Property taxThe tax calculated and paid for fixed assets on the balance

of the enterprises is defined as property tax.

Who are the taxpayers?Resident enterprises, as well as non-resident enterprises

carrying out entrepreneurial activity through its permanent establishment in the Republic of Azerbaijan are payers of the property tax.

Taxable base Followings are a taxable base:● average annual value of fixed assets on the balance of

enterprises;● non-resident enterprises, carrying out the business

activity through permanent establishment in the Republic of Azerbaijan, only the average annual value of fixed assets connected with permanent establishment.

Tax ratesEnterprises pay tax with 1 percent rate of the average

annual residual value of fixed assets.

Tax reliefs and exemptionsState government bodies, budget organizations and local

authorities, the Central Bank and its offices, state funds and public entities for disabled people, and children with limited levels of health are exempt from property tax.

For the purposes of taxation the value of the enterprises property is reduced by the amount of value of following facilities:

● facilities used for the purposes of environment, fire protection and civil defence;

● product transmitting lines, railways and roads, communication and power lines, melioration and watering facilities;

● taxable automobile transport means; ● facilities of enterprises involved in education, health,

culture and sports that used only for the purposes of such areas of activity.

Trolley buses and trams used for the passenger transportation in cities are exempt from property tax.

Legal and physical persons - residents of the industrial or technological parks founded by the decision of the President of the Republic of Azerbaijan are released from paying property tax for their property in the parks for 7 years starting from their reporting registration year. Managing organization or operator of the industrial or technological parks founded by the decision

of the President of the Republic of Azerbaijan are released from paying property tax for their property in the parks.

Legal entities involved in production of agricultural products (including production by industrial method) are exempt from property tax on objects, used during the process of activity, up to January 1, 2019.

The amount of property tax that is payable on water transport facilities owned by enterprises and which are used for passenger transportation and freight is reduced by 25 percent.Legal persons with investment promotion document are released from paying the property tax on their related property within 7 years since the date of issuing the same document.

Procedure of tax calculation and payment Property tax is calculated based on the average annual

residual value of the enterprise property.If the property of the enterprise is insured more than the

residual value, property tax is calculated in consideration with the market value.

In case the insured property cost is calculated in consideration with the market value, the rule of property tax calculation on average annual residual value of the property, is not applied.

The tax period for the property tax of the enterprise is a calendar year.

As current tax payments, property taxpayers pay 20 percent of previous year's tax amount not later than 15th day of the second month of each quarter.

Legal entities not being property of a taxpayer during the previous accounting year, however, are the property of taxpayers next year, as well as, newly established legal entities which are property of taxpayers must carry out current tax payments at the amount of the 20 percent of the annual property tax to be calculated on that property not later than the 15th day of the second month of each quarter following the quarter of property acquisition. Current tax payments on property tax are the amounts of tax withheld from the taxpayer within the tax year.

The amount of tax to be paid to the state budget for accounting period is determined taking into account previously calculated payments.

If current tax payments aren't paid in time, interest for each day of delay should be imposed in respect to the non-paid current tax payment.

Current tax payments on property tax should be calculated at the end of the reporting year and if the calculated current tax amount is more than tax amount on tax report, the over calculated amount and interests should be reduced.

An enterprise submits the annual tax return for property tax stto the tax authority not later than March 31 of the year

following the accounting year. In case of liquidation of the legal entity being taxpayer,

that legal entity should submit its property tax return to the tax authorities within 30 days from the date of decision on liquidation and in case 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) and in this case, the accounting period covers the duration from the beginning of tax year until the date of closing business.

Taxes on property tax return are paid before the submission deadline for such returns. The amount of calculated tax is concerned as deduction from income which is not limited for the purposes of profit tax.

The property tax of enterprises is paid to the state budget.Below is an example of calculation of the property tax of an

enterprise:

Procedure for determining the taxable value of the property

The property tax is calculated based on the average annual value of an enterprise's property.

● �The residual value of property is the original value of fixed assets less the amount of amortization calculated on this fixed assets.

● The average annual residual value of the property (with exception of automobile transport means) is calculated by summing and division by two of residual value of the enterprise property for the beginning and the end of the year. While calculating average residual value of the property of an enterprise, the growth seen after re-calculation of fixed assets (positive difference seen after re-calculation).

● If enterprise is established or becomes a payer of assessed tax within an accounting year, the residual value of its property (with exception of automobile transport means) of the date of establishment or becoming liable to payment of assessed tax and the end of reporting period shall be summed, divided by 24 and multiplied by the number of month following the month when enterprise was established or became a payer of assessed tax until the end of the year.

● If enterprise is liquidated within an accounting year, or became a simplified taxpayer, the residual value of its property (with exception of automobile transport means) for the beginning of the year and the date of liquidation or becoming a simplified taxpayer shall be summed, divided by 24 and multiplied by the number of months from the beginning of the year before the month when the enterprise was liquidated, or became a simplified taxpayer.

Financial sanctions and interestsManagement of the enterprise is liable for an accurate calculation of the property tax on fixed assets on the balance of the enterprise and timely payment of the calculated property tax to the budget.

● A financial sanction at the value of 40 manats is imposed on a taxpayer for late submission of tax return without valid reasons according to the decision of the head (deputy) of the tax authority.

● In case of non-payment by the taxpayer of its debts on taxes, interests and financial sanctions within 5 days, the tax authority is entitled to demand from the taxpayer the submission of information to the tax authority on assets within10 days in the form set by the tax authority. Against the

taxpayer, who has not provided the information on assets, within timeframes established without any valid reasons, on the basis of the decision of the tax authority the financial sanction at the amount of 100 manats shall be applied.

● If the taxpayer has reduced the amount of tax specified in the report, compared to the amount, which shall be specified in the report, as well as if he did not submit the report and evade transfering of required amount of tax to the state budget, towards him the financial sanction is applied at the rate of 50 percent of the reduced or evaded tax amounts (except for additional tax amount, calculated as a result of desk tax audit).

● For failure to pay the property tax or current tax payment within the specified period, the interest at the rate of 0.1% of the amount of the tax payment is imposed on the taxpayer for each day of delay, but not more than 1 year.

Azerbaijan, AZ1073,Baku city, Landau st.16E-mail: office@taxes.gov.azBaku - 2017 BAKU - 2017

www.taxes.gov.az

Ministry of Taxesof the Republic of Azerbaijan

PROPERTY TAX