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Application of tax incentives to income generated from activities in territories liberated from occupation
Application of tax incentives to income generated from activities in territories liberated from occupation
My question concerns the application of tax incentives to activities carried out in territories liberated from occupation. The law refers to “residents of the liberated territories.” I kindly ask for clarification on this matter. Is it mandatory for a taxpayer to be registered with the tax authorities in those territories in order to benefit from the incentives? Can taxpayers registered in Baku or other regions not apply these incentives to income earned from activities carried out in the liberated territories?
According to the State Tax Service under the Ministry of Economy, residents of the liberated territories are exempt from profit (income) tax, property tax, land tax, and simplified tax for a period of 10 years starting from January 1, 2023. Based on the provisions of the Tax Code, these exemptions apply to legal entities and individuals registered with the tax authorities in the liberated territories and supplying goods (works, services) to residents of those territories.
According to Article 226.2 of the Tax Code, a resident of the liberated territories refers to legal entities and individuals that are registered for tax purposes in those territories and directly carry out activities there.
Furthermore, if a resident of the liberated territories conducts the same type of activity both within those territories and outside them (within the Republic of Azerbaijan), the tax exemptions provided under this article do not apply. In such cases, the taxpayer must maintain separate accounting of income and expenses for activities carried out within and outside the liberated territories.
Basis: Articles 226 and 227 of the Tax Code
My question concerns the application of tax incentives to activities carried out in territories liberated from occupation. The law refers to “residents of the liberated territories.” I kindly ask for clarification on this matter. Is it mandatory for a taxpayer to be registered with the tax authorities in those territories in order to benefit from the incentives? Can taxpayers registered in Baku or other regions not apply these incentives to income earned from activities carried out in the liberated territories?
According to the State Tax Service under the Ministry of Economy, residents of the liberated territories are exempt from profit (income) tax, property tax, land tax, and simplified tax for a period of 10 years starting from January 1, 2023. Based on the provisions of the Tax Code, these exemptions apply to legal entities and individuals registered with the tax authorities in the liberated territories and supplying goods (works, services) to residents of those territories.
According to Article 226.2 of the Tax Code, a resident of the liberated territories refers to legal entities and individuals that are registered for tax purposes in those territories and directly carry out activities there.
Furthermore, if a resident of the liberated territories conducts the same type of activity both within those territories and outside them (within the Republic of Azerbaijan), the tax exemptions provided under this article do not apply. In such cases, the taxpayer must maintain separate accounting of income and expenses for activities carried out within and outside the liberated territories.
Basis: Articles 226 and 227 of the Tax Code