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Azerbaijan/ 5.1 General legislation  

5.1.5 Tax laws

The tax policy holds one of the main keys to attracting funds and investment into culture.  The Tax Code, the most progressive element of which is the application of simplified tax rates, took effect on 1 January 2001. Article 219.2 of the Code states that: "Firms paying taxes under the simplified system shall not be liable for VAT, income tax, land tax or property tax". This applies to firms with a yearly turnover of less than 200 000 AZN.

Since January 2006, enterprises located outside of the capital Baku pay tax at 2% and those registered in the capital pay tax at 4% of total turnovers. Registration of enterprises is submitted to the tax department and is usually realised within 3 days.

Similar to all countries with an economy in transition, the tax legislature of Azerbaijan is in a period of establishment. Changes and additions to the Code took effect every year and one of the results of the changes is that the number of cultural institutions liable for VAT and income tax has increased, with significantly negative effects for their operation. Income tax and social security payments for businesses have been reduced. Starting in 2008, a system of electronic submission of tax declarations by legal entities and individuals was established.

With the Decree of the President on Additional Measures in the Sphere of State Provision of the Development of Entrepreneurship in the Republic of Azerbaijan (September, 2002) the following steps took place from 1 January 2003:

  • a reduction of the taxes by types;
  • a differentiation of taxes for spheres and regions;
  • enlargement of the sphere of application of the simplified tax system; and
  • a reduction of the social provision taxes.

All these measures provide the basis for future development of tax policies in the field of culture.

Chapter published: 02-11-2016

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