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Procedure for applying tax exemptions on income exceeding 2500 AZN
Procedure for applying tax exemptions on income exceeding 2500 AZN
It is stated that salary received by an individual at the workplace, as well as any payments or benefits arising from this employment, including compensation for unused annual leave, are considered income derived from employment.
From 1 January 2026 to 1 January 2027, for individuals working for taxpayers operating outside the oil and gas sector and belonging to the non-state sector, the monthly taxable income is subject to the following rates: up to 2500 AZN — 3%; from 2500 to 8000 AZN — 75 AZN + 10% of the amount exceeding 2500 AZN; above 8000 AZN — 625 AZN + 14% of the amount exceeding 8000 AZN. According to Article 102.1.6 of the Tax Code, 200 AZN of monthly income at the main place of employment is exempt from income tax if the income does not exceed 2500 AZN.
In addition, according to Article 102.4.5 of the Tax Code, the taxable monthly income of internally displaced persons and equivalent individuals is reduced by 100 AZN. This exemption does not apply to persons who have obtained permanent residence under housing legislation or civil legal transactions.
İt is noted that when an employer pays compensation for unused annual leave from previous years, such compensation is taxed separately from the salary of the month of payment. For tax purposes, the tax exemptions provided under Article 102 of the Tax Code are deducted separately from each annual compensation amount.
It is stated that salary received by an individual at the workplace, as well as any payments or benefits arising from this employment, including compensation for unused annual leave, are considered income derived from employment.
From 1 January 2026 to 1 January 2027, for individuals working for taxpayers operating outside the oil and gas sector and belonging to the non-state sector, the monthly taxable income is subject to the following rates: up to 2500 AZN — 3%; from 2500 to 8000 AZN — 75 AZN + 10% of the amount exceeding 2500 AZN; above 8000 AZN — 625 AZN + 14% of the amount exceeding 8000 AZN. According to Article 102.1.6 of the Tax Code, 200 AZN of monthly income at the main place of employment is exempt from income tax if the income does not exceed 2500 AZN.
In addition, according to Article 102.4.5 of the Tax Code, the taxable monthly income of internally displaced persons and equivalent individuals is reduced by 100 AZN. This exemption does not apply to persons who have obtained permanent residence under housing legislation or civil legal transactions.
İt is noted that when an employer pays compensation for unused annual leave from previous years, such compensation is taxed separately from the salary of the month of payment. For tax purposes, the tax exemptions provided under Article 102 of the Tax Code are deducted separately from each annual compensation amount.