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trWho is responsible for paying the tax on rental income of a person whose TIN is frozen?
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Who is responsible for paying the tax on rental income of a person whose TIN is frozen?
Individual A had previously obtained a TIN (VÖEN), but their business activity is currently suspended and their TIN is frozen. They have leased a business property owned by them to individual B, who has a TIN. In this case, is individual A required to issue an electronic invoice (e-invoice) for the rental payment? It should be noted that the TIN of individual A is currently frozen. How are the tax obligations regulated in this case? Is individual B considered to have fully fulfilled all tax obligations by paying the tax on the rental income and submitting the withholding tax return?
We hereby inform you that, pursuant to Article 124.1 of the Tax Code, if income from the rental of movable and immovable property is considered income derived from an Azerbaijani source in accordance with Article 13.2.16 of the Tax Code, tax is withheld at source at a rate of 14 percent.
According to Article 150.1.6 of the Tax Code, legal entities, entrepreneurs and individuals deriving income from non-business activities who make payments stipulated in Articles 124, 125 or 126 of the Tax Code are required to withhold tax at source. The person responsible for withholding tax at source from rental payments must transfer the tax to the state budget no later than the 20th day of the month following the quarter in which the income was paid and submit a withholding tax return to the tax authority.
In the case described in your inquiry, where rental payments to a resident individual are made by persons registered as taxpayers, the tax obligation on rental income is fulfilled by the tenants through withholding tax at source at a rate of 14 percent.
At the same time, we inform you that since the TIN of the individual leasing out the property (individual A) is frozen, they are not required to issue an electronic invoice.
According to Article 58.1 of the Tax Code, if the amount of tax (including withholding tax) indicated in a tax return is understated compared to the amount that should have been indicated in the return, or if the tax payable to the state budget is evaded by failing to submit a tax return, a financial penalty equal to 50 percent of the understated or evaded tax amount is imposed on the taxpayer, except for the case specified in Article 58.1-1 of the Tax Code.
If the calculated tax amounts are not paid within the period established by the Tax Code, interest at a rate of 0.1 percent of the unpaid tax amount is charged for each day overdue after the payment deadline. Such interest is applied for the entire period of delay in tax payments, but for no more than one year.
Legal basis: Articles 124 and 150.1.6 of the Tax Code.
Individual A had previously obtained a TIN (VÖEN), but their business activity is currently suspended and their TIN is frozen. They have leased a business property owned by them to individual B, who has a TIN. In this case, is individual A required to issue an electronic invoice (e-invoice) for the rental payment? It should be noted that the TIN of individual A is currently frozen. How are the tax obligations regulated in this case? Is individual B considered to have fully fulfilled all tax obligations by paying the tax on the rental income and submitting the withholding tax return?
We hereby inform you that, pursuant to Article 124.1 of the Tax Code, if income from the rental of movable and immovable property is considered income derived from an Azerbaijani source in accordance with Article 13.2.16 of the Tax Code, tax is withheld at source at a rate of 14 percent.
According to Article 150.1.6 of the Tax Code, legal entities, entrepreneurs and individuals deriving income from non-business activities who make payments stipulated in Articles 124, 125 or 126 of the Tax Code are required to withhold tax at source. The person responsible for withholding tax at source from rental payments must transfer the tax to the state budget no later than the 20th day of the month following the quarter in which the income was paid and submit a withholding tax return to the tax authority.
In the case described in your inquiry, where rental payments to a resident individual are made by persons registered as taxpayers, the tax obligation on rental income is fulfilled by the tenants through withholding tax at source at a rate of 14 percent.
At the same time, we inform you that since the TIN of the individual leasing out the property (individual A) is frozen, they are not required to issue an electronic invoice.
According to Article 58.1 of the Tax Code, if the amount of tax (including withholding tax) indicated in a tax return is understated compared to the amount that should have been indicated in the return, or if the tax payable to the state budget is evaded by failing to submit a tax return, a financial penalty equal to 50 percent of the understated or evaded tax amount is imposed on the taxpayer, except for the case specified in Article 58.1-1 of the Tax Code.
If the calculated tax amounts are not paid within the period established by the Tax Code, interest at a rate of 0.1 percent of the unpaid tax amount is charged for each day overdue after the payment deadline. Such interest is applied for the entire period of delay in tax payments, but for no more than one year.
Legal basis: Articles 124 and 150.1.6 of the Tax Code.