Azerbaijan's headline corporate income tax (CIT) rate is 20.
The headline personal income tax (PIT) rate is 25.
The standard VAT/GST (or equivalent consumption tax) rate is 18. Registration thresholds, zero-rated and exempt categories, and reduced rates vary - see the source link below for full detail.
An individual is resident in Azerbaijan if physically present for more than 182 days in a calendar year. An entity is resident if incorporated in Azerbaijan; branches and representative offices of foreign legal entities are treated as non-resident. Resident entities are taxed on worldwide income at a flat 20% profit tax rate; a non-resident entity operating through a permanent establishment is taxed on PE-attributable Azerbaijan-source gross income less related deductions, while non-PE Azerbaijan-source income is taxed at source without any expense deductions. Separate production sharing agreement (PSA) and host government agreement (HGA) regimes apply to foreign oil and gas contractors and subcontractors under specially negotiated terms.
Azerbaijan introduced CFC rules effective 2020 as part of a broader package of anti-avoidance amendments (alongside economic substance requirements, thin capitalization rules, and "risky taxpayer" provisions). Under the regime, profits of a controlled foreign corporation incorporated in a tax haven become taxable in Azerbaijan where an Azerbaijani resident, alone or together with an interdependent resident or non-resident, holds more than 50% of the voting rights or charter capital of the foreign corporation (or the right to more than 50% of its profits) - a specific figure confirmed via a dedicated tax-news source covering the 2020 amendments in detail; a separate, less detailed source cites a lower 20% ownership threshold, which is not used here given the first source's greater specificity on this exact provision. To prevent double taxation once CFC profits are taxed in Azerbaijan, the resident receives a tax offset for tax already paid on that profit abroad, and dividends actually received from the CFC, along with certain other categories (including income already attributed to a resident subsidiary of the CFC, and income from the CFC's Azerbaijan permanent establishment), are excluded from the CFC inclusion to avoid double-counting.
Confirmed via PwC: thin capitalization rules were introduced effective 1 January 2019. Interest on loans from overseas lenders and/or related parties is deductible only up to the interbank credit auction rate for loans of similar currency and maturity; where no such auction rate exists for comparison, the deduction is capped at 125% of the published interbank auction credit rate of the Central Bank of Azerbaijan - a rate-based cap rather than a debt-to-equity ratio.
No domestic FBAR/Form 8938-equivalent requiring an Azerbaijani resident to self-report foreign accounts was found. Azerbaijan signed a FATCA intergovernmental agreement with the United States on 4 September 2015 (FATCA effective in Azerbaijan from 1 July 2014, per bank compliance disclosures), and separately signed the Council of Europe/OECD Multilateral Convention on Mutual Administrative Assistance in Tax Matters in 2003 (protocol amendment in 2014), which underpins CRS-based exchange of information with more than 100 countries. Separately and independently of Azerbaijani law, US citizens and Green Card holders with Azerbaijan-connected accounts remain obligated to file FinCEN Form 114 (FBAR) once aggregate foreign accounts exceed USD 10,000, and potentially Form 8938, regardless of Azerbaijan's own domestic requirements.
Azerbaijan maintains approximately 52 double tax treaties. Azerbaijan signed the OECD's Multilateral Instrument (MLI) on 20 November 2023 (the 102nd signatory), which was ratified by Azerbaijan's Milli Majlis (parliament) and entered into force for Azerbaijan on 1 January 2025, modifying the application of a number of Azerbaijan's existing bilateral treaties for BEPS purposes from that date. As a former Soviet republic, some of Azerbaijan's older treaty coverage traces back to the historic US-USSR tax treaty via Commonwealth of Independent States (CIS) succession arrangements.