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Are tax concessions applied to employees who benefit from life savings insurance?
Are tax concessions applied to employees who benefit from life savings insurance?
Under the life savings insurance agreements concluded between a state institution and a local insurance company, a certain portion of the employees’ monthly salaries is voluntarily paid by the employer to the insurance company. Five-year agreements were signed with the insurance company on 01.01.2021 and 01.01.2024. When calculating tax for these employees, a tax exemption was applied based on Article 102.1.8 of the Tax Code. After the amendment to the Tax Code that entered into force on January 1, 2025, is this tax exemption still applicable?
According to the State Tax Service under the Ministry of Economy, from January 1, 2025, based on the amendment to Article 102.1.8 of the Tax Code, tax exemptions for all types of compulsory insurance and voluntary medical insurance premiums paid by the employer, as well as life savings insurance and pension insurance premiums under agreements concluded for at least 3 years, apply only to individuals employed by employers belonging to the non-state (private) sector.
According to the transitional provisions of the Law of the Republic of Azerbaijan No. 98-VIIQD dated December 16, 2024, “On Amendments to the Tax Code of the Republic of Azerbaijan,” the mentioned article applies to insurance premiums paid under life savings insurance and pension insurance agreements concluded after January 1, 2025.
For taxpayers not belonging to the non-state sector, for life savings insurance and pension insurance agreements concluded for at least 3 years before January 1, 2025, and whose 3-year term has not been completed by that date, the tax exemption in force until January 1, 2025, applies only to insurance premiums paid within 3 years from the date the agreements were concluded.
For taxpayers not belonging to the non-state sector, for life savings insurance and pension insurance agreements concluded for at least 3 years before January 1, 2025, and whose 3-year term had already been completed by that date, the tax exemption in force until January 1, 2025, applies only to insurance premiums paid up to that date.
Based on the above, for life savings insurance agreements concluded for at least 3 years before January 1, 2025, and whose 3-year term had already been completed by that date (in this case, the 5-year agreement concluded on 01.01.2021), the tax exemption for employees working in the state sector applies only to insurance premiums paid up to January 1, 2025. No tax exemption is applied to premiums paid under this agreement after January 1, 2025.
For life savings insurance agreements concluded for at least 3 years before January 1, 2025, and whose 3-year term has not been completed by that date (in this case, the 5-year agreement concluded on 01.01.2024), the tax exemption for employees working in the state sector applies to insurance premiums paid within 3 years from the date the agreements were concluded.
Under the life savings insurance agreements concluded between a state institution and a local insurance company, a certain portion of the employees’ monthly salaries is voluntarily paid by the employer to the insurance company. Five-year agreements were signed with the insurance company on 01.01.2021 and 01.01.2024. When calculating tax for these employees, a tax exemption was applied based on Article 102.1.8 of the Tax Code. After the amendment to the Tax Code that entered into force on January 1, 2025, is this tax exemption still applicable?
According to the State Tax Service under the Ministry of Economy, from January 1, 2025, based on the amendment to Article 102.1.8 of the Tax Code, tax exemptions for all types of compulsory insurance and voluntary medical insurance premiums paid by the employer, as well as life savings insurance and pension insurance premiums under agreements concluded for at least 3 years, apply only to individuals employed by employers belonging to the non-state (private) sector.
According to the transitional provisions of the Law of the Republic of Azerbaijan No. 98-VIIQD dated December 16, 2024, “On Amendments to the Tax Code of the Republic of Azerbaijan,” the mentioned article applies to insurance premiums paid under life savings insurance and pension insurance agreements concluded after January 1, 2025.
For taxpayers not belonging to the non-state sector, for life savings insurance and pension insurance agreements concluded for at least 3 years before January 1, 2025, and whose 3-year term has not been completed by that date, the tax exemption in force until January 1, 2025, applies only to insurance premiums paid within 3 years from the date the agreements were concluded.
For taxpayers not belonging to the non-state sector, for life savings insurance and pension insurance agreements concluded for at least 3 years before January 1, 2025, and whose 3-year term had already been completed by that date, the tax exemption in force until January 1, 2025, applies only to insurance premiums paid up to that date.
Based on the above, for life savings insurance agreements concluded for at least 3 years before January 1, 2025, and whose 3-year term had already been completed by that date (in this case, the 5-year agreement concluded on 01.01.2021), the tax exemption for employees working in the state sector applies only to insurance premiums paid up to January 1, 2025. No tax exemption is applied to premiums paid under this agreement after January 1, 2025.
For life savings insurance agreements concluded for at least 3 years before January 1, 2025, and whose 3-year term has not been completed by that date (in this case, the 5-year agreement concluded on 01.01.2024), the tax exemption for employees working in the state sector applies to insurance premiums paid within 3 years from the date the agreements were concluded.