two young businessmen discussing project at meeting with laptop and smart phone on table

What Is the Difference Between an Individual and a Sole Proprietor?

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Let’s clarify two concepts that are often confused in society:

Individual – According to the legislation of the Republic of Azerbaijan, an individual is a legal subject recognized by law, who can carry out certain legal and financial operations based on an identity document. However, having the status of an individual does not grant the right to engage in official commercial activity.

Sole Proprietor (SP) – A sole proprietor is an individual who has officially registered with the Ministry of Taxes and started entrepreneurial activity. Sole proprietors have taxpayer status and are authorized to enter into contracts, issue invoices, and engage in legal relations through official documentation.

For more detailed information and legal support, please contact us.

Email: [email protected] | Mobile: +99455 2134939 | Tel: +99412 3108659

two young businessmen discussing project at meeting with laptop and smart phone on table

The Role and Importance of Internal Audit

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The primary purpose of internal audit is to effectively manage an organization’s financial risks, evaluate the performance of internal control mechanisms, and ensure that financial processes comply with applicable legislation.

Internal auditors objectively analyze financial operations, assess the efficiency of control systems, and provide management with recommendations for their improvement.

This process contributes to the achievement of the company’s strategic goals and supports the transparent and efficient conduct of financial activities. Audit also plays a key role in identifying operational risks, ensuring the accuracy of financial reporting, and strengthening the overall control environment.

For more detailed information and legal support, please contact us.

Email: [email protected] | Mobile: +99455 2134939 | Tel: +99412 3108659

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Domestic Transport is Now Tax-Exempt

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Domestic (non-international) transport is now tax-exempt — this presents a real opportunity for companies operating in the transportation sector.

This change is not just an official announcement; when applied correctly, it can lead to significant cost savings for you.

Abacus Audit helps you take advantage of this opportunity properly and reduce your tax burden by considering the nuances of legislation.

Remember: for those who misuse the law, an opportunity can turn into a risk.

🔎 For more detailed information and legal support, contact us.

✉️ Email: [email protected] | 📲 Mobile: +99455 2134939 | ☎️ Tel: +99412 3108659

3

Attention for Entrepreneurs Making Payments Abroad with Business Cards!

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Attention Entrepreneurs Making Payments Abroad with Business Cards!

According to Article 169.3 of the Tax Code, if services or work are purchased from a non-resident via electronic commerce, an 18% VAT must be calculated on the payment amount and paid to the state budget.

For instance, when a payment is made via a debit card, it is treated as a transaction by an individual, and the bank automatically withholds the 18% VAT and transfers it to the state budget. However, when a business card is used, the VAT is not withheld, since the business card is tied to the entrepreneur’s account. Therefore, the responsibility to pay the 18% VAT falls directly on the entrepreneur and must be remitted to the state budget in accordance with the regulations.

We recommend that you take this into account to fulfill your financial obligations accurately and on time.

🔎 For more detailed information and legal support, please contact us:

✉️ Email: [email protected] | 📲 Mobile: +994 55 213 4939 | ☎️ Tel: +994 12 3108659

2

New Rules Regarding Removal from the List of Risky Taxpayers

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New Rules Regarding Removal from the List of Risky Taxpayers:

By the decision of the Cabinet of Ministers dated November 21, 2024, the procedure and conditions for removal from the list of risky taxpayers have been approved. In this regard, amendments were made to the Cabinet of Ministers’ decision No. 265 dated July 28, 2020.

It should be noted that the criteria approved in 2020 only determined the rules for inclusion in the list of risky taxpayers. However, with the new decision, legal grounds for removal from this list have also been established.

Two main conditions have been set for the cancellation of the risky taxpayer status:

✅ Proof of the legitimacy of non-commodity transactions – The taxpayer must confirm that the transactions carried out are real.

✅ Payment of financial sanctions – If the taxpayer fully pays the financial sanction imposed based on Article 58.15-1 of the Tax Code regarding non-commodity transactions, they gain the right to be removed from the list of risky taxpayers.

According to the relevant article of the Tax Code, the following fines are applied to taxpayers proven to have conducted non-commodity transactions:
📌 First time – 10% financial sanction
📌 Second time – 20% financial sanction
📌 Third and subsequent times – 40% financial sanction

After the sanctions imposed are fully paid, the taxpayer gains the opportunity to be removed from the risky list.

🔎 For more detailed information and legal support, contact us.

✉️ Email: [email protected] | 📲 Mobile: +99455 2134939 | ☎️ Tel: +99412 3108659

5

Changes to the Tax Code in 2025

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According to additional amendments to the Tax Code, starting from 2025, certain micro-entrepreneurs—who are individuals with turnover up to 45,000 AZN—may benefit from a 75% income tax exemption even without employing three workers!

The eligible activities include:

  • Software development

  • Project design and decoration services

  • Translation services

  • Advertising services

  • Research and studies

  • Services in science, education, culture, and sports

  • Legal, freelance audit, accounting, and financial consulting

  • Journalism

  • Market analysis

  • Valuation activities

  • Courier services

  • Tour guiding

  • Service exports

🔹 Our comprehensive services include:

  • Tax filings

  • Accounting (operations & financial statements)

  • HR (employee data systemization)

  • Audit (risk management)

  • Legal (court and legal support)

  • Tender support (financial reporting)

  • Brokerage (organizing import and export operations)

For more detailed information, contact us:
✉️ [email protected] | 📲 +994 55 213 4939 | ☎️ +994 12 3108659

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If You Do Not Pay the Charter Capital on Time, You May Be Fined Up to 2000 AZN

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Important Information Regarding the Payment of Charter Capital

After the company is officially registered, the charter capital must be paid within a maximum of 90 days (a shorter period may be specified in the charter). The payment receipt confirming the amount paid must be submitted to the tax authority within 5 days.

