This article provides a clear overview of the key regulations and tax rates for corporate income tax in Azerbaijan, tailored for 2025. All information is based exclusively on official, currently available data, to assist international businesses assessing operations in Azerbaijan.
Corporate Income Tax Rate and Structure in Azerbaijan
As of 2025, Azerbaijan uses a flat corporate income tax regime for companies. This means businesses are subject to a uniform tax rate on taxable corporate profits, regardless of company size or income level.
| Tax Type | Rate (%) | Assessment Basis | Currency Code |
|---|---|---|---|
| Corporate Income Tax | 20% | Corporate profits | AZN |
For reference, the Azerbaijani manat (AZN) is currently valued at approximately 1.70 AZN to 1 USD (conversion as of early 2025). This highlights that a 20% flat rate is applied uniformly to all eligible profits reported by companies operating within Azerbaijan.
Additional Surtax on Profit Repatriation
In addition to the base corporate income tax, Azerbaijan imposes an extra tax in specific situations. Notably, if a permanent establishment (PE) of a non-resident company repatriates net profits to its parent or overseas headquarters, a surtax applies.
| Surtax Condition | Rate (%) | Payable By | Currency Code |
|---|---|---|---|
| Net profit repatriation by PE of non-resident | 5% | Permanent establishment of non-resident | AZN |
This 5% surtax is levied in addition to the standard 20% corporate tax, but only on amounts transferred abroad as repatriated profits from permanent establishments. Other forms of business entities are not subject to this surtax under the currently available rules.
No Progressive Brackets or Minimum Holding Periods
The Azerbaijani corporate tax system does not use progressive tax brackets. There is no differentiation based on income thresholds—all taxable corporate profits are subject to the flat 20% rate.
Furthermore, there is no publicly available requirement for a minimum or maximum holding period for corporate assets impacting corporate tax rates. Businesses should be aware that this information may be subject to annual review, but no such conditions have been specified by the Azerbaijani authorities as of 2025.
Quick Reference Table: Key Corporate Tax Elements for 2025
| Parameter | Value | Unit/Notes |
|---|---|---|
| Standard Corporate Tax Rate | 20% | All taxable profits |
| Tax System Type | Flat | Single rate for all companies |
| Currency | AZN | Azerbaijani manat |
| Surtax on PE Profit Repatriation | 5% | Net profit, PEs only |
| Progressive Brackets | None | Flat rate applies |
| Asset Holding Periods | No requirement | Not applicable |
Practical Aspects of Corporate Tax Compliance in Azerbaijan
To ensure full legal compliance, companies operating in Azerbaijan should account for both the flat 20% corporate income tax and the additional 5% surtax if operating as a permanent establishment of a non-resident entity. Timely tax filings and transparent documentation of profit repatriation are crucial to meet Azerbaijani regulatory requirements. For the latest regulations, reference the official tax authority website taxes.gov.az.
Pro Tips for Navigating Azerbaijani Corporate Tax in 2025
- Confirm the legal structure of your entity: Permanent establishments of foreign companies face an additional 5% repatriation tax—understand your business’s classification in advance.
- Plan international profit transfers carefully: If you operate via a permanent establishment, anticipate the additional 5% levy before moving funds abroad.
- Stay updated on official currency rates and use accurate conversions when reporting figures for cross-border purposes.
- Streamline tax reporting with robust accounting, as Azerbaijan uses a flat rate regime without brackets—accuracy keeps audits and compliance checks smooth.
- Regularly review the State Tax Service of Azerbaijan for any regulatory updates or changes impacting corporate taxation.
In summary, Azerbaijan’s uniform 20% flat corporate tax and straightforward regime make it a predictable environment for corporate tax planning in 2025. The only significant exception is the 5% surtax targeting profit repatriation by non-resident permanent establishments. Businesses benefit from the lack of progressive tax brackets or holding period requirements, simplifying forecasts and compliance—with just a few key details to keep top of mind when navigating cross-border transactions.