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Tax requirements for deductible expenses
Tax requirements for deductible expenses
According to Article 108.1 of the Tax Code, all expenses related to the generation of income, as well as mandatory payments stipulated by law (excluding expenses not deductible under this chapter), are deductible from income. Deductible expenses must be documented in the manner prescribed by law. Expenses that are not documented in accordance with legal requirements are not allowed to be deducted from income.
According to Article 109.3 of the Tax Code, except for the expenses specified in Article 119.2 of this Code, social expenses related to employees and their family members, as well as entertainment expenses, are not deductible from income.
Please note that Article 119.2 of the Tax Code lists representation expenses, housing and meal expenses for employees, as well as expenses related to the provision of therapeutic and preventive meals, milk, and equivalent products and supplies for employees working in hazardous, heavy, and underground conditions.
We inform you that the norms and procedures for deducting representation expenses, housing and meal expenses for employees, and expenses related to therapeutic and preventive meals, milk, and equivalent products and supplies for employees working in hazardous, heavy, and underground jobs for taxation purposes have been approved by Decision No. 492 of the Cabinet of Ministers of the Republic of Azerbaijan dated November 22, 2024.
According to the rules, the daily deductible limit for meal expenses per employee is set at 5 (five) AZN if the cost of meals is paid directly to the employee, if meals are provided by the employer, or if they are obtained from another taxpayer engaged in public catering activities. Additionally, if the meal compensation is paid directly to the employee in a non-cash form, it is also considered a deductible expense.
Furthermore, please be informed that 50% of the representation expenses incurred by a taxpayer during the tax year, but not exceeding 1% of the annual income, are deductible for taxation purposes.
According to clause 4.3 of the Rules, representation expenses include the costs of official receptions and/or services provided to participants in events held for the purpose of establishing and/or maintaining mutual cooperation.
According to Article 108.1 of the Tax Code, all expenses related to the generation of income, as well as mandatory payments stipulated by law (excluding expenses not deductible under this chapter), are deductible from income. Deductible expenses must be documented in the manner prescribed by law. Expenses that are not documented in accordance with legal requirements are not allowed to be deducted from income.
According to Article 109.3 of the Tax Code, except for the expenses specified in Article 119.2 of this Code, social expenses related to employees and their family members, as well as entertainment expenses, are not deductible from income.
Please note that Article 119.2 of the Tax Code lists representation expenses, housing and meal expenses for employees, as well as expenses related to the provision of therapeutic and preventive meals, milk, and equivalent products and supplies for employees working in hazardous, heavy, and underground conditions.
We inform you that the norms and procedures for deducting representation expenses, housing and meal expenses for employees, and expenses related to therapeutic and preventive meals, milk, and equivalent products and supplies for employees working in hazardous, heavy, and underground jobs for taxation purposes have been approved by Decision No. 492 of the Cabinet of Ministers of the Republic of Azerbaijan dated November 22, 2024.
According to the rules, the daily deductible limit for meal expenses per employee is set at 5 (five) AZN if the cost of meals is paid directly to the employee, if meals are provided by the employer, or if they are obtained from another taxpayer engaged in public catering activities. Additionally, if the meal compensation is paid directly to the employee in a non-cash form, it is also considered a deductible expense.
Furthermore, please be informed that 50% of the representation expenses incurred by a taxpayer during the tax year, but not exceeding 1% of the annual income, are deductible for taxation purposes.
According to clause 4.3 of the Rules, representation expenses include the costs of official receptions and/or services provided to participants in events held for the purpose of establishing and/or maintaining mutual cooperation.