New Tax and Economic Changes: Key Updates of 2025

With the beginning of the new year, a series of significant tax and economic changes are being implemented in Azerbaijan. These reforms, effective from 2025, will have a positive impact on both entrepreneurs in the business sector and individual citizens. In this article, we will discuss the main changes that will take effect in 2025 and their impact on businesses and the economy.

1. Tax Benefits for Entrepreneurs

Entrepreneurs operating in specific sectors with an annual turnover of up to 45,000 AZN will be granted tax benefits. These sectors include journalism, software development, translation, advertising, science, auditing, finance, courier services, accounting, tourism, research, and decoration services. These entrepreneurs will be exempt from 75% of income tax on their earnings.

Impact:

This reform will stimulate the development of small and medium-sized enterprises (SMEs), particularly easing the financial burden on entrepreneurs in service sectors.

2. Increase in Minimum Wage and Pension

From 2025, the minimum wage will be set at 400 AZN, and the minimum pension will be set at 320 AZN. This change is considered an important step aimed at improving the living standards of citizens.

Impact:

The increase in wages and pensions will not only improve social welfare but also positively influence domestic consumption and overall economic growth.

3. Support for Renewable Energy Sector

Special attention has been given to the development of the renewable energy sector. Equipment used in renewable energy projects will be exempt from import duties. This incentive will accelerate the implementation of green energy projects and promote sustainable development.

Impact:

The support directed toward renewable energy will contribute to environmental protection, increase energy efficiency, and lead to the creation of new job opportunities.

4. Control of Cash Transactions

Penalties will be imposed on those engaged in cash transactions involving precious metals and movable property. This decision aims to reduce cash transactions and increase transparency.

Impact:

This change will increase tax revenues and enhance economic transparency. It also seeks to limit the informal sector in the economy.

5. Support for the Cultural Sector

As part of the support for cultural institutions, 50% of the VAT paid on cultural facilities will be refunded. This is an important step to promote the development of the cultural sector.

Impact:

The tax relief for cultural institutions will allow for the wider distribution of products and services in this sector and contribute to the overall development of cultural activities.

6. Support for Local Bus Production

The sale of locally produced buses will be exempt from VAT. This measure will promote local production and strengthen the economy in this sector.

Impact:

Encouraging local production will contribute to increasing domestic manufacturing and reducing dependency on foreign imports. It will also lead to the creation of local jobs and accelerate regional development.

7. Support for Transit Cargo

Transit cargo transported by rail will be exempt from road tax. This decision will make transit transportation more affordable and efficient.

Impact:

This incentive will make Azerbaijan a more attractive transit corridor, boosting international trade. It will also provide better opportunities for local logistics and transportation companies.

Conclusion

The year 2025 brings significant changes to the business and economic sectors in Azerbaijan, filled with new opportunities and enhanced support systems. Entrepreneurs and individual citizens should align themselves with these changes by adapting their tax and economic policies, optimizing their operations, and taking full advantage of the new opportunities available.

To benefit from these changes and receive support with tax planning, you can contact TBG Consulting. We provide detailed information about tax and economic reforms in Azerbaijan, helping your business adapt to the new environment.