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If a microenterprise operates for less than 12 months within a year, will a 75% discount be applied?
If a microenterprise operates for less than 12 months within a year, will a 75% discount be applied?
The State Tax Service under the Ministry of Economy clarifies the issue:
Question: An individual registered and started operations in April. They ceased operations in a subsequent month (e.g., August). During the active period, the number of employees was 3. Can this person use the discount specified in Article 102.1.30 of the Tax Code during the period they were operational? Suppose the taxpayer started operations in January, temporarily suspended activities in March due to lack of work, resumed in June, and then suspended again in September. If they resume operations in November, will the discount mentioned in Article 102.1.30 of the Tax Code be applied? Note that during the active months, they had 3-5 employees.
Answer: According to the Presidential Decree of the Republic of Azerbaijan on the application of the Law of the Republic of Azerbaijan No. 1033-VIQD dated December 5, 2023, which amends the Tax Code of the Republic of Azerbaijan, these changes will come into effect on January 1, 2024.
It is specified that, according to Article 102.1.30 of the Tax Code, a discount of 75% is applied to the income earned from entrepreneurial activity by individuals who are micro-entrepreneurs with an average number of employees not less than 3 and who do not have any arrears in mandatory state social insurance contributions for the respective year.
The average number of employees for the respective year is calculated by summing up the number of employees over the calendar year and dividing by 12.
If a taxpayer does not meet the conditions specified in this article for the application of the tax discount and transitions from a micro-enterprise to another category of business entity in the subsequent reporting year, the tax discount is determined based on 75% of the income tax calculated and paid for the previous 3 calendar years as a micro-entrepreneur, and the profit tax obligation for the periods when they were classified as another business entity is waived.
This discount is not applied to the income derived from transactions without goods.
In response to the query, the State Tax Service stated that when the taxpayer ceases operations, the average number of employees for the application of Article 102.1.30 of the Tax Code is determined based on the period of actual activity.
The State Tax Service under the Ministry of Economy clarifies the issue:
Question: An individual registered and started operations in April. They ceased operations in a subsequent month (e.g., August). During the active period, the number of employees was 3. Can this person use the discount specified in Article 102.1.30 of the Tax Code during the period they were operational? Suppose the taxpayer started operations in January, temporarily suspended activities in March due to lack of work, resumed in June, and then suspended again in September. If they resume operations in November, will the discount mentioned in Article 102.1.30 of the Tax Code be applied? Note that during the active months, they had 3-5 employees.
Answer: According to the Presidential Decree of the Republic of Azerbaijan on the application of the Law of the Republic of Azerbaijan No. 1033-VIQD dated December 5, 2023, which amends the Tax Code of the Republic of Azerbaijan, these changes will come into effect on January 1, 2024.
It is specified that, according to Article 102.1.30 of the Tax Code, a discount of 75% is applied to the income earned from entrepreneurial activity by individuals who are micro-entrepreneurs with an average number of employees not less than 3 and who do not have any arrears in mandatory state social insurance contributions for the respective year.
The average number of employees for the respective year is calculated by summing up the number of employees over the calendar year and dividing by 12.
If a taxpayer does not meet the conditions specified in this article for the application of the tax discount and transitions from a micro-enterprise to another category of business entity in the subsequent reporting year, the tax discount is determined based on 75% of the income tax calculated and paid for the previous 3 calendar years as a micro-entrepreneur, and the profit tax obligation for the periods when they were classified as another business entity is waived.
This discount is not applied to the income derived from transactions without goods.
In response to the query, the State Tax Service stated that when the taxpayer ceases operations, the average number of employees for the application of Article 102.1.30 of the Tax Code is determined based on the period of actual activity.