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Is compensation paid due to an employee's death subject to taxation?
Is compensation paid due to an employee's death subject to taxation?
According to the Labour Code, when an employment contract is terminated due to an employee's death, the deceased employee’s heirs are entitled to compensation amounting to at least three times the average monthly salary. Is this amount subject to income tax?
The State Tax Service under the Ministry of Economy has stated that, in accordance with Article 77.7 of the Labour Code, in the event of an employee’s death, their heirs are paid compensation equal to no less than three times the average monthly wage.
According to Article 102 of the Tax Code and Article 15 of the Law “On Social Insurance,” the compensation paid to the heirs of the deceased employee, as stipulated by the Labour Code of the Republic of Azerbaijan, is exempt from income tax and mandatory state social insurance contributions.
It is also noted that if the deceased was both an insured person and a recipient of a labour pension, only one funeral benefit is paid — the one with the higher amount.
According to the Labour Code, when an employment contract is terminated due to an employee's death, the deceased employee’s heirs are entitled to compensation amounting to at least three times the average monthly salary. Is this amount subject to income tax?
The State Tax Service under the Ministry of Economy has stated that, in accordance with Article 77.7 of the Labour Code, in the event of an employee’s death, their heirs are paid compensation equal to no less than three times the average monthly wage.
According to Article 102 of the Tax Code and Article 15 of the Law “On Social Insurance,” the compensation paid to the heirs of the deceased employee, as stipulated by the Labour Code of the Republic of Azerbaijan, is exempt from income tax and mandatory state social insurance contributions.
It is also noted that if the deceased was both an insured person and a recipient of a labour pension, only one funeral benefit is paid — the one with the higher amount.