Baku: Starting from 2026, significant amendments to the Tax Code are planned in the following areas: tax control and its forms; registration and deregistration procedures; submission of electronic invoices; personal income tax and corporate profit tax; depreciation allowances; value-added tax (VAT); excise duties; property, land, road, and mining taxes; simplified tax; requirements for obtaining the ‘Distinction Mark,’ as well as other related directions.
According to Azerbaijan State News Agency, the amendments provide for the addition of the concept of ‘horizontal monitoring’ to the Tax Code. The purpose of horizontal monitoring is to implement control over the correct calculation, timely and full payment of taxes in a more modern and effective manner. Taxpayers accepted for horizontal monitoring will not be subject to on-site tax audits during the monitoring periods, and in-house tax audits except for some cases. The rules for conducting monitoring, the subject matter, the persons covered, the taxpayer’s obligations, cases of exclusion from monitoring, and financial sanctions will be determined in separate articles in connection with the new concept.
The changes in the terms of submission of electronic invoices specify that, unlike the performance of other works and provision of services, electronic invoices for the provision of international transportation services should be submitted by the time of commencement of transportation services, and for services provided on a regular and permanent basis – by the time of commencement of services for each calendar month. There is also a unified form of electronic invoice for the refund of VAT paid for goods purchased by foreigners and stateless persons in the territory of the Republic of Azerbaijan and not intended for production or commercial purposes, as well as for medical services provided to foreigners and stateless persons by medical institutions and individuals engaged in private medical practice, approved by the relevant body.
Planned changes to the personal income tax indicate that income tax will be applied to individuals employed in enterprises that are not in the oil and gas sector and belong to the non-state (private) sector from January 1, 2026. Tax rates will be increased in stages: a 3% rate until January 1, 2027, for income up to 2,500 manat; 75 + 10% for income from 2,500 to 8,000 manat; and 625 + 14% for income over 8,000 manat. From January 1, 2027, the tax rates will be set at 5%, 125 manat + 10% for income from 2,500 to 8,000 manat, and 675 manat + 14% for income over 8,000 manat. By January 1, 2028, the rates will increase to 7%, 175 manat + 10% for income from 2,500 to 8,000 manat, and 725 manat + 14% for income exceeding 8,000 manat.
The definition of the object of taxation of profit tax has been revised. Depreciation calculated in accordance with Article 114 of this Code for fixed assets and intangible assets purchased or installed at the expense of other funds allocated from the state budget, except for state-owned enterprises within the state investment program, will be determined as the object of taxation.
Depreciation deductions for taxpayers admitted to horizontal monitoring can be calculated using the straight-line or declining balance method, whereas other taxpayers may only use the declining balance method, except for intangible assets. Specific assets that should use these methods for calculating annual depreciation rates have been listed, with some additions and changes made.
Foreign fish products will be excluded from agricultural products whose object of VAT taxation is defined as the trade surcharge applied during wholesale and retail sales for a period of 5 years from January 1, 2022.
The simplified tax rate has been changed to a 6% rate for services provided to the population via cashless payments through POS terminals for a period of 3 years from January 1, 2026. The turnover for simplified tax and VAT purposes is determined by applying a coefficient of 0.5 for non-cash payments through POS terminals for retail trade and services provided to unregistered persons.
A detailed summary and explanation of the planned changes is available on the official website of Caspian Legal Center. For more information, visit: Tax Code of Azerbaijan | 2026 Tax Code Amendments.