A vast number of CSOs and CSO experts in Azerbaijan are considered micro-entrepreneurs. Since January 1, 2024, with the new Tax Code amendments, micro-entrepreneurs (both individual entrepreneurs and legal entities) can be 75% income tax exempted, only if they:
- have at least 3 employees; and
- do not have debts for compulsory state social insurance contributions (SIC).
Previously, the requirements for 3 employees and debt-free SIC were not in the law. This means that this change will reduce micro-entrepreneurs’ net income and, therefore, financially negatively affect CSOs and CSO experts. This is a new burden for CSOs already operating with limited financial capabilities due to a restrictive legal and practical environment.
At the same time, CSOs established by government agencies, such as Unions of Writers, Painters, etc see some favourable tax changes. Income tax exemptions from the amount transferred to an enterprise operating in the field of science, education, healthcare, sports, and culture, as well as the part of the amount transferred to funds created for public and social purposes, have been raised from 10% to 15% (Article 106.1.18). The provisions of this article are applied only in relation to expenses paid in non-cash. The exemptions are applicable until 2029.