BAKU, Azerbaijan, November 7. In 2026, 57 percent of Azerbaijan’s state budget and 63 percent of the consolidated budget will be formed from non-oil revenues; however, linking this growth to higher taxes is an incorrect approach, said the country's Finance Minister, Sahil Babayev, Trend reports.
Speaking during a joint meeting of the Parliamentary Committees on Legal Policy and State Building, Defense, Security and Anti-Corruption, Human Rights, and Regional Issues on the draft law “On the State Budget of the Republic of Azerbaijan for 2026,” Babayev emphasized that the main source of the increase comes from the growth of the non-oil gross domestic product (GDP).
“Next year, non-oil GDP is projected to rise by around 10 percent nominally and about 5 percent in real terms. Taxes are calculated based on nominal figures. Since GDP itself is growing, revenues are increasing accordingly. We always look at the share of taxes in GDP,” the minister noted.
He added that this year, the ratio of non-oil tax revenues to GDP stands at 12.9 percent, while next year it is expected to reach 13.1 percent.
“An increase of 0.2 percent cannot be considered a significant tax rise. Therefore, it is wrong to speak of a serious increase in taxes,” Babayev said.
The minister made it clear that a tax package has been rolled out, featuring a cornucopia of new exemptions.
“There are extensive concessions related to local production and agriculture. The Nakhchivan region was mentioned as well. The simplified tax limit is being raised from 200,000 to 400,000, and there are also exemptions concerning cashless transactions,” he stated.
Babayev highlighted that the most discussed topic has been the issue of income tax on salaried earnings.
“Our position on this matter has been repeatedly explained in recent days. For the absolute majority of the labor market, those earning up to 2,500 manat ($1,470), the income tax will be 3 percent. This in itself is a major concession. If the government had not proposed this relief, a 14 percent tax would have applied to these incomes starting from January 2026. Therefore, we do not believe that the overall tax burden on the economy is increasing,” the minister concluded.
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