From 2026, the issue of whether monthly income tax will be withheld from the salaries of individuals not working in the oil and gas sector and the public sector, whose salaries are below 8000 manats, is on the agenda.
Recall that for seven years, no income tax has been withheld from individuals working outside the oil and gas sector and the public sector with salaries up to 8000 manats. This concession is applied based on Article 101.1-1 of the Tax Code. Article 101.1-1 also sets a concession for individuals working outside the oil and gas sector and the public sector with salaries above 8000 manats: only 14 percent of such individuals' salary is subject to income tax.
Article 101.1-1 of the Tax Code is valid for seven years. It has been applied since January 2019 and ends at the end of 2025.
On September 17, at the meeting of the Economic Policy, Industry and Entrepreneurship Committee of the National Assembly, it was proposed to extend the duration of concessions granted to individuals not working in the oil and gas sector and the public sector.
On September 19, in a statement to Medianews.az, Deputy Chairman of the Economic Policy, Industry and Entrepreneurship Committee Azər Badamov said that the proposal was made by committee member Vüqar Bayramov: “Other members of the committee supported the proposal. At the committee meeting, the head of the department of the Ministry of Economy, as well as the head of the main department of the State Tax Service under the Ministry of Economy, also participated. We conveyed the proposal to their attention. Now, the Ministry of Economy and the State Tax Service should conduct calculations and investigate the feasibility of the proposal. That is, experts need to work on this. Is it necessary to extend the duration of the concession, how significant is it, and does the state budget permit it? These and other questions need to be clarified. If it is concluded that it is possible to extend the concession period in any form, then the relevant authority should initiate legislative amendments to the Tax Code. Currently, there is no draft law regarding the extension of the concession; such a draft can only be presented after investigations by the Ministry of Economy and the State Tax Service.
I would also like to emphasize one point. Everyone should know that these are concessions intended for a certain period, and they were applied seven years ago so that the non-oil sector would develop, jobs would be legalized, salaries would not be hidden from the state, and transparency would be ensured. Over these seven years, these processes have taken place. Therefore, if the period is not extended, our citizens should view this normally. Because I repeat: the concessions were intended for a certain period with specific goals. The goals have been reached, and the period is coming to an end. I mention all these just in case. As for the Economic Policy, Industry and Entrepreneurship Committee of the National Assembly, our proposal concerns extending the duration of the concession. Every member of the committee supports this proposal. However, whether the proposal is accepted depends on thorough analyses and discussions.”
Medianews.az notes that individuals working in the oil and gas sector and the public sector with salaries up to 2500 manats are subject to an income tax withdrawn monthly at the rate of 14 percent of their salary, i.e., 350 manats. When the salary exceeds 2500 manats, 14 percent (350 manats) is withheld from the salary portion up to 2500 manats, and 25 percent from the remainder. For example, if the salary is 3500 manats, the salary is divided into two parts: 2500 manats and 1000 manats. Fourteen percent (350 manats) is withheld from the 2500 manat portion, and 25 percent (250 manats) from the 1000 manat portion as income tax. Thus, if the salary is 3500 manats, a total of 600 manats is withheld monthly as income tax.
If there are no amendments to the Tax Code, that is, if the duration of the concessions specified in Article 101.1-1 is not extended, or new forms of concessions are not applied, then income tax will be withheld from the salaries of individuals currently working outside the oil and gas sector and the public sector in the same manner. This applies both to those earning up to 8000 manats and those earning more than 8000 manats. That is, if there is no change in the Tax Code, regardless of whether a citizen works in the oil and gas sector and the public sector or outside these sectors, if their salary is up to 2500 manats, 14 percent (350 manats) will be withheld monthly, and if their salary exceeds 2500 manats, then 14 percent (350 manats) from the portion up to 2500 manats and 25 percent from the remainder of the salary will be charged as income tax.
Toğrul Əli,
Medianews.az
