Update:
The amendments made to the Tax Code of the Republic of Azerbaijan and related legislation have been officially adopted and will enter into force on 1 January 2026.
Starting from 2026, the changes introduced in tax legislation will have a direct impact on the business environment. The new approach is primarily based on risk-based tax control, promotion of cashless transactions, and strengthening tax discipline.
Tax Control and Key Concepts
A number of fundamental concepts in the Tax Code have been updated, in particular:
- The concept of voluntary disclosure has been expanded and now also applies to previous tax periods.
- The concept of non-commodity transactions has been clarified and now includes fictitious and sham transactions.
- The concept of electronic audit has been abolished, and tax control mechanisms have been restructured.
Tax Registration and Communication Procedures
The registration and deregistration of individuals for tax purposes are carried out primarily in electronic form.
All correspondence with tax authorities is conducted through a single electronic tax cabinet, which increases transparency in documentation and communication.
Personal Income Tax and Corporate Profit Tax
During the period 2026–2028, personal income tax rates will be increased gradually.
A 5% tax rate has been established on dividends paid by non-residents.
Approaches to determining the taxable base for corporate profit tax have also been updated.
Social Insurance
Different mechanisms apply to mandatory state social insurance contributions for:
- employees;
- individuals engaged in self-employment;
- specific types of activities.
In certain regions, social insurance contributions are subsidized by the state.
Value Added Tax (VAT) and Cashless Turnover
The following measures are предусмотрены:
- application of a 0.5 coefficient to cashless POS transactions;
- exclusion of 50% of cashless turnover from the taxable base in the public catering and healthcare sectors;
- extension of a number of VAT exemptions.
At the same time, the scope of application of certain exemptions has been restricted.
Excise Duties and Other Taxes
- An excise duty of AZN 20 is introduced on mobile phones (exemption applies to one device per year).
- Excise rates on alcoholic beverages, tobacco products, and energy drinks have been updated.
- A 10% withholding tax is applied at source to rental income.
- Amendments have been made to road tax and mining tax rates.
Practical Conclusion
The 2026 amendments require businesses to maintain more accurate accounting, transition to cashless payments, and implement proactive tax risk management.
For entrepreneurs who adapt to the new legislative requirements, opportunities for tax burden optimization remain available.
To correctly assess the impact of tax changes on your business, it is recommended to obtain professional tax consultation.
