Introduction
Corporate income tax (CIT) is the core profit tax for companies in Azerbaijan. This guide explains who pays, the 20% rate, filing timelines, deductions, loss rules, audits, and penalties—so you stay compliant and protect profits.

Corporate Income Tax: Scope & Rate

CIT applies to profits earned by Azerbaijani legal entities and foreign companies with a permanent establishment (PE) in Azerbaijan. The standard rate is 20% on taxable profit (income minus deductible expenses).

Who Pays CIT?

• Resident companies: worldwide income sourced to Azerbaijan tax rules.
• Non-residents with a PE: profits attributable to the PE in Azerbaijan.
• Non-residents without a PE: generally taxed via withholding on certain Azerbaijan-sourced income (see our DTA pages for treaty relief).

Tax Base & Deductible Expenses

Taxable profit equals accounting profit adjusted by tax rules. Typical deductible items include ordinary and necessary business costs, depreciation/amortization, certain professional fees, and confirmed bad debts. Non-deductible items may include fines and expenses not linked to income generation.

Losses & Carry-Forward

Tax losses can be carried forward subject to local limitations. Maintain clear documentation to support the timing and amount of any loss utilization.

Filing Calendar & Payments

• Quarterly provisional filings/payments: based on year-to-date results.
• Annual return: filed after year-end within the statutory deadline.
• Final settlement: top-up payment (or refund) after the annual return.

Accurate bookkeeping and timely reconciliations reduce audit risk and penalties.

Audits & Documentation

Keep ledgers, contracts, invoices, PE attributions, and supporting schedules for deductions and losses. Prepare audit-ready files (trial balance, working papers, reconciliations) to streamline inspections.

Penalties & Common Pitfalls

• Late filing or payment penalties and interest.
• Disallowed expenses due to missing documentation.
• Incorrect PE profit attribution for foreign companies.

A pre-year-end check (tax forecast) helps identify adjustments before closing.

How ACON Helps with CIT

• Quarterly and annual CIT compliance (calculations, filings, payments).
• Expense review for deductibility and loss-utilization planning.
• PE analysis for foreign companies and profit attribution support.
• Audit defense pack preparation and representation.
• Coordination with related areas (link out: our VAT guidance,
  treaty overviews).

Conclusion

Corporate income tax in Azerbaijan is straightforward when you align your books, documents, and timelines with tax rules. If you need a clean compliance setup—or a second opinion—our team can help.

👉 Contact ACON Consulting for CIT filing and audit-ready support.

Corporate Income Tax — FAQ

What is the corporate tax rate in Azerbaijan?
The standard CIT rate is 20% on taxable profit.

Do foreign companies pay CIT?
Yes—if they have a permanent establishment (PE) in Azerbaijan. Profits attributable to the PE are taxed at 20%.

How often do I file?
Quarterly provisional filings/payments and one annual return after year-end.

Are all expenses deductible?
Only expenses connected to income generation and supported by valid documents; some items (e.g., fines) are non-deductible.

Can I carry forward losses?
Yes, subject to local rules. Keep documentation to substantiate amounts and timing.