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In which cases are received dividends exempt from taxation?
In which cases are received dividends exempt from taxation?
We inform you that according to Article 13.2.15 of the Tax Code, a dividend is defined as the distribution of a legal entity’s net profit (for simplified tax payers, income after deduction of taxes and expenses) in favor of its founders (participants) or shareholders, including the distribution of assets (property) formed from net profit upon the liquidation of a legal entity, as well as any payments in cash or other forms related to the repurchase of shares (stakes) within the limits of the increased nominal value funded by net profit.
At the same time, we note that income obtained from the distribution of property during the liquidation of a legal entity (excluding property formed from undistributed profit), as well as the distribution of shares that do not alter the percentage of shareholder ownership, and payments related to the repurchase of shares (stakes or interests) within their nominal value (excluding increases in nominal value funded by undistributed profit), are not considered dividends.
We also inform you that according to Articles 106.10 and 218-1.1.4 of the Tax Code, dividend income received by physical and legal persons who are founders (participants) or shareholders of a resident enterprise that maintains accounting records of income and expenses in accordance with the Tax Code, is not registered for VAT purposes, and whose transaction volume does not exceed 200,000 AZN in any month within a consecutive 12-month period, is exempt from tax.
Additionally, we bring to your attention that dividend income received by physical and legal persons who are participants in resident legal entities engaged in the production of agricultural products (including industrial methods) is exempt from taxation for a period of 4 years starting from January 1, 2023.
We inform you that according to Article 13.2.15 of the Tax Code, a dividend is defined as the distribution of a legal entity’s net profit (for simplified tax payers, income after deduction of taxes and expenses) in favor of its founders (participants) or shareholders, including the distribution of assets (property) formed from net profit upon the liquidation of a legal entity, as well as any payments in cash or other forms related to the repurchase of shares (stakes) within the limits of the increased nominal value funded by net profit.
At the same time, we note that income obtained from the distribution of property during the liquidation of a legal entity (excluding property formed from undistributed profit), as well as the distribution of shares that do not alter the percentage of shareholder ownership, and payments related to the repurchase of shares (stakes or interests) within their nominal value (excluding increases in nominal value funded by undistributed profit), are not considered dividends.
We also inform you that according to Articles 106.10 and 218-1.1.4 of the Tax Code, dividend income received by physical and legal persons who are founders (participants) or shareholders of a resident enterprise that maintains accounting records of income and expenses in accordance with the Tax Code, is not registered for VAT purposes, and whose transaction volume does not exceed 200,000 AZN in any month within a consecutive 12-month period, is exempt from tax.
Additionally, we bring to your attention that dividend income received by physical and legal persons who are participants in resident legal entities engaged in the production of agricultural products (including industrial methods) is exempt from taxation for a period of 4 years starting from January 1, 2023.