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Taxes and Social Contributions to be Paid by Computer Repair Entrepreneurs
Taxes and Social Contributions to be Paid by Computer Repair Entrepreneurs
The type of activity we are discussing concerns tax and social obligations for individuals engaged in computer repair. Before determining the tax and social obligations for this type of activity, it is necessary to clarify its main essence and what type of income it is associated with. To identify the obligations of this activity, it is important to determine whether it is considered entrepreneurial or non-entrepreneurial. Specialist Zahra Yusifova provides clarity on the tax and social obligations for individuals involved in computer repair.
According to Article 13.2.37 of the Tax Code, entrepreneurial activity is an activity independently carried out by a person with the main goal of obtaining profit from the use of property, provision of goods, performance of works, or provision of services (income for individual entrepreneurs). As seen from this article, the mentioned type of activity is considered entrepreneurial.
When determining the tax and social obligations of any income, it is essential to clarify what type of income it falls under. Otherwise, incorrect assessment of the relevant obligations may lead to financial losses for the entrepreneur. According to Article 13.2.12 of the Tax Code, the total value of operations related to the provision of goods (works, services) as well as other non-sale income is considered income. For tax purposes, the time of income receipt is determined by Articles 132 and 135 of this Code. When residential and non-residential areas are separated from buildings built by individuals engaged in construction activities, the turnover related to the provision of these residential and non-residential areas to the state is not considered taxable income.
The income of a resident taxpayer consists of income earned both within the Republic of Azerbaijan and outside its borders. Moreover, the Tax Code specifies the following types of income:
1. Income from employment;
2. Income from activities not related to employment;
3. All income, except for income exempt from taxes and increases arising from the revaluation of fixed assets (property).
According to Article 99.1 of the Tax Code, income from activities not related to employment includes income from both entrepreneurial and non-entrepreneurial activities.
Now, let’s determine the specific tax and social payments an individual engaged in computer repair must pay to the state budget from the income earned through this entrepreneurial activity. According to the Tax Code, taxes must be paid from the remaining amount after deducting the costs incurred to earn the income from the total income, in accordance with this Code. All expenses related to the income receipt, as well as compulsory payments envisaged by the law, are deducted from the income, excluding non-deductible expenses. Expenses deducted from the income must be formalized in accordance with the procedures set by law; otherwise, it is not allowed to deduct them from the income.
Considering the above-mentioned points and other provisions of the Tax Code, it becomes clear that once each entrepreneur determines their income, they deduct the allowed expenses from it and, taking into account the discounts and exemptions provided by this Code, apply the relevant tax rate to determine their obligations to the budget. The tax rate for computer repair activities (after deducting allowable expenses) is set at 20%.
Now, let’s look at how the social payments for this type of activity are calculated according to the "Social Insurance Law." The first important point to determine is the area where the person engaged in this activity operates, the minimum wage for the year, and whether they operate with or without employees. This clarification is necessary to accurately calculate both tax obligations and compulsory state social insurance (CSSI) payments. It is important to note that the calculation of CSSI obligations is determined by specific formulas and procedures for both employees and entrepreneurs themselves.
According to Article 14.5 of the "Social Insurance Law," the mandatory state social insurance fee for self-employed individuals (entrepreneurs) is paid at the following rates:
• Except for Article 14.5.7 of this law, for entrepreneurial activities – up to January 1, 2026, 50% of the minimum monthly wage in the construction sector, and 25% in other sectors:
- In Baku – 100%;
- In Sumgayit and Ganja – 90%;
- In other cities – 80%;
- In administrative centers of district administrative units and settlements – 60%;
- In rural areas – 50%.
The type of activity we are discussing concerns tax and social obligations for individuals engaged in computer repair. Before determining the tax and social obligations for this type of activity, it is necessary to clarify its main essence and what type of income it is associated with. To identify the obligations of this activity, it is important to determine whether it is considered entrepreneurial or non-entrepreneurial. Specialist Zahra Yusifova provides clarity on the tax and social obligations for individuals involved in computer repair.
According to Article 13.2.37 of the Tax Code, entrepreneurial activity is an activity independently carried out by a person with the main goal of obtaining profit from the use of property, provision of goods, performance of works, or provision of services (income for individual entrepreneurs). As seen from this article, the mentioned type of activity is considered entrepreneurial.
When determining the tax and social obligations of any income, it is essential to clarify what type of income it falls under. Otherwise, incorrect assessment of the relevant obligations may lead to financial losses for the entrepreneur. According to Article 13.2.12 of the Tax Code, the total value of operations related to the provision of goods (works, services) as well as other non-sale income is considered income. For tax purposes, the time of income receipt is determined by Articles 132 and 135 of this Code. When residential and non-residential areas are separated from buildings built by individuals engaged in construction activities, the turnover related to the provision of these residential and non-residential areas to the state is not considered taxable income.
The income of a resident taxpayer consists of income earned both within the Republic of Azerbaijan and outside its borders. Moreover, the Tax Code specifies the following types of income:
1. Income from employment;
2. Income from activities not related to employment;
3. All income, except for income exempt from taxes and increases arising from the revaluation of fixed assets (property).
According to Article 99.1 of the Tax Code, income from activities not related to employment includes income from both entrepreneurial and non-entrepreneurial activities.
Now, let’s determine the specific tax and social payments an individual engaged in computer repair must pay to the state budget from the income earned through this entrepreneurial activity. According to the Tax Code, taxes must be paid from the remaining amount after deducting the costs incurred to earn the income from the total income, in accordance with this Code. All expenses related to the income receipt, as well as compulsory payments envisaged by the law, are deducted from the income, excluding non-deductible expenses. Expenses deducted from the income must be formalized in accordance with the procedures set by law; otherwise, it is not allowed to deduct them from the income.
Considering the above-mentioned points and other provisions of the Tax Code, it becomes clear that once each entrepreneur determines their income, they deduct the allowed expenses from it and, taking into account the discounts and exemptions provided by this Code, apply the relevant tax rate to determine their obligations to the budget. The tax rate for computer repair activities (after deducting allowable expenses) is set at 20%.
Now, let’s look at how the social payments for this type of activity are calculated according to the "Social Insurance Law." The first important point to determine is the area where the person engaged in this activity operates, the minimum wage for the year, and whether they operate with or without employees. This clarification is necessary to accurately calculate both tax obligations and compulsory state social insurance (CSSI) payments. It is important to note that the calculation of CSSI obligations is determined by specific formulas and procedures for both employees and entrepreneurs themselves.
According to Article 14.5 of the "Social Insurance Law," the mandatory state social insurance fee for self-employed individuals (entrepreneurs) is paid at the following rates:
• Except for Article 14.5.7 of this law, for entrepreneurial activities – up to January 1, 2026, 50% of the minimum monthly wage in the construction sector, and 25% in other sectors:
- In Baku – 100%;
- In Sumgayit and Ganja – 90%;
- In other cities – 80%;
- In administrative centers of district administrative units and settlements – 60%;
- In rural areas – 50%.