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Are the employee's medical expenses deductible from income?
Are the employee's medical expenses deductible from income?
A payment was made to a medical institution via an electronic invoice for the treatment of an employee. Can this amount be fully recorded as an expense, or are there any applicable limits? In general, can this amount be deducted from income as an expense?
According to the State Tax Service under the Ministry of Economy, Article 102.1.3.1 of the Tax Code states that the portion of financial aid or one-time allowances provided for payment of medical treatment within the country, including surgical operations, up to 10,000 AZN is exempt from taxation. Similarly, for medical treatment abroad, including surgeries, the exempt amount is up to 50,000 AZN. This tax benefit is granted only if relevant documents are submitted confirming that the amount was used for its intended medical purpose.
In response to the inquiry, it was stated that under Article 108.1 of the Tax Code, except for expenses that are not deductible under this chapter, all expenses related to the generation of income, as well as mandatory payments prescribed by law, are deductible from income. Deductible expenses must be documented in accordance with the procedures established by law. Expenses not documented in accordance with legal requirements are not eligible for deduction from income.
Since the mentioned expense is considered related to non-commercial activity under Article 109.2 of the Tax Code, its deduction from income is not permitted.
A payment was made to a medical institution via an electronic invoice for the treatment of an employee. Can this amount be fully recorded as an expense, or are there any applicable limits? In general, can this amount be deducted from income as an expense?
According to the State Tax Service under the Ministry of Economy, Article 102.1.3.1 of the Tax Code states that the portion of financial aid or one-time allowances provided for payment of medical treatment within the country, including surgical operations, up to 10,000 AZN is exempt from taxation. Similarly, for medical treatment abroad, including surgeries, the exempt amount is up to 50,000 AZN. This tax benefit is granted only if relevant documents are submitted confirming that the amount was used for its intended medical purpose.
In response to the inquiry, it was stated that under Article 108.1 of the Tax Code, except for expenses that are not deductible under this chapter, all expenses related to the generation of income, as well as mandatory payments prescribed by law, are deductible from income. Deductible expenses must be documented in accordance with the procedures established by law. Expenses not documented in accordance with legal requirements are not eligible for deduction from income.
Since the mentioned expense is considered related to non-commercial activity under Article 109.2 of the Tax Code, its deduction from income is not permitted.