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trWhat tax obligations and tax incentives apply to individuals earning income from YouTube?
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What tax obligations and tax incentives apply to individuals earning income from YouTube?
I am an individual resident of the Republic of Azerbaijan. I earn income through Google AdSense via my YouTube channel and wish to fulfil my tax obligations fully and lawfully. Which tax regime and tax rate apply to this income? What tax incentives are available to legally reduce my tax burden? Does Article 102.1.30-1 of the Tax Code (exemption of 75% of annual income up to AZN 45,000 from income tax) apply to my income? Would establishing a legal entity (LLC) be tax-efficient in this case?
The State Tax Service under the Ministry of Economy has stated that the activity described in the inquiry is considered entrepreneurial activity. Pursuant to Article 33.4 of the Tax Code, an individual conducting entrepreneurial activity without establishing a legal entity must submit an application to the tax authority for tax registration before commencing such activity (obtain a Taxpayer Identification Number – TIN) and pay taxes on the income earned into the state budget.
An individual may register for tax purposes by submitting an “Application for Registration of an Individual” to the tax authority. Free registration is carried out at ASAN service centres or, in cities and districts where such centres are not available, at taxpayer service centres.
Tax obligations depend on the taxation system selected in the application submitted during tax registration and the taxable objects arising from the activity. These obligations include the relevant taxes (simplified tax, income tax or VAT).
Furthermore, pursuant to Article 108.1 of the Tax Code, except for expenses that are non-deductible under this chapter, all expenses related to earning income, as well as mandatory payments prescribed by law, may be deducted from income. Deductible expenses must be properly documented in accordance with the procedure established by law. Expenses that are not documented in the legally prescribed manner may not be deducted from income.
It has also been stated that, pursuant to Article 102.1.30-1 of the Tax Code, where the annual income earned by individuals from the types of activities specified in that article does not exceed AZN 45,000 (without taking expenses into account), 75% of such income is exempt from income tax. If the taxpayer carries out transactions without the actual supply of goods, this tax incentive does not apply to income arising from such transactions.
In addition, pursuant to Article 218.5.10 of the Tax Code, persons performing work and providing services, except for work performed and services provided to individuals (the general public) who are not registered as taxpayers with the tax authority, are not eligible to be simplified tax payers.
Considering that, according to the inquiry, income is paid exclusively by the YouTube video-hosting platform and that, as an individual entrepreneur, you provide services to another legal entity, you are not entitled to apply the simplified tax regime and must operate solely as an income tax payer.
It has additionally been noted that, in order to ensure the correct application of tax legislation to the matters raised, it is advisable to contact the tax authority with which the taxpayer is registered, providing information reflecting the actual circumstances of the activity and relevant supporting documents.
Legal basis: Articles 33, 34, 102.1.30-1 and 218.5.10 of the Tax Code.
I am an individual resident of the Republic of Azerbaijan. I earn income through Google AdSense via my YouTube channel and wish to fulfil my tax obligations fully and lawfully. Which tax regime and tax rate apply to this income? What tax incentives are available to legally reduce my tax burden? Does Article 102.1.30-1 of the Tax Code (exemption of 75% of annual income up to AZN 45,000 from income tax) apply to my income? Would establishing a legal entity (LLC) be tax-efficient in this case?
The State Tax Service under the Ministry of Economy has stated that the activity described in the inquiry is considered entrepreneurial activity. Pursuant to Article 33.4 of the Tax Code, an individual conducting entrepreneurial activity without establishing a legal entity must submit an application to the tax authority for tax registration before commencing such activity (obtain a Taxpayer Identification Number – TIN) and pay taxes on the income earned into the state budget.
An individual may register for tax purposes by submitting an “Application for Registration of an Individual” to the tax authority. Free registration is carried out at ASAN service centres or, in cities and districts where such centres are not available, at taxpayer service centres.
Tax obligations depend on the taxation system selected in the application submitted during tax registration and the taxable objects arising from the activity. These obligations include the relevant taxes (simplified tax, income tax or VAT).
Furthermore, pursuant to Article 108.1 of the Tax Code, except for expenses that are non-deductible under this chapter, all expenses related to earning income, as well as mandatory payments prescribed by law, may be deducted from income. Deductible expenses must be properly documented in accordance with the procedure established by law. Expenses that are not documented in the legally prescribed manner may not be deducted from income.
It has also been stated that, pursuant to Article 102.1.30-1 of the Tax Code, where the annual income earned by individuals from the types of activities specified in that article does not exceed AZN 45,000 (without taking expenses into account), 75% of such income is exempt from income tax. If the taxpayer carries out transactions without the actual supply of goods, this tax incentive does not apply to income arising from such transactions.
In addition, pursuant to Article 218.5.10 of the Tax Code, persons performing work and providing services, except for work performed and services provided to individuals (the general public) who are not registered as taxpayers with the tax authority, are not eligible to be simplified tax payers.
Considering that, according to the inquiry, income is paid exclusively by the YouTube video-hosting platform and that, as an individual entrepreneur, you provide services to another legal entity, you are not entitled to apply the simplified tax regime and must operate solely as an income tax payer.
It has additionally been noted that, in order to ensure the correct application of tax legislation to the matters raised, it is advisable to contact the tax authority with which the taxpayer is registered, providing information reflecting the actual circumstances of the activity and relevant supporting documents.
Legal basis: Articles 33, 34, 102.1.30-1 and 218.5.10 of the Tax Code.