Azerbaijan

Expiry of 7-Year Personal Tax Incentives for Non-Oil and Gas Sector in 2026

From 2019 to 2025, employees in the non-oil private sector enjoyed a full exemption from personal income tax up to AZN 8,000 per month; amounts exceeding AZN 8,000 were taxed at 14%.

Starting from 01 January 2026, the seven-year preferential tax regime will conclude. Employees will transition to the reinstated taxation framework, which introduces a gradual increase in income tax rates over a three-year period.

• Upto AZN 2,500/month: 3%
• AZN 2,501 – AZN 8,000/month: 75 AZN + 10% of the amount exceeding AZN 2,500
• Above AZN 8,000/month: 625 AZN + 14% of the amount exceeding AZN 8,000

Future increases:

• 2027: 5% for the lowest bracket
• 2028 onward: 7% for the lowest bracket

Amendments to the Social Insurance Law introduce differentiated rates for high-income earners beginning from 01 January 2026:

Mandatory Social Insurance:

• Wages above AZN 8,000: combined rate drops from 25% to 21% (10% employee + 11% employer)
• Wages up to AZN 8,000: current structure remains (Employee: 3% on first AZN 200 + 10% on remainder; Employer: 22% on first AZN 200 + 15% on remainder)

Mandatory Health Insurance:

The threshold changes from AZN 8000 to AZN 2500. For wages above AZN 2,500, contribution falls from 4% to 1% (split equally between employee and employer), (Salary−2,500)×0.5%+50 AZN.

Unemployment Insurance:

No change; remains at 1% total