® Amendments to the Tax Code for 2026 – Explanation of Key Provisions
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.
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.
According to the changes in the terms of submission of electronic invoices, 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. Electronic invoices for advance payments should be submitted until that time, not the day of receipt of the advance. A unified form of electronic invoice for the refund of value added tax 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, is approved by the relevant body (institution).
According to the planned changes to the personal income tax, income tax will be applied to the income of 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, and tax rates will be increased in stages. The tax rate is planned to be 3% until January 1, 2027 for income up to 2,500 manat, 75 + 10 percent of the amount from 2,500 to 8,000 manat for income from 2,500 to 8,000 manat, and 625 + 14 percent of the amount over 8,000 manat for income over 8,000 manat. From January 1, 2027, the tax rates have been set at 5 percent, 125 manat + 10 percent of the amount from 2,500 manat to 8,000 manat, and 675 manat + 14 percent of the amount exceeding 8,000 manat, respectively. From January 1, 2028, the income tax rate for the above-mentioned individuals is planned to be 7 percent, 175 manat + 10 percent of the amount from 2,500 manat to 8,000 manat, and 725 manat + 14 percent of the amount exceeding 8,000 manat.
A change has been made to the definition of the object of taxation of profit tax. The amount of 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 funds allocated to state-owned enterprises within the framework of the state investment program of the state budget and attributed to assets for investment projects that meet the criteria established by the relevant body (institution)) and attributed to assets (except for the depreciation calculated on repair costs carried out by the taxpayer at his own expense and attributed to the value of fixed assets) is determined as the object of taxation.
The rules for calculating depreciation deductions and deducting them from income by taxpayers admitted to horizontal monitoring are provided. Depreciation deductions by taxpayers admitted to horizontal monitoring are calculated using the straight-line or declining balance method, and by other taxpayers only using the declining balance method (except for depreciation deductions on intangible assets). The list of assets that should be used using the declining balance and straight-line methods in calculating annual depreciation rates has been determined, and some additions and changes have been 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, and a 6 percent rate has been set for the taxation object formed on the basis of cashless payments made through POS terminals for services provided to the population for a period of 3 years from January 1, 2026. Cashless payments must be made through a POS terminal integrated into a single operating system of the cash register.
When determining the volume of taxable transactions for simplified tax and VAT purposes, the taxpayer's turnover formed on the basis of non-cash payments made through POS terminals for retail trade and services provided to persons not registered with the tax authority is taken into account by applying a coefficient of 0.5.
A detailed summary and explanation of the planned changes is provided on the official website of Caspian Legal Center. To familiarize yourself with the changes, click here: Tax Code of Azerbaijan | 2026 Tax Code Amendments
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