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Income tax exemption in the regulated market
Income tax exemption in the regulated market
We hereby inform you that according to Article 102.1.22-2 of the Tax Code, starting from February 1, 2023, for a period of five (5) years, income in the form of dividends, discounts (the difference resulting from the placement of bonds below their nominal value), and interest paid on shares and bonds that have been publicly offered and admitted to trading on a regulated market by resident legal entities both within the territory of the Republic of Azerbaijan and abroad shall be exempt from income tax.
Accordingly, dividends paid on shares that have been publicly offered and admitted to trading on a regulated market by resident legal entities both within the territory of the Republic of Azerbaijan and abroad are exempt from income tax.
At the same time, according to Article 100.1 of the Civil Code, a joint-stock company whose shares are distributed only among its founders or a pre-defined group of persons is considered a closed joint-stock company. Such a company is not allowed to conduct a public subscription for the shares it issues or otherwise offer them to an unlimited number of persons.
Furthermore, in the Republic of Azerbaijan, the issuance, state registration, public offering, depository and post-trading systems, circulation of securities and derivative financial instruments, the principles and procedures for the organization, management, and liquidation of licensed entities on the securities market and the central depository, the relations in the field of investor rights protection, as well as the legal and economic foundations of regulation and supervision of the securities market are defined by the Law of the Republic of Azerbaijan "On the Securities Market" (hereinafter referred to as the "Law").
According to the provisions of Article 1 of the Law, a regulated market is a system organized and managed by a stock exchange that reflects the trading interests of third parties in securities and derivative financial instruments admitted to trading in accordance with the internal rules of the stock exchange.
According to the provisions of Article 8 of the Law, a public offering of investment securities refers to offering them to an indefinite number of persons, through mass media, or to more than 50 persons. The public offering of investment securities (excluding shares of joint-stock companies created during the privatization of state enterprises) shall be carried out through the stock exchange.
We hereby inform you that according to Article 102.1.22-2 of the Tax Code, starting from February 1, 2023, for a period of five (5) years, income in the form of dividends, discounts (the difference resulting from the placement of bonds below their nominal value), and interest paid on shares and bonds that have been publicly offered and admitted to trading on a regulated market by resident legal entities both within the territory of the Republic of Azerbaijan and abroad shall be exempt from income tax.
Accordingly, dividends paid on shares that have been publicly offered and admitted to trading on a regulated market by resident legal entities both within the territory of the Republic of Azerbaijan and abroad are exempt from income tax.
At the same time, according to Article 100.1 of the Civil Code, a joint-stock company whose shares are distributed only among its founders or a pre-defined group of persons is considered a closed joint-stock company. Such a company is not allowed to conduct a public subscription for the shares it issues or otherwise offer them to an unlimited number of persons.
Furthermore, in the Republic of Azerbaijan, the issuance, state registration, public offering, depository and post-trading systems, circulation of securities and derivative financial instruments, the principles and procedures for the organization, management, and liquidation of licensed entities on the securities market and the central depository, the relations in the field of investor rights protection, as well as the legal and economic foundations of regulation and supervision of the securities market are defined by the Law of the Republic of Azerbaijan "On the Securities Market" (hereinafter referred to as the "Law").
According to the provisions of Article 1 of the Law, a regulated market is a system organized and managed by a stock exchange that reflects the trading interests of third parties in securities and derivative financial instruments admitted to trading in accordance with the internal rules of the stock exchange.
According to the provisions of Article 8 of the Law, a public offering of investment securities refers to offering them to an indefinite number of persons, through mass media, or to more than 50 persons. The public offering of investment securities (excluding shares of joint-stock companies created during the privatization of state enterprises) shall be carried out through the stock exchange.