The new tax approach is the lowest indicator in the region, said Deputy Minister of Finance Azer Bayramov during the discussion of the amendments to the Tax Code at the meeting of the Milli Majlis (Azerbaijani Parliament) Committee on Economic Policy, Industry, and Entrepreneurship, APA reports.
The deputy minister noted that since 2019, a preferential mechanism for income tax and social insurance contributions has been applied to the monthly incomes of salaried employees in the private sector of the non-oil economy: “As a result of the reforms, compared to 2018, the wage fund in the non-oil private sector increased 2.7 times in 2024. The grace period ends in 2026, and income tax will be applied at 14 percent for incomes up to 2,500 manats and at 25 percent for incomes exceeding 2,500 manats. That is, as in the years before 2019, tax rates will be restored again, but this still represents a preferential approach.Thus, for individuals with an income of up to 2,500 manats, the income tax will be 3 percent, and instead of the 14 percent rate that should come into force according to the legislation, an 80 percent reduction is envisaged. In 2027, this figure will reach 5 percent, corresponding to a 65 percent reduction, and from 2028, it will reach 7 percent, corresponding to a 50 percent reduction. As a result, this tax approach will be the lowest indicator among the countries of the region and is a rarely observed case in practice. This step will help entrepreneurs and employees to comfortably adapt to the new tax rules. That is, neither will businesses face a sudden burden, nor will jobs be put at risk.”
Azer Bayramov noted that the gradual application of the tax will also support the stability of prices and wages in the economy: “As a result, a safer transition will be ensured for both employees and entrepreneurs. Under the new rules, the total burden on income from salaried work will be 33–37 percent, which is either at the same level or slightly lower than the total burden in the countries of the region. Additionally, it should be noted that if the government had not implemented a phased transition, the burden paid by entrepreneurs for employees could have risen up to 55 percent.”
