Employer Tax Contributions

Tax Type	Rate	Base
Social Security (Non-Oil/Gas, Up to 8,000 AZN)	15%	Gross Salary
Social Security (Oil/Gas & State)	22%	Gross Salary
Unemployment Insurance	0.5%	Gross Salary
Mandatory Medical Insurance (Up to 2,500 AZN)	2%	Gross Salary
Mandatory Medical Insurance (Above 2,500 AZN)	0.5%	Gross Salary

Filing & Compliance

• Employers must calculate and withhold Personal Income Tax (PIT) and employee contributions.
• Monthly payroll declarations must be filed and contributions remitted through the State Tax Service's online portal by the 20th day of the following month.
• Annual reporting summarizing total compensation and withheld taxes for each employee is also required.

In Azerbaijan, employers are responsible for withholding various taxes from employee salaries, which contribute to social security, unemployment insurance, and mandatory medical insurance. These deductions, along with the income tax, are crucial for compliance with Azerbaijani employment regulations.

Employee Tax Deductions in Azerbaijan

Income Tax

• Tax-Exempt Income: The seven-year tax exemption on income up to 8,000 AZN for private sector employees ended on December 31, 2025. As of January 1, 2026, monthly income up to 2,500 AZN is taxed at 3%.
• Tax Rates: Income from 2,501 AZN to 8,000 AZN is taxed at 10%, and income above 8,000 AZN is taxed at 14%. Individual entrepreneurs are taxed at a rate of 20%.
• Capital Gains: Capital gains are considered part of regular income and taxed at the standard individual income tax rate.

Social Security

• Employee Contribution: The social security contribution is 3% on income up to 200 AZN. For income between 200 AZN and 8,000 AZN, the contribution is 6 AZN plus 10% on the amount exceeding 200 AZN. For income exceeding 8,000 AZN, the contribution is 786 AZN plus 10% on the amount exceeding 8,000 AZN.
• Liberated Territories Subsidy: Employees in the private sector of liberated territories (excluding oil and gas) receive a government subsidy on their social security contributions. The 100% subsidy was in effect from January 1, 2023, to December 31, 2025, and will decrease gradually in the following years.

Unemployment Insurance

• Employee Contribution: Employees contribute 0.5% of their salary to unemployment insurance.

Mandatory Medical Insurance

• Employee Contribution: The mandatory medical insurance contribution is 2% on income up to 2,500 AZN and 0.5% on income above 2,500 AZN.

Employer Tax Contributions in Azerbaijan

Social Security

• Employer Contribution: Employers contribute 22% on the first 200 AZN of an employee's salary. For income between 200 AZN and 8,000 AZN, the contribution is 44 AZN plus 15% on the amount exceeding 200 AZN. For income exceeding 8,000 AZN, the contribution is 1,214 AZN plus 11% on the amount exceeding 8,000 AZN.
• Liberated Territories Subsidy: Similar to employees, employers in liberated territories (excluding oil and gas) receive a subsidy on their portion of social security contributions. The subsidy is currently 100% and decreases over time according to the current schedule.

Additional Information

• Minimum Wage: The national minimum wage is 400 AZN. As of February 16, 2026. This figure might be subject to change.
• Payroll Frequency: Payroll is typically processed monthly or bi-monthly in Azerbaijan.
• Overtime: Overtime work is subject to specific regulations, including limits on consecutive overtime hours and situations when overtime is allowed.

It is important to consult official government resources for the most recent updates to these tax regulations and specific details related to individual circumstances.