AZE - CHANGE IN PAYROLL TAX 2026

Several years ago certain tax incentives were established for a period of 7 years (January 1, 2019) relating to monthly income from employment of individuals being hired by the non-oil and gas industry and those having non-government jobs. During the specified period, certain incentives were also given to mandatory state social insurance contributions.  Now that the tax incentive period has come to an end, effective 1^st of Jan’ 2026 all the previously available benefits have been clawed back and the following rules are being introduced effective immediately, as per decree of President of Azerbaijan Republic, published 30th Dec' 2005. 

PIT:

Personal Income Tax (from 1^st of January 2026 to 1^st of January 2027):

The amount of taxable monthly income is subject to the following tax table:

• Up to 2,500 manats - 3 %
• From 2,500 manats to 8,000 manats - 75 azn + 10 % of the amount exceeding 2,500 azn
• Over 8,000 manats: 625 azn + 14 % of the amount exceeding 8,000 azn

Personal Income Tax (from 1^st of January 2027 to 1^st of January 2028):

The amount of taxable monthly income will be subject to the following tax table:

• Up to 2,500 manats - 5 %
• From 2,500 manats to 8,000 manats - 125 azn + 10 % of the amount exceeding 2,500 azn
• Over 8,000 manats -  675 azn +14 % of the amount exceeding 8,000 azn

Personal Income Tax (from 1^st of January 2028):

The amount of taxable monthly income will be subject to the following tax table:

• Up to 2,500 manats - 7 %
• From 2,500 manats to 8,000 manats - 175 azn + 10 % of the amount exceeding 2,500 azn
• Over 8,000 manats - 725 azn + 14 % of the amount exceeding 8,000 azn

SSPF: monthly contributions (from 1^st January 2026)

Starting from 1^st of January 2026 the procedure for paying compulsory state social insurance for employees is also changing and is subject to the following progressive table:

• Up to 200 manats – employee liability 3 %
• Up to 200 manats – employer’s liability 22%
• From 200 to 8,000 manat – employee liability – 6 azn + 10% of the amount exceeding 200 azn
• From 200 to 8,000 manat – employer’s liability – 44 azn + 15% of the amount exceeding 200 azn
• Over 8,000 manats – employee liability – 786 azn + 10% of the amount exceeding 8,000 azn
• Over 8,000 manats – employer’s liability – 1,214 azn + 11% of the amount exceeding 8,000 azn

In addition to changes with the Personal Income Tax and SSPF contributions, changes were also made to the compulsory health insurance deductions.

CMIC: Compulsory Medical Insurance Contributions (from 1^st January 2026)

Starting from 1^st of January 2026 the procedure for paying of compulsory medical insurance contributions for employees is subject to the following progressive table:

• Up to 2,500 manats – employee liability - 2%
• Up to 2,500 manats – employer’s liability - 2%
• Over 2,500 manats – employee liability – 50 azn + 0,5% of the amount exceeding 2,500 azn
• Over 2,500 manats – employer’s liability – 50 azn + 0,5% of the amount exceeding 2,500 azn