Azerbaijan

Organisation for Economic Co-operation and Development’s (OECD’s)/G20’s Inclusive Framework on Base Erosion and Profit Shifting (BEPS)

In December 2022, Azerbaijan joined the OECD’s/G20’s Inclusive Framework on BEPS.

By joining the OECD’s/G20’s Inclusive Framework on BEPS, Azerbaijan, together with another 135 countries and jurisdictions, has taken on the commitment to implement 15 measures to tackle tax avoidance, improve the consistency of international tax rules, and ensure a more transparent tax environment.

Some of the Action Plans have already been fully or partially adopted into Azerbaijan’s tax legislation, such as controlled foreign company (CFC), permanent establishment (PE), transfer pricing, and country-by-country (CbC) reporting provisions.

Through joining the OECD’s/G20’s Inclusive Framework on BEPS, Azerbaijan has committed to addressing tax challenges arising from the digitalisation and globalisation of the economy by joining a two-pillar plan to reform the international taxation rules to make multinational enterprises pay a fair share of tax wherever they operate.

New tax incentives

Beginning from 2023, a new tax incentives regime has been created for the legal entities and sole entrepreneurs operating in the liberated territories.

Exemptions for IT companies

Companies involved in system integration, software preparation, and development activities (so-called ‘IT companies’), beginning from 2023, can benefit from certain profit tax exemptions.