According to the Tax Code, natural and legal persons with private property in the territory of the Republic of Azerbaijan are property tax payers. Property tax is a tax paid by an individual or a legal entity for the property owned. In most countries of the world, property tax covers a much lower share of government revenues than income tax and VAT. The tax is generally calculated taking into account the land area and the district where it is located. In addition, tax is imposed on objects owned by a material person, such as air transport and boats. Let's take a look at what objects this tax is collected from.
Taxation objects
The objects of taxation are the following:
Buildings, water and air vehicles owned by individuals and located on the territory of the republic
The average annual value of fixed assets on the balance sheet of enterprises
For non-resident enterprises carrying out entrepreneurial activities in the Republic of Azerbaijan through their permanent representation - the average annual value of fixed assets related to permanent representation only.
Individuals pay taxes according to the area of the property. If that property is a residential area, 30 square meters of this area are exempted from tax. That is, the property tax of a person with an apartment of 120 square meters in the city of Sumgait is calculated as follows:
120-30 x 0.3 = 27 manats
The rates of property tax for natural persons are shown in the following table: (if the building is located in Baku, the calculation is carried out by applying coefficients in the range of 0.7-1.5 determined by the relevant executive authority).
As a rule, property tax for water and air vehicles owned by individuals is calculated at AZN 0.02 per cubic centimeter of the engine. For example, if any natural person owns a boat with a 3000 cm3 engine, he must pay property tax in the amount of 60 manats annually:
3000 x 0.02 = 60 manats
If this vehicle does not have an engine, the individual must pay a property tax of 1 percent of the property's market value. For example, if any natural person owns a non-motorized boat with a market price of 3000 manats, he must pay property tax in the amount of 30 manats per year:
3000 x 1% = 30 manats
Enterprises pay property tax at the rate of 1 percent of the legally determined value of their fixed assets.
How do individuals pay property tax?
Property tax on buildings is calculated based on each square meter of the building's area. This calculation is carried out by the municipality that controls that area. Property tax on water and vehicles is calculated based on the information provided by the body that registers those vehicles. If these data are not available, the individual must submit the data related to those air or water vehicles no later than January 1. The property tax of natural persons is paid to the local budget.
How do businesses pay property tax?
First, the average annual residual value of the enterprise's property is determined in accordance with the law. Then, based on this value, calculations are made by the relevant state tax authority. The enterprise pays the property tax and submits the annual declaration to the tax authority no later than March 31 of the year following the reporting year. Property tax of enterprises is paid to the state budget.
