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Calculation of social and health insurance contributions of individual entrepreneurs engaged in freight transportation
Calculation of social and health insurance contributions of individual entrepreneurs engaged in freight transportation
Until the end of 2023, individuals engaged in freight transportation continued their activities by obtaining a “Distinction Mark” and making payments for it. However, starting from 2024, according to the amendments to Articles 218.4.1, 220.5, and 221.4 of the Tax Code, taxpayers engaged in freight transportation are now required to calculate and pay tax on turnover to the state budget, instead of paying for the “Distinction Mark” as before.
The question arises: under what rules should individuals engaged in this activity calculate and pay the Mandatory State Social Insurance (MSSI) and Mandatory Health Insurance (MHI) contributions for themselves? Expert Elvin Zaidov provides clarification on this matter.
To clarify the issue, two aspects must be considered.
First aspect: If an individual engaged in freight transportation carries out the activity without employing hired workers, the MSSI and MHI contributions will be calculated as follows:
1. Calculation of MSSI contribution
According to Article 14.5.7 of the Law “On Social Insurance,” for individual activities (without employing workers) in road freight transportation, the contribution is calculated at 6% of the minimum monthly wage until January 1, 2026. Based on Articles 14.5.1-2 of the Law, the amount of the monthly social insurance contribution is determined with the application of the following coefficients until January 1, 2026:
In Baku city (including villages and settlements) – 2
In Absheron district, Sumgayit and Ganja cities – 1.5
In other cities and districts – 1
2. Calculation of MHI contribution
According to Article 15-10.1.3 of the Law “On Mandatory Health Insurance,” for individual entrepreneurs the amount of the mandatory health insurance contribution is calculated at 4% of the minimum monthly wage.
Example 1: Taxpayer Elmir Azizov (name is conditional) is engaged in freight transportation in Ganja city without employing workers. He had full activity in the second quarter of 2025. Considering that the minimum monthly wage in Azerbaijan is currently 400 manats, Elmir Azizov will pay the following amounts for MSSI and MHI in the second quarter:
Monthly MSSI contribution: (400 × 6%) × 1.5 = 36 manats
Quarterly MSSI contribution: 3 × 36 = 108 manats
Monthly MHI contribution: 400 × 4% = 16 manats
Quarterly MHI contribution: 3 × 16 = 48 manats
Second aspect: If an individual engaged in freight transportation carries out the activity by employing hired workers, the MSSI and MHI contributions will be calculated as follows:
1. Calculation of MSSI contribution
According to Article 14.5.1 of the Law “On Social Insurance,” for entrepreneurial activity, until January 1, 2026, the mandatory state social insurance contribution is calculated at 25% of the minimum monthly wage. Based on the same article, the amount of the monthly social insurance contribution is determined with the application of the following percentages:
In Baku city – 100%
In Sumgayit and Ganja cities – 90%
In other cities – 80%
In administrative centers of districts and settlements – 60%
In villages – 50%
2. Calculation of MHI contribution
According to Article 15-10.1.3 of the Law “On Mandatory Health Insurance,” for individuals acting as the insured, the contribution amount is set at 4% of the minimum monthly wage.
Example 2: Taxpayer Shahin Khalafov (name is conditional), engaged in freight transportation in Lankaran city, has 3 hired workers. He was fully active in the second quarter of 2025. With a minimum monthly wage of 400 manats, Shahin Khalafov will pay the following amounts for MSSI and MHI in the second quarter:
Monthly MSSI contribution: (400 × 25%) × 80% = 80 manats
Quarterly MSSI contribution: 3 × 80 = 240 manats
Monthly MHI contribution: 400 × 4% = 16 manats
Quarterly MHI contribution: 3 × 16 = 48 manats
Until the end of 2023, individuals engaged in freight transportation continued their activities by obtaining a “Distinction Mark” and making payments for it. However, starting from 2024, according to the amendments to Articles 218.4.1, 220.5, and 221.4 of the Tax Code, taxpayers engaged in freight transportation are now required to calculate and pay tax on turnover to the state budget, instead of paying for the “Distinction Mark” as before.
The question arises: under what rules should individuals engaged in this activity calculate and pay the Mandatory State Social Insurance (MSSI) and Mandatory Health Insurance (MHI) contributions for themselves? Expert Elvin Zaidov provides clarification on this matter.
To clarify the issue, two aspects must be considered.
First aspect: If an individual engaged in freight transportation carries out the activity without employing hired workers, the MSSI and MHI contributions will be calculated as follows:
1. Calculation of MSSI contribution
According to Article 14.5.7 of the Law “On Social Insurance,” for individual activities (without employing workers) in road freight transportation, the contribution is calculated at 6% of the minimum monthly wage until January 1, 2026. Based on Articles 14.5.1-2 of the Law, the amount of the monthly social insurance contribution is determined with the application of the following coefficients until January 1, 2026:
In Baku city (including villages and settlements) – 2
In Absheron district, Sumgayit and Ganja cities – 1.5
In other cities and districts – 1
2. Calculation of MHI contribution
According to Article 15-10.1.3 of the Law “On Mandatory Health Insurance,” for individual entrepreneurs the amount of the mandatory health insurance contribution is calculated at 4% of the minimum monthly wage.
Example 1: Taxpayer Elmir Azizov (name is conditional) is engaged in freight transportation in Ganja city without employing workers. He had full activity in the second quarter of 2025. Considering that the minimum monthly wage in Azerbaijan is currently 400 manats, Elmir Azizov will pay the following amounts for MSSI and MHI in the second quarter:
Monthly MSSI contribution: (400 × 6%) × 1.5 = 36 manats
Quarterly MSSI contribution: 3 × 36 = 108 manats
Monthly MHI contribution: 400 × 4% = 16 manats
Quarterly MHI contribution: 3 × 16 = 48 manats
Second aspect: If an individual engaged in freight transportation carries out the activity by employing hired workers, the MSSI and MHI contributions will be calculated as follows:
1. Calculation of MSSI contribution
According to Article 14.5.1 of the Law “On Social Insurance,” for entrepreneurial activity, until January 1, 2026, the mandatory state social insurance contribution is calculated at 25% of the minimum monthly wage. Based on the same article, the amount of the monthly social insurance contribution is determined with the application of the following percentages:
In Baku city – 100%
In Sumgayit and Ganja cities – 90%
In other cities – 80%
In administrative centers of districts and settlements – 60%
In villages – 50%
2. Calculation of MHI contribution
According to Article 15-10.1.3 of the Law “On Mandatory Health Insurance,” for individuals acting as the insured, the contribution amount is set at 4% of the minimum monthly wage.
Example 2: Taxpayer Shahin Khalafov (name is conditional), engaged in freight transportation in Lankaran city, has 3 hired workers. He was fully active in the second quarter of 2025. With a minimum monthly wage of 400 manats, Shahin Khalafov will pay the following amounts for MSSI and MHI in the second quarter:
Monthly MSSI contribution: (400 × 25%) × 80% = 80 manats
Quarterly MSSI contribution: 3 × 80 = 240 manats
Monthly MHI contribution: 400 × 4% = 16 manats
Quarterly MHI contribution: 3 × 16 = 48 manats