Azerbaijan has proposed lowering the branch profits tax rate by amending its Tax Code. If approved, the profit tax will be reduced to 5%, effective from 1 January 2025.
Presently, the profit tax for enterprises is 20%. Non-resident legal entities are taxed on Azerbaijani-sourced income not linked to a permanent establishment, with dividends from resident enterprises taxed at 10%.
In Azerbaijan, a 10% branch profits tax is levied on the net profits of a branch or permanent establishment when these earnings are transferred to a non-resident parent company.
The profit of a taxpayer is a difference between the income (except for the tax exempt income) and expense deducted from this income. The tax paid from profit is defined as a profit tax.
Resident and non-resident enterprises in Azerbaijan are payers of profit tax. Any foreign entity not being a physical one is treated as an enterprise paying profit tax unless it proves that it is a joint ownership unit. Branch offices, structural divisions and other separate units of the legal entity established in accordance with the legislation of Azerbaijan owning free balance, current or other accounts are not considered profit tax payers.
