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The concept of dividends and cases of tax exemption
The concept of dividends and cases of tax exemption
We inform you that, according to Article 13.2.15 of the Tax Code, a dividend is a payment made by a legal entity to its founders (participants) or shareholders in the form of distribution of its net profit (for simplified tax payers – income after deduction of taxes and expenses), including the distribution of assets (property) formed from net profit upon the liquidation of the legal entity, as well as monetary or other payments related to the repurchase of shares (interests, stocks) within the limits of their nominal value increased at the expense of net profit.
At the same time, we inform you that income received from the distribution of property during the liquidation of a legal entity (except for property formed from undistributed profit), as well as the distribution of shares that do not change the percentage of shareholders’ ownership, and payments made in connection with the repurchase of shares (interests, stocks) within the limits of their nominal value (except for increases in nominal value from undistributed profit) are not considered dividends.
We also inform you that, according to Articles 106.10 and 218-1.1.4 of the Tax Code, dividend income received by individuals and legal entities who are founders (participants) or shareholders of a resident enterprise that maintains income and expense records in accordance with the Tax Code, is not registered for VAT purposes, and whose transaction volume does not exceed 200,000 AZN in any month within a consecutive 12-month period, is exempt from taxation.
Furthermore, we bring to your attention that dividend income received by individuals and legal entities who are participants in resident legal entities engaged in the production of agricultural products (including industrial production) is exempt from taxation for a period of 4 years starting from January 1, 2023.
We inform you that, according to Article 13.2.15 of the Tax Code, a dividend is a payment made by a legal entity to its founders (participants) or shareholders in the form of distribution of its net profit (for simplified tax payers – income after deduction of taxes and expenses), including the distribution of assets (property) formed from net profit upon the liquidation of the legal entity, as well as monetary or other payments related to the repurchase of shares (interests, stocks) within the limits of their nominal value increased at the expense of net profit.
At the same time, we inform you that income received from the distribution of property during the liquidation of a legal entity (except for property formed from undistributed profit), as well as the distribution of shares that do not change the percentage of shareholders’ ownership, and payments made in connection with the repurchase of shares (interests, stocks) within the limits of their nominal value (except for increases in nominal value from undistributed profit) are not considered dividends.
We also inform you that, according to Articles 106.10 and 218-1.1.4 of the Tax Code, dividend income received by individuals and legal entities who are founders (participants) or shareholders of a resident enterprise that maintains income and expense records in accordance with the Tax Code, is not registered for VAT purposes, and whose transaction volume does not exceed 200,000 AZN in any month within a consecutive 12-month period, is exempt from taxation.
Furthermore, we bring to your attention that dividend income received by individuals and legal entities who are participants in resident legal entities engaged in the production of agricultural products (including industrial production) is exempt from taxation for a period of 4 years starting from January 1, 2023.