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What are the rules and amounts for paying taxes to the municipality?
What are the rules and amounts for paying taxes to the municipality?
How is the property tax for non-residential areas calculated? A. Jafarov clarified this question: "This issue is also regulated by the Tax Code. According to Article 198.1.1 of the Code, residential areas up to 30 square meters are exempt from tax. However, this does not apply to non-residential areas. Therefore, the full size of the properties is subject to property tax. For instance, if a citizen has a 150 square meter non-residential property (leased) in zone 3 of Baku city, the property tax will be calculated by the municipality as follows:
150 x 0.4 = 60 manats;
60 x 1.3 = 78 manats.
Therefore, the annual property tax for this property is 78 manats."
How do municipalities collect property tax?
Under Article 200 of the Tax Code, the procedure for calculating and paying property tax for physical persons on buildings and for water and air transport vehicles is as follows:
- Property tax for buildings is calculated based on the area of each square meter. Property tax for buildings owned by individuals is calculated by the municipality in the area where the building is located.
- Municipalities must provide the payment notice to taxpayers no later than August 1.
- The tax amount for the current year is paid in equal installments - by August 15 and November 15. If the property tax has not been paid by the previous owner, the tax is paid by the new owner on the payment dates specified.
- Property tax for buildings and transportation vehicles of physical persons is paid to the local (municipal) budget.
Interest on Tax Debt
In many cases, we see that municipalities charge interest in the payment notices issued to citizens. Do municipalities have the authority to charge interest for delayed payments?
According to Article 59.1 of the Tax Code, if tax or current tax payments are not made within the prescribed period, a 0.1% interest is charged on the unpaid tax for each day past the due date. Does this provision apply to municipalities?
A. Jafarov clarified that when taxes are not paid on time, 0.1% interest is calculated for each day: "Article 4 of the Tax Code defines three types of taxes applied in the Republic of Azerbaijan. One of them is local taxes, meaning municipal taxes. Therefore, municipalities may charge 0.1% interest per day on unpaid property and land taxes based on Articles 4 and 59 of the Code. The maximum period for calculating the interest is 365 days."
How many years of taxes do we need to pay?
One of the issues that concerns both citizens and municipalities is the period for claiming taxes that have not been paid by individuals. Many experts state that the claim period is 3 or 5 years, citing Article 85 of the Tax Code. This article includes provisions on the deadlines for fulfilling tax obligations and potential changes. However, in A. Jafarov's opinion, these rules do not apply to municipalities: "Simply put, Article 85.4 of the Tax Code provides for the recalculation of taxes within 3 years and their collection within 5 years. However, these rules do not apply to municipalities as the article specifically refers to 'tax authorities.' Therefore, these requirements can only be used by tax authorities, not municipalities, which are local self-government bodies."
A. Jafarov further noted that there are no specific requirements regarding the statute of limitations for property tax debts in the legal framework. According to the Civil Code of the Republic of Azerbaijan, claim periods are outlined. According to Article 372.1 of the Civil Code, the period for making a claim on actions performed by another person is 3 years. Article 373 of the Civil Code specifies the following:
- The general limitation period is 10 years;
- For contractual claims, the limitation period is 3 years, and for real property contract claims, it is 6 years;
- For claims arising from periodic obligations, the limitation period is 3 years;
- The Civil Code also allows for specific limitations that could be shorter or longer depending on the type of claim.
According to Article 373.3 of the Civil Code, the limitation period for periodic obligations is 3 years. As the payment of municipal taxes by citizens is considered a periodic obligation, it can be established that the limitation period for municipal tax debts is 3 years."
How is the property tax for non-residential areas calculated? A. Jafarov clarified this question: "This issue is also regulated by the Tax Code. According to Article 198.1.1 of the Code, residential areas up to 30 square meters are exempt from tax. However, this does not apply to non-residential areas. Therefore, the full size of the properties is subject to property tax. For instance, if a citizen has a 150 square meter non-residential property (leased) in zone 3 of Baku city, the property tax will be calculated by the municipality as follows:
150 x 0.4 = 60 manats;
60 x 1.3 = 78 manats.
Therefore, the annual property tax for this property is 78 manats."
How do municipalities collect property tax?
Under Article 200 of the Tax Code, the procedure for calculating and paying property tax for physical persons on buildings and for water and air transport vehicles is as follows:
- Property tax for buildings is calculated based on the area of each square meter. Property tax for buildings owned by individuals is calculated by the municipality in the area where the building is located.
- Municipalities must provide the payment notice to taxpayers no later than August 1.
- The tax amount for the current year is paid in equal installments - by August 15 and November 15. If the property tax has not been paid by the previous owner, the tax is paid by the new owner on the payment dates specified.
- Property tax for buildings and transportation vehicles of physical persons is paid to the local (municipal) budget.
Interest on Tax Debt
In many cases, we see that municipalities charge interest in the payment notices issued to citizens. Do municipalities have the authority to charge interest for delayed payments?
According to Article 59.1 of the Tax Code, if tax or current tax payments are not made within the prescribed period, a 0.1% interest is charged on the unpaid tax for each day past the due date. Does this provision apply to municipalities?
A. Jafarov clarified that when taxes are not paid on time, 0.1% interest is calculated for each day: "Article 4 of the Tax Code defines three types of taxes applied in the Republic of Azerbaijan. One of them is local taxes, meaning municipal taxes. Therefore, municipalities may charge 0.1% interest per day on unpaid property and land taxes based on Articles 4 and 59 of the Code. The maximum period for calculating the interest is 365 days."
How many years of taxes do we need to pay?
One of the issues that concerns both citizens and municipalities is the period for claiming taxes that have not been paid by individuals. Many experts state that the claim period is 3 or 5 years, citing Article 85 of the Tax Code. This article includes provisions on the deadlines for fulfilling tax obligations and potential changes. However, in A. Jafarov's opinion, these rules do not apply to municipalities: "Simply put, Article 85.4 of the Tax Code provides for the recalculation of taxes within 3 years and their collection within 5 years. However, these rules do not apply to municipalities as the article specifically refers to 'tax authorities.' Therefore, these requirements can only be used by tax authorities, not municipalities, which are local self-government bodies."
A. Jafarov further noted that there are no specific requirements regarding the statute of limitations for property tax debts in the legal framework. According to the Civil Code of the Republic of Azerbaijan, claim periods are outlined. According to Article 372.1 of the Civil Code, the period for making a claim on actions performed by another person is 3 years. Article 373 of the Civil Code specifies the following:
- The general limitation period is 10 years;
- For contractual claims, the limitation period is 3 years, and for real property contract claims, it is 6 years;
- For claims arising from periodic obligations, the limitation period is 3 years;
- The Civil Code also allows for specific limitations that could be shorter or longer depending on the type of claim.
According to Article 373.3 of the Civil Code, the limitation period for periodic obligations is 3 years. As the payment of municipal taxes by citizens is considered a periodic obligation, it can be established that the limitation period for municipal tax debts is 3 years."