholding tax (WHT) rate on real estate lease from individuals from 14% to 7%.
- Aircraft used by air carriers for passenger transport activities are exempt from property tax.
- Spoilage of food products purchased and prepared by taxpayers engaged in catering activities is not considered as a value-added taxable (VATable) operation.
- Exemption from current tax payments and issuance of certificates related to current tax payments for a period of one year.
- Extension of the deadline for payment of the last tax for 2019 until 1 September 2020.
- Extension of accrued profit (income) and property taxes for taxpayers who are not micro-business entities until 1 September of the current year and payment of accrued tax no later than 1 September 2019.
- Postponement of calculation of interest on unpaid taxes, compulsory state social insurance, and unemployment insurance premiums from 1 April 2020 to 1 January 2021.
Extension of the right to choose the simplified tax method for 2020 by persons engaged in public catering activities registered for VAT from 20 April to 1 September.
Areas of activity affected by the pandemic
- Domestic (inter-city and inter-district, intra-city and intra-district) passenger transport by road (including taxis).
- Activities of hotels and other hotel-type facilities as accommodation facilities.
- Tour operator and tour agent activities.
- Transportation and (or) delivery of goods on order, including food, food, and non-food items from sellers to buyers.
- Public catering activities.
- Organisation of exhibitions, stage, recreation and entertainment (game), cinema, theatre, museum, and concert halls.
- Activities of sports and health facilities.
- Activities of training (education) and professional development courses, out-of-school educational institutions, and psychological centres.
- Other areas of activity that are fully or partially restricted by the Cabinet of Ministers in order to ensure the health and safety of the population in connection with the spread of the coronavirus pandemic.