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Are tax incentives (exemptions) provided for taxpayers engaged in tutoring activities?
Are tax incentives (exemptions) provided for taxpayers engaged in tutoring activities?
I am planning to start tutoring activities in English on an individual basis (face-to-face or online lessons) and to register as an individual entrepreneur for tax purposes. In this regard, I kindly request clarification on the following issues: 1. After registering as an individual entrepreneur, how should payments received from individuals (students or parents) be recorded as income? 2. After obtaining a Tax Identification Number (VÖEN), which points should be given special attention regarding the fulfillment of tax and social insurance obligations, submission of tax declarations, and the overall procedure?
The State Tax Service under the Ministry of Economy has stated that the activity indicated in the inquiry is considered entrepreneurial activity. According to Article 33.4 of the Tax Code, an individual who carries out entrepreneurial activity without establishing a legal entity must, before starting the activity, submit an application to the tax authority for tax registration, obtain a Tax Identification Number (VÖEN), and pay taxes to the state budget on the income derived from the activity. Tax liabilities are determined in accordance with the taxation system selected in the application submitted during tax registration and the arising taxable objects.
If an individual chooses the simplified taxation system, a simplified tax at the rate of 2 percent is calculated on the obtained income (gross turnover) without deducting expenses and is paid to the state budget. If the activity is carried out as a personal income tax payer, income tax at the rate of 20 percent is calculated on the remaining amount after deducting expenses related to earning the income and is paid to the state budget.
It has also been stated that pursuant to Article 102.1.30-1 of the Tax Code, starting from January 1, 2025, if the annual income obtained by individuals engaged in the specified types of activities during a calendar year does not exceed 45,000 manats (without considering expenses), 75 percent of such income is exempt from personal income tax.
Services provided in the fields of science, education, culture, and sports fall under the types of activities specified in this article (Article 102.1.30-1.6 of the Tax Code). If non-commodity transactions are carried out by the taxpayer, the tax incentive established by this article does not apply to income derived from such non-commodity transactions.
Additionally, it has been noted that if an individual engaged in the specified types of activities simultaneously engages in other types of activities, the tax incentive provided for in Article 102.1.30-1 may be applied only if the share of annual income derived from those activities in the total annual income is not less than 50 percent.
Information on declaration forms and rules for their completion, as well as technical issues encountered when using electronic services, can be found in the “Declaration” and “Electronic Services” sections.
I am planning to start tutoring activities in English on an individual basis (face-to-face or online lessons) and to register as an individual entrepreneur for tax purposes. In this regard, I kindly request clarification on the following issues: 1. After registering as an individual entrepreneur, how should payments received from individuals (students or parents) be recorded as income? 2. After obtaining a Tax Identification Number (VÖEN), which points should be given special attention regarding the fulfillment of tax and social insurance obligations, submission of tax declarations, and the overall procedure?
The State Tax Service under the Ministry of Economy has stated that the activity indicated in the inquiry is considered entrepreneurial activity. According to Article 33.4 of the Tax Code, an individual who carries out entrepreneurial activity without establishing a legal entity must, before starting the activity, submit an application to the tax authority for tax registration, obtain a Tax Identification Number (VÖEN), and pay taxes to the state budget on the income derived from the activity. Tax liabilities are determined in accordance with the taxation system selected in the application submitted during tax registration and the arising taxable objects.
If an individual chooses the simplified taxation system, a simplified tax at the rate of 2 percent is calculated on the obtained income (gross turnover) without deducting expenses and is paid to the state budget. If the activity is carried out as a personal income tax payer, income tax at the rate of 20 percent is calculated on the remaining amount after deducting expenses related to earning the income and is paid to the state budget.
It has also been stated that pursuant to Article 102.1.30-1 of the Tax Code, starting from January 1, 2025, if the annual income obtained by individuals engaged in the specified types of activities during a calendar year does not exceed 45,000 manats (without considering expenses), 75 percent of such income is exempt from personal income tax.
Services provided in the fields of science, education, culture, and sports fall under the types of activities specified in this article (Article 102.1.30-1.6 of the Tax Code). If non-commodity transactions are carried out by the taxpayer, the tax incentive established by this article does not apply to income derived from such non-commodity transactions.
Additionally, it has been noted that if an individual engaged in the specified types of activities simultaneously engages in other types of activities, the tax incentive provided for in Article 102.1.30-1 may be applied only if the share of annual income derived from those activities in the total annual income is not less than 50 percent.
Information on declaration forms and rules for their completion, as well as technical issues encountered when using electronic services, can be found in the “Declaration” and “Electronic Services” sections.