Withholding Tax rates in Azerbaijan (WHT tax in Azerbaijan)

Withholding Tax rates in Azerbaijan (WHT tax in Azerbaijan)

What are the Withholding Tax rates in Azerbaijan?

Income received from Azerbaijan sources not attributable to a permanent establishment (PE) of a non-resident in Azerbaijan is subject to Withholding Tax (WHT) at the following rates:

 

• Dividends paid by resident enterprises: 10%.
• Interest paid by residents, PEs of non-residents, or on behalf of such PEs (except for interest paid to resident banks or to PEs of non-resident banks): 10%.
• Rental fees for movable and immovable property: 14%.
• Royalties: 14%.
• Risk insurance or reinsurance payments: 4%.
• Telecommunications or international transport services: 6%.
• Other Azerbaijani-source income: 10%.
• Payments to low-tax jurisdictions: 10%.

 

If a resident enterprise or a PE of a non-resident receives interest, royalties, or rental fees taxable at the source of payment in Azerbaijan, it is entitled to consider the tax deducted from the source of payment, provided that the documents supporting the tax deduction are in place.

Direct or indirect payments to a person in a country with a favorable tax regime are considered income from an Azerbaijani source and are subject to 10% WHT (Withholding Tax). 

Banks and the national operator of the postal service must deduct 10% WHT (Withholding Tax) from funds transferred by residents to digital wallets, which refer to software to carry out electronic payments.

Moreover, local banks, branches of foreign banks in the Republic of Azerbaijan, or national postal operators shall be obliged to withhold tax at the source of payment when individuals who are not registered with the tax authority are making payments to countries or territories subject to preferential taxation.

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