Ministry of Taxes of the Republic of Azerbaijan 

Fulfillment of tax obligations and terms for submission of tax returns  

A taxpayer’s obligation to pay taxes (including current tax payments) is deemed his tax obligation. Fulfilment of tax obligations is the payment of payable tax amounts within the established term and manner. Term of payment is established for each type of tax. The fulfilment of tax liabilities is obligatory regardless of the existence of funds on taxpayer’s accounts or any property. Fulfilment of tax obligations cannot be assigned to other person. The terms for fulfilment of tax obligations may be extended for the period from 1 month to 9 months within a tax year.
Tax report consists of a tax return. Taxpayers that are required to submit a tax report must submit such tax report to the tax authority within the established term and in the determined place. If, before the end of the term for submitting reports, a taxpayer places a request for the extension of the term for submitting a profit or income tax report and pays the due tax in full amount, the term for submitting reports is deemed to have been extended for up to 3 months. The extension of the term does not change the term for the payment of tax. If the amount of tax as per the report exceeds the amount paid, the relevant difference must be paid to the budget along with interest calculated from the last day of the tax payment term.
If the term for payment of tax or submission of tax return expires on a non-working day, it shall be postponed to the following business day.

For income and profit tax
Accounting period for income and profit tax is a calendar year. Legal entities are obliged to make current payments to the state budget no later than the 15th day of the month following each quarter. Enterprises and organizations owned by municipalities pay taxes to local (municipal) budget. Current tax payments are included in the amount of tax withheld from the taxpayer within tax year.
Taxpayer can choose from 2 methods to determine the amount of current tax payments:
1. The amount of payment for each quarter shall be 1/4 of the tax amount calculated in previous tax year.
2. The taxpayer may determine the amounts of current tax payments by multiplying the volume of his income in relevant quarter to coefficient of tax weight in the gross income for previous year (with no consideration of amounts to be deducted from income).
The taxpayer selects one of the two methods for calculation of the amount of payable taxes within the year annually by April 15 and informs the tax authority.
In case if the taxpayer chooses the 2nd method, he should submit the certificate on current tax amounts calculated from income or profit within 15 days after the end of each quarter. Otherwise, the tax authority applies the 1st method.  In case, when the taxpayer does not inform about the method applied for calculation of the amount of current tax payments, the tax authority applies the first method and that method does not vary up to the end of year.
Resident enterprises, non-residents who have permanent establishment in the Azerbaijan Republic and whose taxable income is generated from Azerbaijani sources and not taxed at
the source of payment, as well as individuals deriving income which are not subject to withholding tax (which is not possible to tax at source) and resident individuals of the Republic of Azerbaijan deriving income from sources outside the Republic of Azerbaijan, as well as deriving royalties  submit the tax return to tax authorities where they are registered before March 31 of the year following the accounting year, and carry out final calculations for annual income (with consideration of current tax payments) and pay the income tax within the same period. At the same period physical persons pay the income tax and legal persons pay the profit tax to the state budget by making final calculations (taking into account current payments).
Enterprises owned by municipalities pay the profit tax to local (municipal) budget, while others pay to the state budget.
In case the taxpayer ceases his entrepreneurial activity in the Republic of Azerbaijan, he shall submit the tax return covering the period from beginning of the tax year until the day of termination of activities to tax authorities within 30 days.

For VAT:
A VAT payer submits the tax return on each accounting period not later than the 20th day of the month following the accounting month to the tax authority at which he is registered and pays the tax to the state budget within the same period.
In case the taxpayer is abolished (activities are terminated), he shall submit the VAT return covering the period from beginning of the tax year until the day of termination of activities to tax authorities within 30 days but not later than 20th day of the next month.

For Excises:
With respect to the production of excise goods, excise tax on taxable operations carried out during each accounting month must be paid to the state budget and the tax return must be submitted to the tax authority no later than 20th day of the month following the accounting month.
When excise goods are imported excise is collected by the customs authorities under the procedure established for the collection of customs duties.
In case the taxpayer is abolished (activities are terminated), he shall submit the excise return covering the period from beginning of the tax year until the day of termination of activities to tax authorities within 30 days but not later than 20th day of the next month.

For property tax:
The tax period for the property tax is a calendar year. Legal entities that are the payers of the property tax pay 25 percent of annual tax amount not later than the 15th day of the second month of each quarter. Legal entities not operating as a payer of the property tax during the previous accounting year, however, are the payers of the property tax next year, as well as, newly established legal entities which are payers of property tax must carry out current tax payments at the amount of the 20 percent of the amount of the annual property tax to be calculated on such property not later than the 15th day of the second month of each quarter following the quarter in which such property was obtained. Current tax payments are the amounts of tax withheld from the taxpayer within the tax year.
Enterprises that are the payers of the property tax submit the annual tax return for property tax to the tax authority where they are registered not later than March 31 of the year following the reporting year. At that time enterprises pay the tax to the state budget making final calculations on profit tax (taking into account the current payments).
In case of abolishment of the legal person being taxpayer, that legal person should submit its property tax return to the tax authorities within 30 days from the date of decision on abolishment and in case if the date of such a decision is not mentioned for the permanent establishment of the non-resident, that permanent establishment should submit its tax return within 30 days from the date of legalization of the decision by representative missions of the Republic of Azerbaijan in other states (or by consular missions of other countries representing interests of the Republic of Azerbaijan). In this case, the accounting period is from the beginning of the tax year until the date of termination of activities.
Physical persons pay the annual amount of the property tax in equal portions before August 15 and before November 15 of the same year to local (municipal) budget. If property tax was not paid by the previous owner of the property it shall be paid by new owner within timeframes stipulated by legislation. Municipalities must submit tax payment notifications to taxpayers not later than June 1.

