Table of Contents
Main Types of Taxes in Azerbaijan
Corporate Income Tax (20%)
Simplified Tax (2–4%)
VAT (18%)
Personal Income Tax
Property Tax
Customs & Import Duties
Azerbaijan has rapidly become one of the most attractive destinations for global entrepreneurship — especially for Pakistani businessmen seeking a secure, affordable, and fast-growing market.
Located at the crossroads of Europe and Asia, Azerbaijan offers a transparent legal system, a stable economy, and a favorable taxation environment that encourages business formation and foreign investment.
For Pakistani investors planning to open a company, purchase property, or apply for long-term residence through Azerbaijan immigration, understanding the tax structure is essential to ensure compliance and profitability.
This guide by AzeImmigration explains how Azerbaijan’s tax system works — from corporate and simplified taxes to VAT, personal income, property, and customs duties — and how proper tax compliance supports TRC, PRC, and business visa applications.
Why Azerbaijan’s tax system attracts Pakistani investors
Azerbaijan has positioned itself as a gateway between Europe, Central Asia, and the Middle East — offering reliable infrastructure, modern legal reforms, and strong Pakistan–Azerbaijan diplomatic ties.
But the biggest reason Pakistani entrepreneurs choose Azerbaijan is its low and predictable taxation model.
Key Advantages:
Low Corporate Tax — 20% Flat Rate
Equal for locals and foreigners
Transparent calculation (no hidden fees)
Full ownership rights (no sponsor or local partner required)
Freedom to repatriate profits abroad
| Country | Corporate Tax | Notes |
|---|---|---|
| Azerbaijan | 20% | Simple, fixed rate |
| Turkey | 22% | Higher admin burden |
| Saudi Arabia | 20–30% | Sector-based |
| Pakistan | 29–39% | Complex structure |
Simplified Tax System for Small Businesses
Only 2–4% of revenue — no need to calculate profit or expenses
Ideal for small-to-medium businesses such as cafés, retail, IT, and logistics
Encourages startups and early-stage investors
Simplified Tax Rates:
2% outside Baku
4% inside Baku
Advanced e-Tax System
Azerbaijan’s digital e-Tax Portal allows foreigners to:File and pay taxes online
Access invoices and financial reports
Avoid physical visits to tax offices
Government Investment Support
Investors benefit from incentives in Alat Free Economic Zone (AFEZ) and Industrial Parks, including:Tax holidays
0% customs duty
Fast-track company registration
Land and utility subsidies
Stable Legal Environment
Azerbaijan maintains predictable tax rates, minimal bureaucracy, and transparent laws — giving investors long-term financial security.
Learn more: Investment Opportunities in Azerbaijan
Main types of taxes in Azerbaijan
1. Corporate Income Tax — 20%
Applies to companies under the standard tax regime.
Who Should Choose Corporate Tax:
Companies with large-scale operations
Import/export or logistics firms
Businesses serving international clients
Manufacturing or IT service providers
Formula:Corporate Tax = (Revenue – Allowable Expenses) × 20%
Allowable Expenses Include:
Rent and utilities
Salaries and payroll
Marketing and advertising
Goods purchased for resale
Transportation and logistics
Professional and legal services
Why It’s Attractive:
Flat 20% rate
Equal treatment for foreign investors
Easy expense deduction system
Immigration Link:
Active companies paying corporate tax improve their TRC and PRC approval chances, as migration officers verify financial compliance.
2. Simplified Tax — 2% to 4%
Perfect for small or medium Pakistani businesses such as:
Restaurants, bakeries, cafés
Retail and clothing shops
Travel agencies
Digital marketing and IT startups
Construction and maintenance firms
Rates:
2% (outside Baku)
4% (inside Baku)
Example:
If your business earns 10,000 AZN in Baku → Tax = 4% × 10,000 = 400 AZN only.
Benefits:
✔ Minimal paperwork
✔ No profit tracking
✔ Low accounting costs
✔ Ideal for TRC approval through business
Learn more: Accounting Services in Azerbaijan
3. Value Added Tax (VAT) — 18%
VAT applies to companies exceeding the government’s annual turnover threshold.
When VAT Applies:
Import/export activities
Large retail operations
Industrial or manufacturing companies
Service providers dealing with major clients
Advantages of VAT Registration:
Builds business credibility
Allows participation in tenders
Enables reclaiming VAT on purchases
Example:
Revenue = 10,000 AZN → VAT = 1,800 AZN (charged to customer, not company profit).
4. Personal Income Tax
Applies to salaries earned by employees or foreign workers in Azerbaijan.
Employer Responsibilities:
Deduct and submit income tax monthly
Provide official salary slips
Report through the e-Tax system
Why It Matters:
✔ Legal work compliance for TRC holders
✔ Supports PRC eligibility
✔ Builds transparent employment record
5. Property Tax
Applies to foreign investors owning property.
Calculated annually based on property size, type, and location.
For Pakistani investors obtaining TRC through property, paying property tax ensures full legal compliance.
6. Customs & Import Duties
Applies to goods imported into Azerbaijan, but rates are competitive and transparent.
Businesses operating in AFEZ (Alat Free Economic Zone) enjoy 0% customs duties on most goods.
How tax compliance supports TRC & PRC applications
The State Migration Service of Azerbaijan reviews tax compliance during TRC and PRC applications.
Benefits of Clean Tax Records:
Faster residence approval
Stronger business credibility
Fewer document verification delays
Eligibility for PRC after one year
Maintaining an active tax history demonstrates your company’s legal and financial stability — a key factor for successful immigration outcomes.
See also: Migration Services in Azerbaijan
How AzeImmigration helps Pakistani investors
Navigating Azerbaijan’s tax system can be challenging for foreigners — especially when dealing with translations, e-Tax registration, or TRC-linked requirements.
AzeImmigration ensures your business is compliant and legally sound from day one.
Our Expert Support Includes:
Selecting the correct tax model (Simplified vs. Standard)
Company registration and tax number (TIN) issuance
VAT registration when required
Financial document preparation for TRC/PRC
Certified Azerbaijani translations and notarization
Monthly reporting and accountant coordination
Integration of immigration and taxation processes
Our multilingual team (English, Urdu, Arabic) works directly with tax and migration authorities to make your investment process fast, transparent, and secure.
Learn more: Taxation Services in Azerbaijan