Failure to comply with these rules may result in the following penalties:

🔹 Failure to pay the charter capital on time:

● 1000 AZN for the director or responsible officer
● 2000 AZN for the legal entity

🔹 Failure to submit the payment confirmation document to the tax authority:

● 500 AZN for the responsible officer
● 1000 AZN for the legal entity

Comply with the rules on time and avoid fines!

For more detailed information and legal support, contact us:

✉️ Email: [email protected] | 📲 Mobile: +99455 2134939 | ☎️ Tel: +99412 3108659

1256244

Tax and Taxation

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Tax and Taxation

Tax is a compulsory, individual, and non-refundable payment transferred to the state and local budgets by taxpayers from their property funds to financially support the activities of the state and municipalities.

Tax reports must be prepared and submitted correctly every year. This is important for business owners’ financial planning and productivity. Since tax regulations are regularly updated, professional financial services—such as those provided by Abacus Audit—can be crucial. Abacus Audit offers services to effectively manage your tax reports and financial operations.

Some types of taxes include:

  • Personal Income Tax: A tax calculated on an individual’s income, such as salary, undocumented income, and additional earnings, which must be paid to the state.

  • Corporate Profit Tax: A tax that legal entities, such as enterprises and organizations not owned by municipalities, must pay on their income.

  • Simplified Tax: A taxation regime that simplifies tax reporting and payments, especially applied to small and medium-sized businesses.

  • Value Added Tax (VAT): A government tax added to the value of goods produced or sold by enterprises or individuals.

  • Excise Taxes: Government taxes that enterprises and individuals must pay when purchasing or selling certain goods.

If you want to gain deeper knowledge about taxes and properly manage your finances, it is advisable to use professional assistance. Abacus Audit can help you fulfill your tax obligations and manage your financial responsibilities with their professional financial services.

Audit Compliance Evaluation Financial Statement Concept

Financial, Accounting, and Audit Services of “Abacus Audit and Consulting” Limited Liability Company

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Financial, Accounting, and Audit Services of “Abacus Audit and Consulting” LLC

Our company offers professional financial reporting, accounting, and audit services to enterprises. These services help our clients manage their financial processes and prepare accurate financial statements. The most important benefit we deliver is financial security and reliability. Our team consists of skilled professionals who ensure high-quality financial-accounting support and assist clients in managing their financial processes efficiently.

Our primary goal is to ensure that our clients’ financial statements are prepared accurately, legally, and according to applicable standards. We continuously stay up-to-date with the latest financial regulations and International Financial Reporting Standards, applying this knowledge for the benefit of our clients.

Our financial, accounting, and audit services include:

  • Daily accounting services in compliance with national and international standards

  • Advising on accounting policies and assisting in their development

  • Support in preparing financial statements under IFRS

  • Assistance in restoring unmonitored accounting records

  • Audit (accounting review) services

  • Preparation and optimization of management reports

  • Support in preparing tax reports

  • Fixed asset inventory and preparation of depreciation schedules

Audit Compliance Evaluation Financial Statement Concept

What Is an Audit and Why Is It Important?

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24An audit is a security process that evaluates a company’s financial and operational procedures, verifying the accuracy and reliability of information. This process ensures that a company’s activities and financial policies are secure and meaningful. The most significant benefit of an audit is its ability to provide accuracy and transparency in business operations.

An auditor’s opinion—a formal document signed and stamped by the auditor (or audit firm)—reflects an assessment of the audited entity’s financial condition, the legality of its financial transactions, the correctness of its annual financial statements, and the overall state of accounting. It holds legal significance for all legal and natural persons, government and regulatory bodies, as well as courts.

There are two types of audits:

  1. Mandatory (Statutory) Audit

  2. Voluntary Audit (initiated by the company)

Mandatory Audit
A statutory audit is required under the rules of the Azerbaijan Audit Chamber for closed and open joint-stock companies, as well as limited liability companies (LLCs). It must be conducted annually. For LLCs with more than 50 employees or annual turnover exceeding 3 million AZN, a statutory audit is mandatory. Failure to comply triggers legal penalties. Audit services allow companies to verify the accuracy and reliability of financial data. This enables precise financial policy management, accurate reporting, and informed decision-making.

Now, let’s explore the key advantages of audits for Azerbaijani companies:

  • Detailed Analysis and Assessment: Audits offer thorough analysis of financial data, processes, and operations. This helps identify issues and potential risks early. Auditors ensure that financial information is scrutinized accurately, aiding in forecasting efficiency improvements.

  • Legal Compliance: Through auditing, adherence to standards and requirements set forth by the Azerbaijan Audit Chamber and international norms is verified. This confirms the company operates legally and meets quality benchmarks.

  • Risk Identification and Management: Audits identify existing and potential risks, providing recommendations to manage them effectively. This enhances efficiency and enables more successful strategic planning.

  • Evaluation of Overall Management Performance: Auditing examines management systems and processes. It advises on improving operational effectiveness, supporting organizational development.

  • Stakeholder and Investor Confidence: Audited financials instill confidence among stakeholders and potential investors. Without audit, it’s difficult to establish genuine financial credibility and transparency.

In conclusion, auditing is the most effective way to verify the accuracy and integrity of a company’s financial activities. It helps assess and optimize financial policies and procedures, ensures the reliability of financial statements, and elevates the overall financial quality of a company. By enabling robust monitoring of policies and operations, audits offer crucial support for ensuring financial accuracy, transparency, and effectiveness.