BAKU, Azerbaijan, November 26. The draft law “On Amendments to the Tax Code of the Republic of Azerbaijan” is currently being discussed in the country's parliament, Trend reports, citing the State Tax Service under the Ministry of Economy.
The proposed amendments are designed to foster entrepreneurship, alleviate the tax burden, and enhance efforts to combat the shadow economy. According to the ministry, the rationale behind these changes is being communicated to the public in a phased manner.
While rental income from residential properties is already subject to taxation, a substantial portion of these transactions remains unreported. The proposed amendments aim to streamline administrative processes and reduce the tax burden on rental income, thereby incentivizing individuals to formalize their rental agreements.
Effective January 1, 2025, citizens receiving rental income will have the option to designate an agent, either a legal entity or an individual, to manage their tax obligations, thereby eliminating the need for personal registration with the tax authorities.
In a further move to encourage the formalization of the rental market, the tax rate on rental income from residential properties leased by individuals to other individuals will be reduced from 14 percent to 10 percent. This adjustment results in a tax reduction of approximately 30 percent.
For properties rented as part of entrepreneurial activities or leased to legal entities, the 14 percent tax rate will remain unchanged.
The amendment is designed to prevent tax evasion while promoting transparency and compliance in the rental market, ensuring that rental agreements and transactions for residential properties are properly registered.
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