Azerbaijan Corporate Tax Guide 2026

Azerbaijan's corporate income tax rate is 20% for resident companies. Micro businesses with annual turnover below AZN 200,000 may qualify for a 0% CIT rate under the simplified tax regime. Companies are resident if incorporated under Azerbaijani law or if their place of effective management is in Azerbaijan. The tax year is the calendar year, and annual returns are due by 31 March of the following year.

Overview — Corporate Tax in Azerbaijan

Corporate tax in Azerbaijan is governed by the Tax Code of the Republic of Azerbaijan and administered by the Ministry of Taxes (MoT). A company is tax resident if it is incorporated under Azerbaijani law or if its place of effective management is in Azerbaijan. Resident companies are taxed on worldwide income; non-resident companies with a permanent establishment (PE) are taxed on Azerbaijan-source income only. Companies must register for tax with MoT and obtain a Taxpayer Identification Number (TIN). The tax year aligns with the calendar year. Annual returns must be filed by 31 March of the following year, with quarterly advance payments due during the year.

Standard Corporate Tax Rate — 20%

The standard CIT rate for resident companies in Azerbaijan is 20% of chargeable profits. Non-resident companies with a PE in Azerbaijan are also taxed at 20% on Azerbaijan-source income attributable to the PE. Taxable profit is computed as gross revenue less allowable deductions including operating expenses, depreciation, interest costs (subject to thin capitalisation rules), and losses carried forward. Losses may be carried forward for up to 5 years. Capital gains are included in ordinary income and taxed at the standard CIT rate (no separate CGT rate).

Micro Business Regime — 0% CIT

Micro businesses with annual turnover not exceeding AZN 200,000 may qualify for the simplified tax regime with a 0% CIT rate. Instead of standard CIT, micro businesses pay a simplified turnover tax at reduced rates. Additionally, micro businesses are exempt from VAT and may have simplified accounting and reporting requirements. The micro business regime is designed to encourage entrepreneurship and reduce the compliance burden on small enterprises. Certain activities (e.g., notary services, audit, insurance, banking) are excluded from the simplified regime.

Capital Allowances (Depreciation)

Azerbaijan uses a tax depreciation system with rates specified by asset category:

Buildings & structures — 7% per annum (straight-line)
Machinery & equipment — 20% per annum (declining balance)
Computers & office equipment — 25% per annum (declining balance)
Motor vehicles — 20% per annum (declining balance)
Intangible assets — 10–20% per annum depending on useful life

Tax depreciation is calculated using the straight-line or declining balance method as prescribed. No investment allowance or first-year bonus depreciation is generally available.

FAQs

What is the penalty for late filing of corporate tax returns?

Late filing attracts a penalty of 5% of the tax due per month of delay (max 30%). Late payment carries interest at the central bank refinancing rate plus 5% per annum.

Can foreign companies claim treaty relief?

Yes, Azerbaijan has over 50 double tax treaties including with the UK, Germany, Netherlands, Russia, Turkey, UAE, and others. Treaty relief may reduce withholding tax rates on dividends, interest, and royalties paid to non-residents.

Is there a minimum tax for loss-making companies?

Azerbaijan does not have a turnover-based minimum tax for CIT. Loss-making companies may carry forward losses for up to 5 years. However, consistently loss-making companies may face tax audit scrutiny.

Disclaimer

This guide provides general information about Azerbaijani corporate 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.