Azerbaijan

Capital gains

There is no separate capital gains taxation in Azerbaijan. Proceeds from the disposal of capital assets are included in ordinary taxable income.

Dividend income

Effective from 1 January 2024, dividends paid by a resident enterprise are taxed at the source of payment at the rate of 5%. Consequently, such dividends received by Azerbaijan legal entities (being profit taxpayers) are not subject to profit tax in Azerbaijan.

Interest income

Azerbaijani source interests paid by a resident or a non-resident’s PE, or on behalf of such establishment, shall be taxed at the source of payment at a rate of 10%.

Interest amounts received by local legal entities are subject to profit tax, and any tax withheld could be credited against due profit tax.

Royalty income

Royalty received by non-residents from an Azerbaijani resident and PE of a non-resident in Azerbaijan is taxed at the source of payment at the rate of 14%.

Royalty income received by Azerbaijan tax resident legal entities is subject to profit tax.

Foreign income

If an enterprise is considered as a CFC, its profit shall be taxed in the Republic of Azerbaijan (see the Group taxation section).

Any payment made to a low-tax jurisdiction is subject to withholding tax (WHT) at 10%.

A list of low-tax jurisdictions is approved by the presidential decree. Please access the list (only in Azerbaijani) at:  https://e-qanun.az/framework/36016