Azerbaijan Capital Gains Tax Guide 2026

Overview — Capital Gains in Azerbaijan

Under the Azerbaijani Tax Code, capital gains are generally included in the taxable income of the taxpayer and subject to the ordinary income tax rates. There is no distinct capital gains tax regime with a separate rate or holding period differentiation. For individuals, capital gains are aggregated with other income (salary, business, rental) and taxed at the progressive IIT rates of 14% (up to AZN 2,500/month) and 25% (above AZN 2,500/month). For companies, capital gains are included in chargeable profits and taxed at 20%. The gain is calculated as the difference between the disposal proceeds and the acquisition cost, adjusted for allowable expenses.

Private Residence Exemption

Gains from the sale of an individual's principal private residence are exempt from income tax in Azerbaijan. The exemption applies if the property has been owned and occupied as the main residence for at least 3 years. Second homes, investment properties, and holiday homes are not covered by the exemption and gains are taxable as ordinary income. The exemption covers the building and the land on which it sits, up to a reasonable curtilage. Partial relief may apply where the property has been used partly for business purposes.

Listed Shares & Securities Exemption

Gains from the disposal of shares listed on the Baku Stock Exchange (BSE) and certain government securities may be exempt from income tax. This exemption is intended to encourage investment in the Azerbaijani capital market. Unlisted shares and securities are subject to tax on gains as ordinary income. The exemption also applies to gains from the sale of bonds issued by the Government of Azerbaijan or the Central Bank. Investors should verify the current list of exempt securities with MoT.

Property & Real Estate Gains

Gains from the disposal of real property (land and buildings) by individuals are subject to IIT at progressive rates unless the private residence exemption applies. The gain is the difference between the sale price and the purchase price, less allowable costs (legal fees, stamp duty, improvements). For companies, property gains are included in chargeable profit and taxed at 20% CIT. A 15% withholding tax may apply on property sales by non-residents, which is a final tax. Residents must declare property gains in their annual tax return.

FAQs

How do I calculate my chargeable gain?

The gain is calculated as disposal proceeds minus acquisition cost (plus improvement costs and incidental acquisition/disposal costs). Example: Buy land for AZN 100,000, sell for AZN 150,000, costs of AZN 5,000. Gain = 150,000 − 100,000 − 5,000 = AZN 45,000. This is added to other income and taxed at progressive IIT rates.

Can I offset capital losses against other income?

Capital losses may be offset against capital gains in the same year. Unrelieved losses may be carried forward for up to 5 years but cannot be offset against other income (e.g., salary or business profits).

What assets are exempt from CGT?

Principal private residence (owned and occupied for 3+ years), BSE-listed shares, government securities, and assets inherited upon death (no deemed disposal).

Disclaimer

This guide provides general information about Azerbaijani capital gains tax for the 2026 tax year. Tax laws and rates may change. Always consult with a qualified Azerbaijani tax advisor or the Ministry of Taxes for advice specific to your situation. InvestmentKit does not provide tax advice.