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Taxation rules for rental income and applicable penalties
Taxation rules for rental income and applicable penalties
We hereby inform you that according to Article 124.1 of the Tax Code, if income from the rental of movable or immovable property is considered to be derived from an Azerbaijani source in accordance with Article 13.2.16 of this Code, then a tax at the rate of 14 percent is withheld at the source of payment.
Based on the above, when rental payments are made to a resident individual by persons registered as taxpayers, the tax obligation on rental income is fulfilled at the source of payment (at the rate of 14 percent) by the lessees.
If the person paying the rent is not registered as a taxpayer, the individual lessor himself, or a tax agent designated by him, pays the tax at the rate of 14 percent and, in accordance with Articles 33 and 149 of this Code, registers for tax purposes and submits a tax return.
According to Article 58.1 of the Tax Code, if the amount of tax (including tax withheld at source) indicated in the report is understated compared to the amount that should have been reported, or if the amount of tax due to the budget has been evaded by failing to submit the report, a financial sanction equal to 50 percent of the understated or evaded amount of tax (excluding additional tax assessed as a result of a desk tax audit) shall be imposed on the taxpayer (except for the case provided for in Article 58.1-1 of this Code).
If the assessed tax amounts are not paid within the period established by the Tax Code, interest is charged at the rate of 0.1 percent of the unpaid tax amount for each overdue day after the payment deadline. This interest applies to the entire overdue period, but not exceeding one year.
We hereby inform you that according to Article 124.1 of the Tax Code, if income from the rental of movable or immovable property is considered to be derived from an Azerbaijani source in accordance with Article 13.2.16 of this Code, then a tax at the rate of 14 percent is withheld at the source of payment.
Based on the above, when rental payments are made to a resident individual by persons registered as taxpayers, the tax obligation on rental income is fulfilled at the source of payment (at the rate of 14 percent) by the lessees.
If the person paying the rent is not registered as a taxpayer, the individual lessor himself, or a tax agent designated by him, pays the tax at the rate of 14 percent and, in accordance with Articles 33 and 149 of this Code, registers for tax purposes and submits a tax return.
According to Article 58.1 of the Tax Code, if the amount of tax (including tax withheld at source) indicated in the report is understated compared to the amount that should have been reported, or if the amount of tax due to the budget has been evaded by failing to submit the report, a financial sanction equal to 50 percent of the understated or evaded amount of tax (excluding additional tax assessed as a result of a desk tax audit) shall be imposed on the taxpayer (except for the case provided for in Article 58.1-1 of this Code).
If the assessed tax amounts are not paid within the period established by the Tax Code, interest is charged at the rate of 0.1 percent of the unpaid tax amount for each overdue day after the payment deadline. This interest applies to the entire overdue period, but not exceeding one year.