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Income tax and social insurance exemptions for life savings insurance
Income tax and social insurance exemptions for life savings insurance
We hereby inform you that, in accordance with Article 102.1.8 of the Tax Code and Article 15 of the Law of the Republic of Azerbaijan "On Social Insurance", insurance premiums paid by an employer to insurance companies operating in the Republic of Azerbaijan under a life savings insurance contract concluded for a period of not less than three years — from a portion of the insured employee’s taxable income not exceeding 50% — are exempt from income tax and mandatory state social insurance contributions.
Accordingly, income tax and social insurance contributions are calculated on the remaining portion of the employee’s taxable salary after deducting the part (not exceeding 50%) transferred to life savings insurance.
At the same time, amounts paid to insurers by the employer on behalf of the employee, based on life savings insurance contracts and from the employer’s own funds (as part of the social insurance contributions), are considered part of the employee’s income and are treated as deductible business expenses for the employer. In this case, the employee's monthly income is determined including the amount paid by the employer to the insurance company on their behalf.
We hereby inform you that, in accordance with Article 102.1.8 of the Tax Code and Article 15 of the Law of the Republic of Azerbaijan "On Social Insurance", insurance premiums paid by an employer to insurance companies operating in the Republic of Azerbaijan under a life savings insurance contract concluded for a period of not less than three years — from a portion of the insured employee’s taxable income not exceeding 50% — are exempt from income tax and mandatory state social insurance contributions.
Accordingly, income tax and social insurance contributions are calculated on the remaining portion of the employee’s taxable salary after deducting the part (not exceeding 50%) transferred to life savings insurance.
At the same time, amounts paid to insurers by the employer on behalf of the employee, based on life savings insurance contracts and from the employer’s own funds (as part of the social insurance contributions), are considered part of the employee’s income and are treated as deductible business expenses for the employer. In this case, the employee's monthly income is determined including the amount paid by the employer to the insurance company on their behalf.