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How much tax is withheld from a 3,000 manat rental payment made to an individual not registered for tax purposes, and how much is paid to them?
How much tax is withheld from a 3,000 manat rental payment made to an individual not registered for tax purposes, and how much is paid to them?
We inform you that, according to Article 124.1 of the Tax Code, if income from the rental of movable or immovable property is derived from sources in Azerbaijan in accordance with Article 13.2.16 of this Code, tax is withheld at the rate of 14% at the source of payment.
Accordingly, if the rental payment is made to a resident individual by persons registered as taxpayers, the tax obligation on rental income is fulfilled by the lessee at the source of payment at the rate of 14%.
If the person making the rental payment is not registered as a taxpayer, the lessor (individual) or their appointed tax agent pays the tax at the rate of 14% and registers for tax purposes and submits a declaration in accordance with Articles 33 and 149 of the Code.
According to Article 58.1 of the Tax Code, if the tax amount (including tax withheld at the source) reported in the declaration is less than the amount required to be reported, or if the tax due to the budget is evaded by failing to submit a declaration, a financial penalty of 50% of the underreported or evaded tax amount (excluding any additional tax calculated during a desk audit) is applied to the taxpayer (except for the case provided for in Article 58.1-1 of the Code).
If the calculated tax amounts are not paid within the period specified by the Tax Code, interest is charged on the unpaid tax at a rate of 0.1% for each day overdue. The interest is applied for the entire overdue period, but not for more than one year.
In response to your inquiry, we inform you that from a rental payment of 3,000 manats, 420 manats (3,000 × 14%) should be withheld as tax at the source and paid to the budget, and 2,580 manats (3,000 – 420) should be paid to the individual.
We inform you that, according to Article 124.1 of the Tax Code, if income from the rental of movable or immovable property is derived from sources in Azerbaijan in accordance with Article 13.2.16 of this Code, tax is withheld at the rate of 14% at the source of payment.
Accordingly, if the rental payment is made to a resident individual by persons registered as taxpayers, the tax obligation on rental income is fulfilled by the lessee at the source of payment at the rate of 14%.
If the person making the rental payment is not registered as a taxpayer, the lessor (individual) or their appointed tax agent pays the tax at the rate of 14% and registers for tax purposes and submits a declaration in accordance with Articles 33 and 149 of the Code.
According to Article 58.1 of the Tax Code, if the tax amount (including tax withheld at the source) reported in the declaration is less than the amount required to be reported, or if the tax due to the budget is evaded by failing to submit a declaration, a financial penalty of 50% of the underreported or evaded tax amount (excluding any additional tax calculated during a desk audit) is applied to the taxpayer (except for the case provided for in Article 58.1-1 of the Code).
If the calculated tax amounts are not paid within the period specified by the Tax Code, interest is charged on the unpaid tax at a rate of 0.1% for each day overdue. The interest is applied for the entire overdue period, but not for more than one year.
In response to your inquiry, we inform you that from a rental payment of 3,000 manats, 420 manats (3,000 × 14%) should be withheld as tax at the source and paid to the budget, and 2,580 manats (3,000 – 420) should be paid to the individual.