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Rules for taxation of non-residents’ income
Rules for taxation of non-residents’ income
We would like to inform you that, in accordance with Article 125.1 of the Tax Code, tax is withheld at the source of payment from the gross income of a non-resident, determined as income derived from sources in Azerbaijan and not attributable to the permanent establishment of the non-resident in the territory of the Republic of Azerbaijan, without deduction of expenses.
Income derived from sources in Azerbaijan refers to the types of income specified in Article 13.2.16 of the Tax Code.
Withholding tax from a non-resident’s income is regulated by Article 125.1 of the Tax Code. According to the provisions of Article 125.1.5, a 10 percent tax is withheld at the source of payment, without deduction of expenses, from other income of a non-resident determined as income derived from sources in Azerbaijan under Article 13.2.16 of the Tax Code, and not attributable to the non-resident’s permanent establishment in the territory of the Republic of Azerbaijan, obtained from performing work or providing services.
Services and works provided outside the territory of the Republic of Azerbaijan by a VAT payer who is a resident of Azerbaijan are not subject to VAT.
However, under Article 168.1.5 of the Tax Code, consulting, legal, accounting, engineering, or advertising services, as well as data processing and other similar services, are subject to VAT directly in the place where the recipient of such services is located or registered.
Additionally, we inform you that regarding the transaction mentioned in the inquiry, it is recommended that the taxpayer apply to the tax authority at the place of registration with information on the actual circumstances of the services provided, the nature of these services, the method of determining the commission amount, and supporting documents (contract, payment documents, etc.).
We would like to inform you that, in accordance with Article 125.1 of the Tax Code, tax is withheld at the source of payment from the gross income of a non-resident, determined as income derived from sources in Azerbaijan and not attributable to the permanent establishment of the non-resident in the territory of the Republic of Azerbaijan, without deduction of expenses.
Income derived from sources in Azerbaijan refers to the types of income specified in Article 13.2.16 of the Tax Code.
Withholding tax from a non-resident’s income is regulated by Article 125.1 of the Tax Code. According to the provisions of Article 125.1.5, a 10 percent tax is withheld at the source of payment, without deduction of expenses, from other income of a non-resident determined as income derived from sources in Azerbaijan under Article 13.2.16 of the Tax Code, and not attributable to the non-resident’s permanent establishment in the territory of the Republic of Azerbaijan, obtained from performing work or providing services.
Services and works provided outside the territory of the Republic of Azerbaijan by a VAT payer who is a resident of Azerbaijan are not subject to VAT.
However, under Article 168.1.5 of the Tax Code, consulting, legal, accounting, engineering, or advertising services, as well as data processing and other similar services, are subject to VAT directly in the place where the recipient of such services is located or registered.
Additionally, we inform you that regarding the transaction mentioned in the inquiry, it is recommended that the taxpayer apply to the tax authority at the place of registration with information on the actual circumstances of the services provided, the nature of these services, the method of determining the commission amount, and supporting documents (contract, payment documents, etc.).