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Changes in non-residents' net profit tax
Changes in non-residents' net profit tax
The permanent representative office of a Georgian company operates in the logistics sector in the Republic of Azerbaijan. After fulfilling the profit tax obligation on the income generated from this activity, the remaining free funds are transferred to the head office with a 10% tax withheld. Last year, the tax on dividends was reduced to 5%. We would like to know whether any changes are planned to the tax rate applied to the net profit earned by non-residents through their permanent representative offices in the Republic of Azerbaijan.
According to the State Tax Service under the Ministry of Economy, based on the amendment to Article 126 of the Tax Code, which came into force on January 1, 2025, in addition to the profit tax from the permanent representative office of a non-resident, a 5% tax is levied on any amount transferred (paid) by this representative office to the non-resident from its net profit.
Thus, starting from January 1, 2025, the withholding tax rate on the net profit transferred by a non-resident’s permanent representative office to that non-resident has been reduced from 10% to 5%.
The permanent representative office of a Georgian company operates in the logistics sector in the Republic of Azerbaijan. After fulfilling the profit tax obligation on the income generated from this activity, the remaining free funds are transferred to the head office with a 10% tax withheld. Last year, the tax on dividends was reduced to 5%. We would like to know whether any changes are planned to the tax rate applied to the net profit earned by non-residents through their permanent representative offices in the Republic of Azerbaijan.
According to the State Tax Service under the Ministry of Economy, based on the amendment to Article 126 of the Tax Code, which came into force on January 1, 2025, in addition to the profit tax from the permanent representative office of a non-resident, a 5% tax is levied on any amount transferred (paid) by this representative office to the non-resident from its net profit.
Thus, starting from January 1, 2025, the withholding tax rate on the net profit transferred by a non-resident’s permanent representative office to that non-resident has been reduced from 10% to 5%.