BAKU, Azerbaijan, January 1. Dividends paid by
non-resident organizations to Azerbaijani residents will now be
taxed at a rate of 5%, Trend reports.
The change is reflected in amendments to the Tax Code, approved
by President Ilham Aliyev.
Previously, individuals who are residents of Azerbaijan were
required to declare and pay tax on non-commercial income received
abroad at a rate of 14%. Experts noted that the higher rate often
encouraged the use of offshore or favorable tax jurisdictions,
contributed to unreported income, and slowed the repatriation of
funds to Azerbaijan, limiting capital inflows and investment
potential.
Reducing the rate from 14 to 5% is expected to encourage
voluntary declaration of foreign income, expand the tax base, and
incentivize the return of financial assets and investments to the
country. Despite the lower rate, authorities anticipate an increase
in overall state budget revenues.
The previous 14% tax applied to annual non-commercial income,
financial assistance, bonuses, pensions for non-employed
individuals, fees paid to mediators, and income received by lawyers
working for law firms under civil law contracts.
These amendments came into effect on January 1, 2026.
