Azerbaijan

Corporate - Withholding taxes

Last reviewed - 11 February 2020

Income received from Azerbaijan sources not attributable to a PE of a non-resident in Azerbaijan is subject to WHT at the following rates:

  • Dividends paid by resident enterprises: 10%.
  • Interest paid by residents, PEs of non-residents, or on behalf of such PEs (except for interest paid to resident banks or to PEs of non-resident banks): 10%.
  • Rental fees for movable and immovable property: 14%.
  • Royalties: 14%.
  • Risk insurance or reinsurance payments: 4%.
  • Telecommunications or international transport services: 6%.
  • Other Azerbaijani-source income: 10%.
  • Payments to low-tax jurisdictions: 10%.

If a resident enterprise or a PE of a non-resident receives interest, royalties, or rental fees taxable at the source of payment in Azerbaijan, it is entitled to consider the tax deducted from the source of payment, provided that the documents supporting the tax deduction are in place.

Direct or indirect payments to a person in a country with a favourable tax regime are considered income from an Azerbaijani source and subject to 10% WHT. The list of countries concerned is determined annually (see Foreign income in the Income determination section for a link to the list).

Banks and the national operator of the postal service must deduct 10% WHT from funds transferred by residents to digital wallets, which refer to software to carry out electronic payments.

Tax treaties

The following chart contains the WHT rates that are applicable to dividend, interest, and royalty payments by Azerbaijan residents to non-residents under the tax treaties in force as of 1 January 2019. If the treaty rate is higher than the domestic rate, the latter is applicable.

Recipient WHT (%)
Dividends Interest (2) Royalties (3)
Individual companies Qualifying companies (1)
Non-treaty 10 10 10 14
Treaty:        
Austria 15 5/10 10 5/10
Belarus 15 15 10 10
Belgium 15 5/10 10 5/10
Bosnia and Herzegovina 10 10 0/10 10
Bulgaria 8 8 0/7 5/10
Canada 15 10 0/10 5/10
China (People's Republic) 10 10 10 10
Croatia 10 5 10 10
Czech Republic 8 8 5/10 10
Denmark 15 5 8 5/10
Estonia 10 5 10 10
Finland 10 5 0/10 5/10
France 10 10 10 5/10
Georgia 10 10 10 10
Germany 15 5 10 5/10
Greece 8 8 8 8
Hungary 8 8 0/8 8
Iran 10 10 10 10
Israel 15 15 10 5/10
Italy 10 10 10 5/10
Japan 15 15 10 10
Jordan 8 8 8 10
Kazakhstan 10 10 10 10
Korea 7 7 10 5/10
Kuwait 10 5 7 10
Latvia 10 5 10 5/10
Lithuania 10 5 10 10
Luxembourg 10 5 10 5/10
Macedonia 8 8 0/8 8
Malta 8 8 8 8
Moldova 15 8 10 10
Montenegro 10 10 0/10 10
Netherlands 10 5 0/10 5/10
Norway 15 10 10 10
Pakistan 10 10 10 10
Poland 10 10 10 10
Qatar 7 7 7 5
Romania 10 5 8 10
Russia 10 10 10 10
San Marino 10 5 10 5/10
Saudi Arabia 7 5 7 10
Serbia 10 10 10 10
Slovenia 8 8 8 5/10
Sweden 10 5 8 5/10
Switzerland 15 5 5/10 5/10
Tajikistan 10 10 10 10
Turkey 12 12 10 10
Ukraine 10 10 10 10
United Arab Emirates 10 10 7 5/10
United Kingdom 15 10 10 5/10
Uzbekistan 10 10 10 10
Vietnam 10 10 10 10

Notes

  1. The lower dividend rate applies if the qualifying company meets certain criteria (e.g. participation and capital holding criteria).
  2. The lower interest rate applies, inter alia, to interest paid by public bodies or to bank loans.
  3. The lower royalty rate applies to royalties for patents, designs or models, plans, secret formulas or processes, computer software, know-how, etc.

New rules on administration of DTTs are effective as of 1 July 2017. The following amendments are established:

  • Advance tax relief may be obtained for all type of income, including business (active income) if such income is not attributable to a PE in Azerbaijan. Previously, such relief might only be obtained for dividends, interest, royalties, and income from international shipments.
  • Applications may also be filed electronically along with a hard-copy submission. Previously, only hard-copy submission was possible.
  • No requirement to get respective DTT application approved by the overseas tax authorities. Only a tax residency certificate is required to be approved by the foreign tax authorities.
  • Tax office may also return the approved applications to the income payer (tax agents) in the online regime.

More detailed information about applicability of lower rates may be found in respective DTTs.