This post is for company (enterprise) owners, individual entrepreneurs and accountants. Based on the official text of the Tax Code, we briefly and clearly explain the profit tax rate, the deadline for the annual return, quarterly current payments and the consequences of delays.
Profit tax rate: 20 percent
Put simply, profit tax is a tax levied on the profit a company earns. Which income and expenses are taken into account is determined by separate rules in the Tax Code, which is why correct bookkeeping is especially important here.
Under Article 105.1 of the Tax Code, the profit of enterprises is taxed at a rate of 20 percent.
When dividends are paid
If a company pays dividends to its founders or shareholders, there is one more rule to know: dividends paid by a resident enterprise are taxed at source at a rate of 5 percent (Tax Code, Article 122.1). "At source" means that the tax is withheld when the dividend is paid.
Annual profit tax return: 31 March
Under Articles 149.1.1 and 149.2 of the Tax Code, resident enterprises submit their annual profit tax return to the tax authority no later than 31 March of the year following the reporting year.
Important: under Article 152.1, the annual tax must also be paid by the deadline set for filing the return. In other words, 31 March is the deadline for both the return and the payment.
Practical tip: putting primary documents, contracts, bank statements and supporting documents for payments made during the year in order at the end of the year prevents a rush in March.
Current tax payments: every quarter
Current payments are tax payments made quarterly during the year. Under Article 151.1 of the Tax Code, legal entities and individual entrepreneurs must pay current tax payments to the state budget no later than 15 days after the end of the quarter.
As a rule, each current payment amounts to 1/4 (one quarter) of the tax calculated for the previous tax year. Article 151 also provides for an alternative calculation method; check with your accountant which method suits you.
Key deadlines and rates in a table
| Obligation | Rule | Basis (Tax Code) |
|---|---|---|
| Profit tax rate | 20% of the profit of enterprises | 105.1 |
| Current payments | No later than 15 days after the end of each quarter; as a rule, 1/4 of the previous year's tax | 151.1 |
| Annual return (resident enterprises) | No later than 31 March of the year following the reporting year | 149.1.1, 149.2 |
| Payment of the annual tax | By the deadline set for the return | 152.1 |
| Tax on dividends | 5%, at source | 122.1 |
Consequences of delays: interest and financial sanctions
Knowing these rules helps you plan your payment schedule in advance:
- Late payment interest (Article 59.1): if tax or a current tax payment is not paid on time, interest of 0.1% of the unpaid amount is charged for each day of delay. In cases identified by an audit, interest is charged for no more than 1 year (Article 59.2).
- Failure to file (Article 57.1): if a tax return is not submitted within the set deadline without grounds, a financial sanction of 40 manat is imposed.
- Understated tax (Article 58.1): if tax is understated in a return, or tax is evaded without a return being filed, a financial sanction of 50% of the understated or evaded tax amount is imposed. Additional tax assessed as a result of a desk tax audit is an exception to this rule.
Summary
- The profit of enterprises is taxed at a rate of 20 percent.
- Resident enterprises file the annual return no later than 31 March of the year following the reporting year; the tax is also paid by this deadline.
- Current payments are made within 15 days after the end of each quarter and, as a rule, amount to 1/4 of the previous year's tax.
- Dividends paid by a resident enterprise are taxed at source at 5 percent.
- Late payments incur interest of 0.1% for each day, and failure to submit a return on time without grounds incurs a sanction of 40 manat.
If you have questions about profit tax, current payments or the annual return, message us on WhatsApp: +994 77 734 10 12. Estavor Accounting also provides tax and accounting services online — let's review your situation together based on the official rules.
📚 Sources
- Azərbaycan Respublikasının Vergi Məcəlləsi, 105.1-ci maddə
- Azərbaycan Respublikasının Vergi Məcəlləsi, 149.1.1 və 149.2-ci maddələr
- Azərbaycan Respublikasının Vergi Məcəlləsi, 151.1-ci maddə
- Azərbaycan Respublikasının Vergi Məcəlləsi, 122.1-ci maddə
- Azərbaycan Respublikasının Vergi Məcəlləsi, 59.1-ci maddə
- Azərbaycan Respublikasının Vergi Məcəlləsi, 57.1-ci maddə
- Azərbaycan Respublikasının Vergi Məcəlləsi, 58.1-ci maddə
🌐 The original article is in Azerbaijani; the official sources are available in Azerbaijani.
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