Effective from 1 January 2019, the Cabinet of Ministers of the Republic of Azerbaijan approved the criteria for the activities of oil and gas industry and non-public sector with its resolution No. 56, dated February 18, 2019. These criteria determine the list of persons which are not entitled to apply income tax exemptions and social security payment reductions, which are available to the private sector entities.
Under the resolution, the following persons shall be deemed engaged in oil and gas activities:
i) SOCAR and its structural units and entities;
ii) contractors and legal entities operating under production sharing agreements (PSA), main pipeline and other similar agreements regardless of the type of activity;
iii) local and foreign subcontractors engaged in providing services to the legal entities specified in (i) and (ii):
iv) The resolution provides that legal entities and solo tax payers registered in Azerbaijan shall be considered non-state sector, save for the public legal entities established on behalf of the state, budget organizations, other legal entities and organizations financed from the state budget and other state-owned funds, as well as legal entities with 51 % or more shareholding and participation interest directly and indirectly owned by the state.
This information is for general information purposes only. For further and detailed advice, please, do not hesitate to contact Baku Attorneys & Consultants, a full service law firm in Baku, Azerbaijan.