Withholding Tax Rates: A Comprehensive Overview
In Azerbaijan, certain types of income earned from Azerbaijani sources by non-residents without a permanent establishment (PE) are subject to Withholding Tax (WHT). The rates vary depending on the nature of the income.
Dividends from Azerbaijani Companies
Rate: 10%
Applicability: This rate applies to dividends paid out by companies based in Azerbaijan.
Interest Income Taxation
Rate: 10%
Scope: This includes interest paid by Azerbaijani residents, PEs of non-residents, excluding those to resident banks or PEs of non-resident banks.
Property Rental Income
Rate: 14%
Details: Income earned from renting both movable and immovable property in Azerbaijan falls under this rate.
Royalties
Rate: 14%
Context: Royalties, a common form of intellectual property income, are taxed at this rate.
Insurance and Reinsurance Payments
Rate: 4%
Specifics: Payments related to risk insurance or reinsurance services are subjected to this lower WHT rate.
Telecommunications and International Transport
Rate: 6%
Relevance: This rate is applicable to revenues from telecommunications and international transport services.
General Azerbaijani-source Income
Rate: 10%
Overview: Other types of income originating from Azerbaijan that do not fall under the specific categories mentioned are taxed at this rate.
Transactions with Low-tax Jurisdictions
Rate: 10%
Implication: Payments made to entities in low-tax jurisdictions are subject to this rate.
Additional Taxation Considerations
Enterprises and PEs in Azerbaijan can offset the tax withheld at the source against their taxable income, provided they have the necessary documentation.
Direct or indirect payments to individuals or entities in favorable tax regimes are considered Azerbaijani-source income and taxed at 10%.
Azerbaijani financial institutions and postal operators must withhold a 10% tax on transfers to digital wallets and payments to preferential tax territories by unregistered individuals.
This comprehensive guide to WHT rates in Azerbaijan should assist individuals and businesses in understanding their tax obligations related to various types of income.