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Conditions for Tax Exemption of Dividend Income
Conditions for Tax Exemption of Dividend Income
We hereby inform you that, according to Article 102.1.22-2 of the Tax Code, starting from February 1, 2023, for a period of 5 (five) years, income in the form of dividends, discounts (the difference resulting from the placement of bonds below their nominal value), and interest paid on shares and bonds that are publicly offered and admitted to trading on a regulated market by resident legal entities, both within the territory of the Republic of Azerbaijan and abroad, shall be exempt from income tax.
Accordingly, dividends paid on shares that are publicly offered and admitted to trading on a regulated market by resident legal entities, whether within the Republic of Azerbaijan or outside its borders, shall be exempt from income tax.
At the same time, according to Article 100.1 of the Civil Code, a joint-stock company whose shares are distributed only among its founders or among a predetermined group of persons is considered a closed joint-stock company. Such a company may not conduct a public subscription for its shares or otherwise offer them to an unlimited number of persons.
Furthermore, in the Republic of Azerbaijan, the issuance, state registration, public offering of investment securities, post-trade and depositary systems, circulation of securities and derivative financial instruments, the licensing, organization, management, and liquidation of entities operating in the securities market, the protection of investors' rights, as well as the legal and economic foundations for regulation and supervision in the securities market are governed by the Law of the Republic of Azerbaijan “On the Securities Market” (hereinafter – the Law).
According to the provisions of Article 1 of the Law, a regulated market is a system organized and managed by a stock exchange that, in accordance with its internal rules, facilitates trading in securities and derivative financial instruments in a way that reflects the buying and selling interests of third parties.
In accordance with Article 8 of the Law, a public offering of investment securities refers to offering them to an unspecified number of persons, through mass media, or to more than 50 persons. Public offerings of investment securities (except for shares of joint-stock companies created during the privatization of state enterprises) must be carried out through a stock exchange.
We hereby inform you that, according to Article 102.1.22-2 of the Tax Code, starting from February 1, 2023, for a period of 5 (five) years, income in the form of dividends, discounts (the difference resulting from the placement of bonds below their nominal value), and interest paid on shares and bonds that are publicly offered and admitted to trading on a regulated market by resident legal entities, both within the territory of the Republic of Azerbaijan and abroad, shall be exempt from income tax.
Accordingly, dividends paid on shares that are publicly offered and admitted to trading on a regulated market by resident legal entities, whether within the Republic of Azerbaijan or outside its borders, shall be exempt from income tax.
At the same time, according to Article 100.1 of the Civil Code, a joint-stock company whose shares are distributed only among its founders or among a predetermined group of persons is considered a closed joint-stock company. Such a company may not conduct a public subscription for its shares or otherwise offer them to an unlimited number of persons.
Furthermore, in the Republic of Azerbaijan, the issuance, state registration, public offering of investment securities, post-trade and depositary systems, circulation of securities and derivative financial instruments, the licensing, organization, management, and liquidation of entities operating in the securities market, the protection of investors' rights, as well as the legal and economic foundations for regulation and supervision in the securities market are governed by the Law of the Republic of Azerbaijan “On the Securities Market” (hereinafter – the Law).
According to the provisions of Article 1 of the Law, a regulated market is a system organized and managed by a stock exchange that, in accordance with its internal rules, facilitates trading in securities and derivative financial instruments in a way that reflects the buying and selling interests of third parties.
In accordance with Article 8 of the Law, a public offering of investment securities refers to offering them to an unspecified number of persons, through mass media, or to more than 50 persons. Public offerings of investment securities (except for shares of joint-stock companies created during the privatization of state enterprises) must be carried out through a stock exchange.