SOME AMENDMENTS AND CHANGES TO THE TAX CODE OF THE REPUBLIC OF AZERBAIJAN FOR 2024
As every year, additions and amendments were envisaged in the Tax Code for the next year – 2024. The expected changes will affect, in particular, financial and capital markets, healthcare, agriculture, tourism, transport and other general issues. We would like to highlight the most important draft changes:
- The time the payment is received in the VAT deposit account shall also be treated as VATable transactions;
- The criteria of determination of risky taxpayers will be reduced as well as procedure and conditions of removal from the list of risky taxpayers will be determined.
- The withholding tax rate for dividends paid by the resident enterprise will be reduced (to 5%);
- The tax benefits for the agricultural sector, to be expired in 2024, will be extended further for additional 3 years;
- The norms and procedure for deduction from income the representation expenses, housing and food expenses related to employees, as well as provision of certain products and other equivalent goods provided to workers working in harmful and other severe conditions will be determined.
- The provision the profit tax exemption amount related to the payments of social nature transferred to the special funds and other organizations that operate in the field of science, education, health, sports and culture that meet certain criteria, will be increased (to 15%);
- The mortgaged property and land taken by credit organizations in exchange for outstanding debt will be exempted from property and land tax, respectively, within 2 years of their balance;
- Banks recognized as bankrupt will have the right to treat special reserves as tax deductible expenses (to be approved by the Cabinet of Ministers);
- Certain goods (with the exception of goods specified in article 3.5 of Law «On non-cash settlements», as well as real estate, automobile transport and movable property) purchased from not registered individuals supported by purchase orders or purchase of goods supported by cash cheques (receipt) will be treated as deductible expenses from income at the rate of 2% of the highest amount of the taxpayer's income or expenses for each year.
- Repair expenses of fixed assets that are not on the lessee's balance sheet and not offset by rental fees (or expenses not reimbursed by the lessor) will be deducted from income by amortization in proportionally amounts to years during the term of the contract, but not less than 5 years.
- Exemption from VAT on the import of fixed assets that are the object of a leasing contract will be determined;
- Persons engaged in cargo transportation by vehicles owned or used by them, can no longer be the simplified taxpayers.
- The amount of truck repair expenses for taxation purposes will be increased to 8%.
We would like to emphasize that the above is only a draft and some other additions or revisions could be made.
Company (LLC) registration in Azerbaijan (Innovation in registration of an LLC)
As EKVITA, we provide services in multiple areas of law (corporate, labor, migration, tax, litigation, etc.), as well as accounting, audit, business development and accompany our clients starting from early stages of their businesses. In this regard, putting it simply, I would like to speak about “opening the company”. That is, what is the most appropriate organizational form for starting a business in Azerbaijan, its advantages, necessary procedures in the registration process and etc. As you know, there are several organizational forms for the establishment of a company in the legislation. However, today I would like to tell you about the Limited Liability Company (LLC), which is the most acceptable and simple one among the rest in terms of procedural and legal requirements. If we refer to the definition of LLC – a limited liability company means company established by one or more persons (natural persons and (or) legal entity), the charter capital of which is divided into shares, the sizes of which are specified by the charter. As can be seen from mentioned definition, the legislation does not set limits regarding the number of founders of the LLC. In other words, the founder can be one or more persons, including a foreign citizen. It should be noted that in the case of foreign citizens, the legislative or documentation requirements are the same as for Azerbaijani citizens, i.e. there are no additional or special requirements. Another benefit of the LLC is the absence of any restrictions regarding its charter capital in the legislation. In other words, there is no minimum or maximum limit, the charter capital may be settled in any amount. Therefore, in many cases, when establishing the LLC, the charter capital is formed in the amount of 10-100 manats. It also should be noted that the registration process of the LLC is notable for its simplicity, and it would be appropriate to emphasize the innovative policy pursued by the Ministry of Taxes in this sphere. Thanks to it, Azerbaijan has established itself in 9th place in terms of the “Starting a Business” indicator among 190 countries this year, according to the annual Doing Business Report of the World Bank.Powered by Froala Editor
EKVITA Legal Updates
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EKVITA December Legal Updates
Legal Act: Law on Amendments to the Law on Deposit InsuranceLegal Act: Law on Amendments to the Law on Full Deposit InsuranceLegal Act: Decree on Amendments to the Procedure for the Formation, Management and Use of the Fund to Support the Fight Against CoronavirusLegal Act: Law on Amendments to the Code of Administrative OffensesLegal Act: Law on Amendments to the Law on MediationLegal Act: Order on measures for the implementation of a pilot project for the construction of a wind farm with a capacity of 240 MWLegal Act: Law on the subsistence minimum in the Republic of Azerbaijan for 2021Legal Act: Law on Amendments to the Law on Environmental ProtectionLegal Act: Law on Amendments to the Labor CodePowered by Froala Editor