From 1 February 2023, individuals are exempt from tax for 5 years only on dividend, discount, and interest income paid respectively on shares and bonds that have been publicly placed and are traded on a regulated market

13 May 2022 A number of changes to the Tax Code were introduced to create a supportive tax environment for the capital market ( In the Tax Code of the Republic of Azerbaijan, Article 102.1.22-2 was added to the Tax Code under the Law of the Republic of Azerbaijan "On Amendments to the Tax Code" adopted on 9 June 2022. From 1 February 2023, this article exempts individuals from tax for a period of 5 years only on dividends, rebates (differences arising from placement of bonds below their nominal value) and interest income paid on shares and bonds placed publicly and traded on a regulated market. The amendments bring the procedure for calculating the tax on discount and interest income paid on bonds into line with international best practices and take into account the number of days the bond is held by the holder as the main criterion.  This amendment would stimulate the active participation of investors in the capital market and broaden the investor base by optimizing the tax burden generated from discount and interest income on bonds. Furthermore, it has been determined that the interest income received by legal entities on bonds is to be declared and paid as part of total profits and not at the source of payment.

These changes will make a significant contribution to improving market transparency and increasing opportunities for investors to participate in the capital market while reducing the OTC market and increasing the number of transactions concluded on the stock exchange.