For Tax on land
Accounting period for tax on land is a calendar year. Enterprises must annually calculate tax on land based on the size of the land spots and the tax rates, and submit such tax returns to tax authorities not later than May 15 of each year.
Annual amount of tax on land is paid in equal portions before August 15 and before November 15 of the same year by legal entities to the state budget and by physical persons to local (municipal) budget. 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. Municipalities calculate tax on land on physical persons annually before July 1 and submit the payment notifications not later than August 1.

For Road tax:
Customs authorities transfer tax on automobile transport means of foreign states to the state budget within one bank day, when such automobile transport means enter the customs territory of the Azerbaijan Republic.
Legal entities that own or use automobile transport means at the end of the year must file the tax return to the tax authority and pay the specified tax to the state budget not later than March 31 of the year following the reporting year.
Physical persons who own or use automobile transport means in the territory of Azerbaijan Republic pay the road tax to the state budget when the technical inspection of the vehicle is implemented. In case the documents certifying the payment of annual road tax are not presented, registration, re-registration and the technical inspection of automobile transport means shall not be conducted by the
state agency registering the automobile transport means.

For royalty (mining tax):
Payers of royalties pay the royalty and submit the tax return on a monthly basis not later than the 20th day of the month following the month of extraction of minerals. The mining tax on construction materials of local importance is paid to the local (municipal) budget and the tax return for mining tax is submitted to municipalities. Construction materials of local importance include brick-tile clays, mortar sand and raw materials from crushed stone.

For simplified tax:
Payers of simplified tax must submit tax return on the amount of tax to be paid to tax authorities before 20th day of each month following the reporting period, and make the tax payment to the state budget within the same period.                                                                                                     Persons engaged in house construction activities, shall calculate the simplified tax for each construction site in the quarter when the construction has commenced and no later than 20th of following month of the quarter shall submit the declaration to the tax authority.                            These taxpayers independent of their place of registration as taxpayers, shall pay the simplified tax for the territory where actual operations are taking place on construction of residential housing (place of location of construction site) and calculated tax is paid to state budget in equal portions at the rate of 12.5 percent no later than by 20th of the month following the quarter, until fulfilment of all obligations.                                                                                                                                Payers of the simplified tax must maintain records in conformity with the Book for registering economic operations of small economic subjects and submit the Report №1-KM to statistics and tax authorities of Azerbaijan Republic not later than March 15 following the reporting period (persons employing not more than 2 people fill out only A-Incomes and B-Expenses sections of the Registration Book and do not draw up the Report №1-KM).
Taxpayers engaged in passenger and cargo transportation with automobile transport means do not submit tax return to the tax authorities, unless otherwise required by law.
Persons carrying out passenger and cargo transportation activity with automobile transport means must receive a strict accounting form – “Distinction sign” for each vehicle for following month(s) by the end of the calendar month. “Distinction sign” is issued within 2 business days on the basis of taxpayer’s application. Taxpayer must attach a bank payment document certifying the payment of the tax to the application for issuance of the “Distinction sign”.
Notwithstanding whether the persons implementing the automobile transport services have had activities in any month taxes paid by him for that month cannot be reimbursed or credited against the taxes of the next month.
If the owner or the user of the automobile transport has been changed, the taxes pre-paid for forthcoming months by the previous owner or user are taken into account and there is no requirement for new registration of the “Distinction sign” confirming the payment of taxes.

For taxes withheld at source:
Accounting period for taxes withheld at the source of payment is a quarter. Legal entities and individual entrepreneurs making payments to physical persons working as employees, paying out pensions (with the exception of paid under the State social security system) and making other payments with exception of rental fees and royalties paid to the resident enterprises and permanent establishments of non-residents in the Republic of Azerbaijan, are obliged for withholding of income tax at the source of payment.
Income tax from the monthly income of physical persons with regard to employment is calculated and transmitted to the budget not later than 20th day of the next month.
When paying the non-governmental pensions and other payments (with exception of rental fees and royalties paid to resident enterprises and to permanent establishments of non-residents in the Republic of Azerbaijan) the income tax is calculated and transmitted to the budget not later than 20th day of the month following the quarter in which the income is paid;
The return on withholding taxes is submitted to the tax authorities not later than 20th day of the first month following the ended quarter.

For state duty
Accounting period for state duties is a quarter. State duty for notarial operations is received by the notary and transmitted to the state budget within 2 bank days, state duties for consular operations in diplomatic missions of the Republic of Azerbaijan abroad is transmitted to the budget within a month and other state duties are transferred to the state budget within one bank day. Persons withholding state duties must provide tax authorities with the report reflecting the collection of state duties not later than the 20th day of the month following the reporting quarter.

Financial sanctions, administrative penalties and interests:
A financial sanction is imposed on a taxpayer for late submission of tax return and reference on tax obligations without valid reasons based on the decision of the tax authority at the value of 40 manats.
In case the amount of tax (including the tax at source of payment) indicated on tax report is less than the amount to be indicated on the report and if taxpayer fails to submit tax report and evades to pay the required tax amount to the state budget, the financial sanction is imposed on the taxpayer at the rate of 25 percent of understated or evaded tax amount.
For transportation of passengers and cargoes by automobile transport means without the «Distinction sign», the taxpayer is punished by the penalty at the value of 40 manats.
For failure to pay the tax or make current tax payments within the specified period, the interest at the rate of 0,1% of the outstanding amount of tax or current tax payment is imposed on the taxpayer or tax agent for each day of delay. This interest is applied in respect to overdue amounts of current tax payments for the whole period of delay but not more than for 1 year.
With regard to persons withholding state duties, if the state duty has not been withheld properly and have not been fully transferred to the state budget – officials are punished by an administrative penalty from 77 manats to 99 manats.