en
How are the incomes of sports coaches and gyms taxed?
How are the incomes of sports coaches and gyms taxed?
We present the taxation procedure for the incomes of sports instructors and the gyms where they provide services. The topic is explained by expert Nahid Ibrahim.
The taxation of incomes earned by sports coaches and gyms is regulated by the Tax Code of the Republic of Azerbaijan and is applied in different forms. This depends on their legal status — whether they are registered as individual entrepreneurs or legal entities (LLCs, clubs, etc.). Physical and legal persons with an annual turnover of less than 200,000 AZN can be classified as simplified tax payers. Among these, operating as an individual entrepreneur is the most common form.
Example 1: Let’s assume an individual entrepreneur is a simplified tax payer and earns 3,000 AZN per month as a coach:
Annual turnover: 3,000 × 12 = 36,000 AZN
Simplified tax (2%): 36,000 × 2% = 720 AZN (annual tax amount)
Example 2: Let’s say a gym is established and operates as an LLC with an annual turnover of 150,000 AZN. In this case, it is liable to pay profit tax. The annual tax amount payable by the LLC would be calculated as follows:
Annual turnover: 150,000 AZN
Annual expenses: 100,000 AZN (staff salaries, utilities, rent)
Profit: 50,000 AZN
Tax calculation: 50,000 × 20% = 10,000 AZN (annual tax amount)
If an individual entrepreneur who is a simplified tax payer actively operates in the mentioned field, they must also pay the additional contributions listed below to the state budget within the deadlines set in accordance with the Tax Code. According to Article 14.5 of the Law "On Social Insurance", individual entrepreneurs must calculate and pay the mandatory state social insurance contributions for their area of activity at the following rates until January 1, 2026:
Based on a percentage of the minimum monthly wage — 50% in the construction sector, 25% in other sectors:
- 100% of that amount in Baku city
- 90% in Sumgayit and Ganja cities
- 80% in other cities
- 60% in administrative centers of districts and settlements
- 50% in rural areas
Example 3: Suppose an individual entrepreneur works as a sports coach in Sumgayit city. In this case, the amount of the mandatory monthly state social insurance contribution for the specified entrepreneurial activity would be 90 AZN:
(400 × 25%) × 90% = 90 AZN
The monthly mandatory health insurance contribution for this entrepreneur would be 16 AZN:
400 × 4% = 16 AZN
We present the taxation procedure for the incomes of sports instructors and the gyms where they provide services. The topic is explained by expert Nahid Ibrahim.
The taxation of incomes earned by sports coaches and gyms is regulated by the Tax Code of the Republic of Azerbaijan and is applied in different forms. This depends on their legal status — whether they are registered as individual entrepreneurs or legal entities (LLCs, clubs, etc.). Physical and legal persons with an annual turnover of less than 200,000 AZN can be classified as simplified tax payers. Among these, operating as an individual entrepreneur is the most common form.
Example 1: Let’s assume an individual entrepreneur is a simplified tax payer and earns 3,000 AZN per month as a coach:
Annual turnover: 3,000 × 12 = 36,000 AZN
Simplified tax (2%): 36,000 × 2% = 720 AZN (annual tax amount)
Example 2: Let’s say a gym is established and operates as an LLC with an annual turnover of 150,000 AZN. In this case, it is liable to pay profit tax. The annual tax amount payable by the LLC would be calculated as follows:
Annual turnover: 150,000 AZN
Annual expenses: 100,000 AZN (staff salaries, utilities, rent)
Profit: 50,000 AZN
Tax calculation: 50,000 × 20% = 10,000 AZN (annual tax amount)
If an individual entrepreneur who is a simplified tax payer actively operates in the mentioned field, they must also pay the additional contributions listed below to the state budget within the deadlines set in accordance with the Tax Code. According to Article 14.5 of the Law "On Social Insurance", individual entrepreneurs must calculate and pay the mandatory state social insurance contributions for their area of activity at the following rates until January 1, 2026:
Based on a percentage of the minimum monthly wage — 50% in the construction sector, 25% in other sectors:
- 100% of that amount in Baku city
- 90% in Sumgayit and Ganja cities
- 80% in other cities
- 60% in administrative centers of districts and settlements
- 50% in rural areas
Example 3: Suppose an individual entrepreneur works as a sports coach in Sumgayit city. In this case, the amount of the mandatory monthly state social insurance contribution for the specified entrepreneurial activity would be 90 AZN:
(400 × 25%) × 90% = 90 AZN
The monthly mandatory health insurance contribution for this entrepreneur would be 16 AZN:
400 × 4% = 16 AZN