Overpaying taxes can happen to both individuals and businesses due to calculation errors, incorrect payment details, or specific legal situations. The good news is that Azerbaijan’s tax legislation provides a clear process for tax refund to ensure you can get back any excess amount you have paid. This guide explains how to reclaim overpaid tax, the required steps, documents, and deadlines for both personal and corporate taxpayers.
Understanding Overpaid Tax
An overpaid tax is any amount you have paid to the state budget that exceeds your actual tax obligation. This can happen due to:
- Mistakes in tax calculations
- Incorrect bank details or payment codes
- Double payments
- Application of wrong tax rates
- Changes in tax obligations after audits or inspections
According to Article 87 of the Tax Code of Azerbaijan, any overpaid tax, interest, or financial sanction (except certain excise payments to the Compulsory Health Insurance Fund) can be refunded, applied to other tax debts, or used for future tax obligations — based on the taxpayer’s request.
Process for Tax Refund in Azerbaijan
The overpaid tax refund procedure for companies and individuals follows a structured process:
1. Identify the Overpayment
Review your personal or corporate tax account (available via the State Tax Service’s online portal) to confirm the overpayment.
2. Prepare an Application
Submit the official Overpaid Tax Refund Application Form to the relevant tax authority. This must include:
- Taxpayer identification details
- Amount and type of tax overpaid
- Payment reference numbers
- Supporting documents proving the overpayment
3. Submit to the Relevant Authority
- State Tax Service – for taxes and financial sanctions
- Customs Authority – for customs-related taxes (e.g., VAT, excise)
- State Social Protection Fund – for social security, unemployment, or health insurance overpayments
4. Wait for Processing
- Standard refunds – processed within 45 days
- Cases with wrong payment details and no debts – within 20 days
- VAT refunds with zero-rated transactions – within 4 months
5. Receive Refund or Offset
You can choose to:
- Receive the refund to your bank account
- Apply it toward other tax liabilities
- Use it for future tax periods
Application Deadlines
- You have 5 years from the end of the relevant tax period to apply
- No deadline for social security, unemployment, and health insurance overpayments
- If a court appeal is ongoing, the period is paused until the final decision
Reclaiming Overpaid Tax for Businesses
For corporate taxpayers, reclaiming overpaid taxes can significantly improve cash flow. Common cases include:
- Overpaid corporate income tax due to incorrect profit calculation
- Overpaid VAT on zero-rated sales
- Overpaid withholding tax for foreign transactions under double taxation agreements
Note: Always reconcile your tax account quarterly and maintain accurate payment records.
Key Documents Required
- Official Overpaid Tax Refund Application Form
- Payment orders or receipts
- Tax calculation sheets
- Audit reports (if applicable)
- Proof of incorrect bank details or codes
Practical Advice
- Double-check payment details before sending tax payments
- Use the online taxpayer account to track payments in real time
- Keep all payment orders and correspondence
- Ensure compliance with tax treaties to avoid unnecessary withholding
Conclusion
Knowing how to reclaim overpaid tax is essential for both individuals and companies in Azerbaijan. By following the correct process, submitting the application form accurately, and meeting deadlines, you can ensure a smooth refund experience.
If you need professional assistance in preparing and submitting your application, our tax experts at ACON Consulting are ready to guide you through the process to get back what you have overpaid.
📞 +994 50 990 15 99 | ✉️ info@acon.az
If you would like to benefit from our other tax-related services, you can explore the following blog posts: