The tax rate on dividend income received by individuals from abroad is reduced to 5%

The draft Law “On Amendments to the Tax Code of the Republic of Azerbaijan” is being discussed in the Milli Majlis. The main objective of the amendments is to promote entrepreneurship, optimize the tax burden, and strengthen the fight against the “shadow economy.” The State Tax Service under the Ministry of Economy is presenting the rationale for these amendments to the public in stages.

According to the current provisions of the Tax Code, individuals who are residents of the Republic of Azerbaijan must declare and pay a 14 percent tax rate on non-business income earned from abroad. It is proposed that, starting next year, this tax rate be reduced from 14 percent to 5 percent.

On one hand, the amendment will encourage the voluntary declaration of income obtained from abroad; on the other hand, it will contribute to expanding the coverage of the tax base. In addition, new incentives will be created to promote the inflow of financial assets and investments held abroad into the country, while a lower tax burden will make the repatriation of capital economically more efficient.