Azerbaijan to gradually raise income tax for the private sector

The Azerbaijani government plans to introduce a phased increase in income tax for the private sector starting from 2026, Deputy Finance Minister Azer Bayramov said.

Under the proposed amendments to the Tax Code, the income tax rate will gradually rise to 3% in 2026, 5% in 2027, and 7% in 2028.

Incomes between 2,500 and 8,000 manats will be taxed at 10%, while earnings above 8,000 manats will face a 14% rate.

Bayramov said the phased transition aims to “soften the impact” on the economy and support business development.

The government also proposes to cap the total tax burden on payrolls at 37%, with corresponding amendments to the laws on social and mandatory health insurance.

The reform package seeks to strengthen the fight against the shadow economy, protect the domestic market, encourage investment in strategic sectors, and promote non-cash payments.

Tax exemptions will be gradually reduced and maintained only when economically justified.

N. Tebrizli