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Azerbaijan

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Buying a European shelf company with VAT number

Whenever you need to start doing business immediately in a European country and you need a company with a VAT number, you don’t have to wait for the bureaucratic procedures.

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Paying Taxes in Azerbaijan

August 17, 2011, 3:36 pm
BridgeWest

Paying taxes in Azerbaijan

 

1. What is the corporate tax in Azerbaijan?

Any company registered in Azerbaijan is subject to a corporate tax rate of 20% for its worldwide income.  The entrepreneurs involved in the petroleum operations businesses (Production Sharing Agreements contractors) pay a corporate tax rate from 25% to 32%.

 

2. What is the VAT in Azerbaijan?

Usually, the registration for VAT in Azerbaijan must be performed if the annual turnover exceeds 150000 AZN. The standard VAT rate is 18%. As in other European systems, there are several goods or transactions that are exempt from VAT rate or that are zero-rated. The VAT must be paid no later than the 20th of each month.

 

3. How can the VAT be refunded in Azerbaijan?

The payment of VAT in Azerbaijan is done only electronically, therefore the invoices, together with an application form for a VAT refund must be submitted after every three months. The refund will be received in a 45 days period after the application.

4. What is the dividend tax in Azerbaijan?

The dividend tax rate in Azerbaijan is 10%, unless there is a tax treaty that stipulates a reduced rate.

 

5. What is the tax rates applied on other payments?

The interests paid to a non-resident are taxed with 10%, while the royalties are taxed with a tax rate of 14%.

Besides the above, the technical services are taxed with a 10% withholding tax.

The branches must pay for the net profits remitted to the parent company a 10% withholding tax.

 

6. Are there any incentives for foreign investors in Azerbaijan?

The law regarding foreign investment in Azerbaijan has been changing in order to meet the government’s plan to encourage foreign investment. Therefore, there has been introduced the protection against nationalization or for profit repatriation. Basically, the most businesses regard oil deals. It is expected to be introduced in the law other aspects to attract foreign investment, such as tax deductions or other financial incentives. Other incentives are granted by the double tax treaties signed with the foreign countries which offer the exemption or credit of the corporate tax and smaller and even exempt withholding taxes on dividends, interests and royalties. Also the foreign companies functioning as subcontractors of PSA don’t pay VAT and exempt from some custom duties. The following taxes are applied in the Special Economic Zones: 0.5% on profits, 0% VAT. Also custom exemptions are granted.

 

7. Why do I need a local accountant for my business in Azerbaijan?

A local accountant in Azerbaijan would know better how to operate in the system, especially in a business that would regard oil and gas. His or her experience in a similar company would be of a great use, making a local accountant a genuine asset for your business.




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Company Formation in Azerbaijan

Baku

BridgeWest provides company formation in Azerbaijan. Our assistance includes:

> drafting the Articles of Association (necessary for the company incorporation in Azerbaijan);
The Articles of Association required to ... [More]