Azerbaijan

Expiry of seven-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 (PIT) of up to 8,000 Azerbaijani manats (AZN) per month; amounts exceeding AZN 8,000 were taxed at 14%.

Starting from 1 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, as follows:

• Up to AZN 2,500/month: 3%.
• AZN 2,501 to 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 1 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 8,000 to AZN 2,500. 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.