BAKU, Azerbaijan, November 26. The draft law
“On Amendments to the Tax Code of the Republic of Azerbaijan” is
currently being discussed in the country’s parliament, Trend reports, citing the
State Tax Service under the Ministry of Economy.
The proposed amendments are designed to foster entrepreneurship,
alleviate the tax burden, and enhance efforts to combat the shadow
economy. According to the ministry, the rationale behind these
changes is being communicated to the public in a phased manner.
While rental income from residential properties is already
subject to taxation, a substantial portion of these transactions
remains unreported. The proposed amendments aim to streamline
administrative processes and reduce the tax burden on rental
income, thereby incentivizing individuals to formalize their rental
agreements.
Effective January 1, 2025, citizens receiving rental income will
have the option to designate an agent, either a legal entity or an
individual, to manage their tax obligations, thereby eliminating
the need for personal registration with the tax authorities.
In a further move to encourage the formalization of the rental
market, the tax rate on rental income from residential properties
leased by individuals to other individuals will be reduced from 14
percent to 10 percent. This adjustment results in a tax reduction
of approximately 30 percent.
For properties rented as part of entrepreneurial activities or
leased to legal entities, the 14 percent tax rate will remain
unchanged.
The amendment is designed to prevent tax evasion while promoting
transparency and compliance in the rental market, ensuring that
rental agreements and transactions for residential properties are
properly registered.
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