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When is tax applied in savings life insurance?
When is tax applied in savings life insurance?
According to Article 123.4 of the Tax Code, a 10% tax is withheld at the source of payment on the income received as the difference between the insurance premiums paid by the insured person (or paid on their behalf) under a savings life insurance policy and the insurance payouts.
Is this tax applied only in cases where the insurance contract mentioned in this article is terminated?
Is the tax still applied if the contract is valid for a minimum period of 3 years and is not terminated?
The State Tax Service under the Ministry of Economy has clarified that, according to Article 99.3.9 of the Tax Code, the difference between the insurance premiums paid by the insured person (or on their behalf) and the insurance payouts under savings life insurance is considered income obtained by an individual outside entrepreneurial activity.
According to Article 102.1.8 of the Tax Code, in the case of savings life insurance and pension insurance contracts concluded for a period of not less than 3 years, the insurance premiums paid by an employer in the non-state sector to insurers of the Republic of Azerbaijan, amounting to no more than 50% of the insured person’s taxable income, as well as any amounts paid to the insured person or beneficiary after three years from the effective date of such a contract, are exempt from personal income tax.
Furthermore, according to Article 116.3 of the Tax Code, in the event of early termination of the insurance contract, the insurance premiums paid become subject to taxation at the source of payment by the insurer.
We inform you once again that under Article 123.4 of the Tax Code, a 10% tax is withheld at the source of payment on the income derived from the difference between the insurance premiums paid by the insured person (or on their behalf) and the insurance payouts under a savings life insurance contract.
According to Article 123.4 of the Tax Code, a 10% tax is withheld at the source of payment on the income received as the difference between the insurance premiums paid by the insured person (or paid on their behalf) under a savings life insurance policy and the insurance payouts.
Is this tax applied only in cases where the insurance contract mentioned in this article is terminated?
Is the tax still applied if the contract is valid for a minimum period of 3 years and is not terminated?
The State Tax Service under the Ministry of Economy has clarified that, according to Article 99.3.9 of the Tax Code, the difference between the insurance premiums paid by the insured person (or on their behalf) and the insurance payouts under savings life insurance is considered income obtained by an individual outside entrepreneurial activity.
According to Article 102.1.8 of the Tax Code, in the case of savings life insurance and pension insurance contracts concluded for a period of not less than 3 years, the insurance premiums paid by an employer in the non-state sector to insurers of the Republic of Azerbaijan, amounting to no more than 50% of the insured person’s taxable income, as well as any amounts paid to the insured person or beneficiary after three years from the effective date of such a contract, are exempt from personal income tax.
Furthermore, according to Article 116.3 of the Tax Code, in the event of early termination of the insurance contract, the insurance premiums paid become subject to taxation at the source of payment by the insurer.
We inform you once again that under Article 123.4 of the Tax Code, a 10% tax is withheld at the source of payment on the income derived from the difference between the insurance premiums paid by the insured person (or on their behalf) and the insurance payouts under a savings life insurance contract.