Azerbaijan tax
Tax residence: More than 182 days in any consecutive 12-month period ending in the calendar year. Special regime for new residents: Simplified tax for small businesses and sole entrepreneurs.
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Tax residence
- More than 182 days in any consecutive 12-month period ending in the calendar year · Resident individual
- Non-resident individuals are taxed on Azerbaijan-source income (articles 96.3-96.4).
Special regimes for new residents
Special regime
Simplified tax for small businesses and sole entrepreneurs
2% tax
Details
- On: Gross revenue from goods, works and services plus non-sales income
- Limit: AZN 200k/yr ≈ $118k
2% simplified tax on gross revenue for persons not registered for VAT whose taxable turnover is AZN 200,000 (≈ $118,000) or less in any consecutive 12 months; traders and caterers above that level may also use the system at 6% (trade) or 8% (catering). 1
Taxed on
Gross revenue from goods, works and services plus non-sales income.
Who it applies to
- Person not registered for VAT with taxable operations of AZN 200,000 (≈ $118,000) or less in any month(s) of a consecutive 12-month period.
- Persons in trade and public catering with operations above AZN 200,000 (≈ $118,000) may also be simplified-tax payers (article 218.1.2) at 6% for trade and 8% for catering.
- Outside Baku the regional rate applies only if production space, real estate and workforce are in that region (article 220.2).
Exclusions
- Activities listed in article 218.4 and other excluded categories in the Code are outside the regime.
Limits
- AZN 200,000 a year (≈ $118,000) · Maximum taxable operations over any consecutive 12 months for the 2% regime
Visas
A foreigner running a business needs an entrepreneurship residence ground; this regime is a tax matter separate from the visa.
Other taxes
Personal income tax on employees, social contributions and VAT (above the threshold) apply separately. Article 220.1-1 sets a 6% rate for cashless POS payments for services to the public for 3 years from 1 January 2026.
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Standard rules and foreign-source income
Standard rules
Azerbaijan personal income tax on employment income, including 2026-2028 schedule for non-oil private sector
Details
- On: Monthly employment income (general rates, Tax Code article 101.1)
- Limit: AZN 2,500/mo ≈ $1,470
Azerbaijan residents (more than 182 days in a 12-month period ending in the calendar year) are taxed on all income; employment income is taxed at 14% up to AZN 2,500 (≈ $1,470) a month and 25% above, while non-oil private-sector employees pay 3% up to AZN 2,500, (≈ $1,470) 10% to AZN 8,000 (≈ $4,710) and 14% above from 1 January 2026. 1
Taxed on
Monthly employment income (general rates, Tax Code article 101.1); residents' taxable object is all income less deductions, with a credit for tax paid abroad (articles 96.1, 127).
Who it applies to
- Resident individual: actually present in Azerbaijan more than 182 days in any consecutive 12-month period ending in the calendar year; otherwise tested by permanent home, centre of vital interests, habitual abode, then citizenship.
- General schedule: 14% up to AZN 2,500 (≈ $1,470); AZN 350 (≈ $210) plus 25% of the excess above AZN 2,500 (≈ $1,470).
- Employees of non-oil-and-gas, non-state sector employers, 2026: 3% up to AZN 2,500 (≈ $1,470); AZN 75 (≈ $44) plus 10% from 2,500 to 8,000; AZN 625 (≈ $370) plus 14% above 8,000. 2027: 5% up to 2,500, 10% to 8,000, 14% above. From 2028: 7%, 10% and 14%.
Exclusions
- The non-oil private-sector schedule replaces the earlier 0% band up to AZN 8,000 (≈ $4,710) a month that applied in years before 2026; it applies only to employers outside oil and gas and outside the state sector.
Limits
- AZN 2,500 a month (≈ $1,470) · Upper limit of the lower band in the general schedule and the non-oil private-sector schedule
- AZN 8,000 a month (≈ $4,710) · Upper limit of the 10% band in the non-oil private-sector schedule; 14% above
Days in the country
- More than 182 days in any consecutive 12-month period ending in the calendar year · Resident individual
Tax residence
Non-resident individuals are taxed on Azerbaijan-source income (articles 96.3-96.4).
Visas
Tax residence follows days present and ties, not residence permit type.
Other taxes
Social insurance contributions, VAT and simplified tax are separate. Whether a given employer counts as non-oil and non-state is determined by criteria set by the competent executive authority (article 101.1-4).
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VAT, social security and other taxes
- Personal income tax on employees, social contributions and VAT (above the threshold) apply separately. Article 220.1-1 sets a 6% rate for cashless POS payments for services to the public for 3 years from 1 January 2026.
- Social insurance contributions, VAT and simplified tax are separate. Whether a given employer counts as non-oil and non-state is determined by criteria set by the competent executive authority (article 101.1-4).
Questions people ask
When do you become a tax resident in Azerbaijan?
More than 182 days in any consecutive 12-month period ending in the calendar year (Resident individual). Non-resident individuals are taxed on Azerbaijan-source income (articles 96.3-96.4).
Who qualifies for Simplified tax for small businesses and sole entrepreneurs?
Person not registered for VAT with taxable operations of AZN 200,000 (≈ $118,000) or less in any month(s) of a consecutive 12-month period. A foreigner running a business needs an entrepreneurship residence ground; this regime is a tax matter separate from the visa.
≈ USD figures are approximate: daily reference rates from ExchangeRate-API, dated 12 Oct 2026, refreshed when the site is updated.
Sources (1)
Official sources
- Tax Code of the Republic of Azerbaijan (articles 13.2.5, 96, 101, 101.1-1, 127, 218, 220) · e-qanun.az, official legal acts database of the Republic of Azerbaijan · checked 2026-10-10