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Who pays the tax on rental income?
Who pays the tax on rental income?
According to Article 124.1 of the Tax Code, rental income derived from movable or immovable property and sourced in Azerbaijan is subject to withholding tax at a rate of 14%.
Pursuant to Article 150.1.6 of the Tax Code, legal entities, entrepreneurs, and individuals making payments specified under Articles 124, 125, or 126 are required to withhold tax at the source of payment. The withheld tax must be remitted to the state budget no later than the 20th day of the month following the relevant quarter, and a withholding tax return must also be submitted.
In the case described in your inquiry, where rental payments are made to a resident individual by a person registered as a taxpayer, the obligation to withhold and pay the 14% tax on rental income rests with the tenant. Therefore, the landlord has no obligation to pay additional tax or submit tax reports.
If the amount of tax is understated or a tax return is not submitted, a financial penalty equal to 50% of the understated or concealed tax amount may be imposed. In addition, late payment of taxes is subject to interest at a rate of 0.1% of the unpaid tax amount for each day of delay, up to a maximum period of one year.
According to Article 124.1 of the Tax Code, rental income derived from movable or immovable property and sourced in Azerbaijan is subject to withholding tax at a rate of 14%.
Pursuant to Article 150.1.6 of the Tax Code, legal entities, entrepreneurs, and individuals making payments specified under Articles 124, 125, or 126 are required to withhold tax at the source of payment. The withheld tax must be remitted to the state budget no later than the 20th day of the month following the relevant quarter, and a withholding tax return must also be submitted.
In the case described in your inquiry, where rental payments are made to a resident individual by a person registered as a taxpayer, the obligation to withhold and pay the 14% tax on rental income rests with the tenant. Therefore, the landlord has no obligation to pay additional tax or submit tax reports.
If the amount of tax is understated or a tax return is not submitted, a financial penalty equal to 50% of the understated or concealed tax amount may be imposed. In addition, late payment of taxes is subject to interest at a rate of 0.1% of the unpaid tax amount for each day of delay, up to a maximum period of one year.