How can an Umbrella Company Help with Contracting in Azerbaijan?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Azerbaijan. Even better, most are experts in Azerbaijan and expat tax law, meaning they’ll also help you optimize your earnings in Azerbaijan.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Azerbaijan.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Azerbaijan, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Azerbaijan and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Azerbaijan
One of the most consistently challenging aspects of contracting in Azerbaijan is complying with the country’s tax system. As well as paying tax in Azerbaijan, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Azerbaijan
If you’re working in Azerbaijan under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Azerbaijan for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Azerbaijan, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Azerbaijan through PAYE is left with the prospect doing everything themselves.
Do you know much about Azerbaijan Tax Law? Does Azerbaijan have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Azerbaijan can range from 0 to 25 percent, and you need to be sure you are placed in the correct tax brackets.
Tax Filing as a Contractor in Azerbaijan
| When Do You Need to Lodge Your Tax Return? | 31 March (following the income tax year) |
| Tax Filing Deadline | 31 March (following the income tax year) |
| Can you file it online? | Yes, https://login.e-taxes.gov.az/login/ |
How to File Taxes in Azerbaijan as a Contractor
The simplest way to file taxes in Azerbaijan is online. Alternatively, taxes can be filed via the BTP program which is a downloadable software from the Ministry of Taxes of the Republic of Azerbaijan website.
It is recommended that you consult a tax specialist and/or translator when you file your taxes, as the Ministry of Taxes website is in Azerbaijani.
Step 1: Obtain an ‘Easy Signature’
Easy Signature (Mobile Signature) allows a user to access any Ministry of Taxes e-Service.
- Obtain an Easy Signature SIM Card from any mobile provider (for example, Azercell, Bakcell, Nar Mobile).
- Sign a certificate at a ASAN Service Centre or tax service centre(link is external).
Alternatively, you can apply for an Easy Signature at your nearest ASAN Service Centre. There, you will be given the relevant instructions and application forms.
You may also log in using a VN ASXM Digital ID card (which can be obtained at an ASAN Service Centre) or a RYTN ‘e-Signature’ card.
Step 2: Log In
Log in to the Azerbaijani tax authority’s online tax declaration portal here(link is external).
Step 3: Complete and Submit Tax Return
Follow the prompts and fill in the required information. Comprehensive instructions (in Azerbaijani) on filling in the tax forms can be found here(link is external).
Tax Figures in Azerbaijan
| Currency | Azerbaijani Manat (AZN) | ||||||||
| Tax-free Threshold in Azerbaijan | AZN1,860 | ||||||||
| Income Tax Rates |
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| Notes | Exemption for Investment Promotion Certificate Holders: Individuals who hold an investment promotion certificate for 7 years from the date of obtaining the certificate may be granted a 50% exemption from personal income tax. |
Tax Residency in Azerbaijan
When do you become a tax resident in Azerbaijan
You become a tax resident in Azerbaijan when:
You become a tax resident in Azerbaijan when:
- You stay in Azerbaijan for at least 183 days in a calendar year; or
- You stay in Azerbaijan for less than 183 days in a calendar year but Azerbaijan is your place of permanent stay, centre of vital interests, regular place of residence and/or you are an Azerbaijani citizen.
You and your family members are not regarded as staying in Azerbaijan if you are an official with a diplomatic/consular status, you are an employee of an international organisation, or you are a foreign national engaged in state service of foreign states, unless you are engaged in entrepreneurial activities.
Does the 183 day rule apply in Azerbaijan
Yes
Am I taxed on my global income in Azerbaijan
Tax residents are taxed on their global income. Non-residents are taxed on their Azerbaijan-source income only.
Can you set up your own Limited Company in Azerbaijan?
| How long does it take to set up | 4.5 days |
| How much does it cost | AZN15 + AZN18 per e-Signature |
| Is it easy? | Starting a Business Rank: 18/180 (Source: World Bank) |
Tax Calculator in Azerbaijan
If you are a contractor and want a calculation on your tax and net retention in Azerbaijan, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Azerbaijan
Contractors in Azerbaijan are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. An Azerbaijani umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Azerbaijani taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Azerbaijani tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Azerbaijan
We work with numerous umbrella companies in Azerbaijan, many of whom are experts in tax and immigration laws. If you have any questions about tax in Azerbaijan, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Azerbaijani work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Azerbaijan but without the overhead of directly dealing with the Azerbaijani tax authorities. Get in touch with us today for some reliable advice on tax in Azerbaijan!
A Contractor’s Guide to Work Permits in Azerbaijan
Immigration is one of the primary concerns for any contractor hoping to start working in Azerbaijan. Permanent employees will find it easy to get their Azerbaijani work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The Azerbaijani work permit, known more commonly as the Employment Visa, is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Azerbaijan is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Azerbaijan (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in Azerbaijan. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Azerbaijan and match contractors with the right company for them. If you’ve already secured a contract in Azerbaijan, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).
