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CSOs and their donors should enjoy favourable tax treatment, as they are essential for financial viability and the development of society. However, Azerbaijan introduced numerous new changes to the Tax Code as of January 01, 2022. Part of these changes directly affect CSOs and create additional burdensome obligations such as:
- CSOs are required to provide additional information in their bank payment orders.
- Experts hired by CSOs need to have accounting in place (otherwise they will not be eligible for discount on profit tax and would pay 20% instead of 5% tax).
- If there is no hotel receipt for business travel, then only 50% of the cost is accepted as expense deducted from income.
One positive development is the introduction of tax exemption on donations to foundations for eight years (starting from January 1, 2021), provided that these foundations are established for public and social purposes by the relevant executive body (A President’s Decree is still to be prepared on this issue specifically).