Ministry of Taxes of the Republic of Azerbaijan

Municipal taxes are defined by the Tax Code and relevant legislation, applied by the decision of municipalities and paid in the territory of municipalities.
This booklet provides information about following taxes which are defined by the Tax Code and paid to municipal budget:

1. land use tax levied from physical persons;
2. property tax levied from physical persons;
3. mineral royalty tax on construction materials of local importance;
4. profit tax of enterprises and organizations owned by municipalities.

Rates of municipal taxes are determined within the limits specified in the Tax Code. In accordance with tax legislation, municipalities may adopt decisions to fully or partially exempt specific categories of taxpayers from local taxes or reduce tax rates in their territories.

Physical persons who own or use land plots on the territory of Azerbaijan Republic are payers of tax on land. Land owners and users are liable to tax on land irrespective of results of economic activity and land plots granted to their ownership or use is a taxable base.
Tax rates for agricultural lands are calculated for each hectare of such lands based on conventional points determined with consideration of the purpose, geographical location and the quality of agricultural lands. The price of one conventional point is 0.06 manats.
Tax on lands designated for industrial, construction, transportation, communication, commercial-consumer and other special purposes, homestead lands, housing resources, and lands occupied by the citizens for cottages is imposed on each 100 square meters of land plot at the rates determined in multiples of conventional financial unit specified in the table below:

Settlements	Lands for industry, construction, transport, communications, services and other lands of special designation	Lands of housing funds, farmlands and lands occupied under the summer houses
Baku	10	0.6
Ganja, Sumgayit	8	0.5
Other towns (with exception to regional subordination), regional centres	4	0.3
In towns, districts and villages of regional subordinations (with exception of districts and villages of Baku and Sumgayit)	2	0.1

The land tax is established on the basis of documents that confirm the right of ownership and use of lands. The land tax is paid for lands with located structures and facilities as well as plots necessary for sanitary protection of facilities.
Physical persons and municipal enterprises must register at municipalities during 1 month after obtaining documents proving their right to own or use land plots.
Municipalities calculate tax on land on physical persons annually before June 1 and submit the payment notifications not later than August 1. For land plots owned by the number of physical persons, the tax is calculated proportional to areas of structure owned by such parties.
Tax is paid in equal portions, before August 15 and November 15. If the land tax was not paid by previous owner of the land, it must be paid by the new owner of land plot by the date established by legislation.
The land taxes of physical persona are paid to local (municipal budget) budget.

The amount of tax on lands owned by following physical persons is reduced by 10 manats:

Resident and non-resident physical persons are payers of property tax.
The buildings and their parts (hereinafter referred to as buildings) as personal property of physical person in the Republic of Azerbaijan, as well as any water and air transport facility owned by a physical person, irrespective of where they are located and whether or not they are used are considered taxable base for property tax.
Physical persons pay the property tax in following order and at following rates:

- from the inventoried value of the building in their ownership: the tax not to be levied if the value does not exceed the sum of 5,000 manats. The rate of 0.1% is levied from the amount exceeding 5,000 manats.
- for water and air transport facilities: 0.02 manats per 1 cubic centimetres 1% of the market value for water and air transport facilities without engines.
The property tax on buildings is calculated in established manner according to the inventory value of buildings.
The property tax for premises owned by physical persons is calculated by the municipality of the area at which they are located. Property tax on a building that has several owners is calculated in accordance with the share of each owner in that building.
Tax authorities calculate tax on water and air transport facilities as of January 1 of each year on the basis of the relevant information submitted by authorities registering such facilities. In the absence of such registration the owner of this property provides relevant authorities with documents that include all necessary data (year of manufacturing, price at the moment of purchase and technical characteristics) on all water and air transport facilities owned each year before January 1. Tax on a water or air transport facility that has several owners is withheld from the person who has registered such facility under his own name.
Municipalities must submit tax payment notifications to taxpayers not later than August 1. The annual tax amount is paid in equal portions before August 15 and before November 15. If property tax was not paid by the previous owner of property it shall be paid by new owner within timeframes stipulated by legislation.

The property tax on buildings to be paid by aforementioned physical persons who are granted tax privileges on tax on land, as well as people on retirement or obligatory military service and their family members for the period of such service is reduced by the amount of 30 manats, with exception of cases of their leasing, rent or use for entrepreneurial or other commercial activity.
Buildings of art workshops or parts of buildings where such workshops are located that belong to physical persons involved in entrepreneurial activity without establishing the legal entity on craft production of copper, tin and pottery products, house appliances, gardening instruments, national music instruments, toys, souvenirs, house appliances made of reeds and cane, involved in embroidery and production of house appliances from wood, are not taxed.

The tax paid for the use of subsurface resources in the territory of Azerbaijan Republic is called royalty and physical persons and legal entities extracting the minerals from subsurface strata of the earth are payers of the royalty.
The mining tax on following construction materials of the local importance is paid to municipal budget:

Physical persons and enterprises pay royalty on these construction materials at the rate of 0.5 manats per cubic meter of extracted material.
For the purposes of mining tax, the time of taxable operation is the time when minerals are extracted.
The tax period for the royalty is a calendar month. Royalties must be paid before the 20th day of the
month following the month of extraction of a product.
Payers of royalties must submit tax returns on mining tax to the municipalities no later than the 20th day of the month following the accounting month.

Enterprises and organizations owned by municipalities pay the profit tax to municipal budget. The rate of profit tax is 22%.