Tax at source is a mechanism for withholding tax on income (excluding expenses) at the time of payment by a tax agent at a percentage (%) in accordance with the legislation.
There are types of tax at source. We will provide information about some of them:
- with individuals OMV from rent - OMV from rent of movable and immovable property - when concluding a lease agreement, sometimes the lessor indicates in the contract the net amount that will be received by him. In this case, the lease amount must be grossed up. However, some accountants take this amount as the lease amount. For example, if the rental amount is 1000 AZN (amount payable to the lessor), then the rental amount should be calculated by dividing 1000/0.86:
Amount payable to the lessor: net 1000 AZN
Rent amount: 1000/0.86=1162.92 AZN
VAT: 1162.92*14%=1162.92 AZN
-VAT from dividends- Dividend tax paid by a resident enterprise-5%
-VAT on international communication and freight transportation services- 6%
According to Article 125-1 of the Tax Code, when making payments to persons established in countries or territories with preferential taxation, a 10% withholding tax is levied, regardless of other provisions of this Code.
When making payments to employees, persons who withhold tax at source must submit a report on taxes at source when making payments to employees pursuant to Article 150.3.3 of the Income Tax Act by the 20th of the month following the end of the quarter.
