As of January 1, 2026, a number of significant legislative amendments have entered into force in the Republic of Azerbaijan. These changes cover a wide range of areas, including the state budget, taxation, social insurance, customs, media, transportation, and the business environment. Below is a summarized overview of the key changes effective from the first day of 2026.
State Budget for 2026
According to the decision of the Milli Majlis dated December 9, 2025:
- Budget revenues: 38 billion 609 million AZN
- Budget expenditures: 41 billion 703.6 million AZN
These figures envisage the expansion of social obligations and state investments.
Key Amendments to the Tax Code
The amendments to the Tax Code cover 145 directions across 45 articles and are mainly aimed at improving the investment climate.
Tax Incentives for the Nakhchivan Autonomous Republic
As of January 1, 2026, the following incentives will apply to residents of Nakhchivan for a period of 10 years:
- Exemption from profit (income) tax
- Exemption from property and land tax
- Exemption from simplified tax
- Exemption of dividend income from taxation
In addition, raw materials, supplies, and equipment imported for production purposes by residents of industrial parks, technology parks, and industrial zones are exempt from VAT and customs duties.
Changes Related to Electric Transport and Vehicles
- The import and sale of buses powered exclusively by electric engines (subject to certain conditions) are exempt from VAT for a period of 1 year.
- The VAT incentive period for hybrid and electric passenger vehicles ended on January 1, 2026.
Tax Incentives in the Catering and Healthcare Sectors
- During 2026–2028, income derived from VAT reductions by individuals engaged in catering activities is exempt from income tax.
- In medical institutions, 50% of turnover from cashless payments made via POS terminals is deducted from the taxable base.
Tax Exemptions for Media Entities
For media entities (excluding audiovisual media):
- Income generated from their activities and advertising
- Financial assistance provided by the state
are exempt from income tax until January 1, 2029. Additionally, the provision of media products is exempt from VAT until the same date.
Updates on Social and Mandatory Health Insurance
- For individuals engaged in activities not related to hired labor, the social insurance contribution is set at 2% of income.
- Persons engaged in informal employment are required to pay mandatory health insurance contributions independently.
Changes in Excise Duties, Customs, and Administrative Liability
- Excise tax rates on certain tobacco products have been significantly increased.
- Import of spare parts for trucks for production purposes is exempt from customs duties for a period of 7 years.
- Administrative fines are imposed for the import and sale of incandescent lamps with a power of 25 watts or higher.
Social Indicators
As of 2026, the subsistence minimum is set as follows:
- Nationwide: 300 AZN
- Working-age population: 317 AZN
- Pensioners: 245 AZN
- Children: 260 AZN
At the same time, the need criterion for targeted social assistance has been set at 300 AZN.
Conclusion
The legislative amendments effective from 2026 are primarily aimed at encouraging entrepreneurship, improving the investment climate, strengthening social protection, and enhancing fiscal discipline. To benefit correctly from these changes, obtaining professional legal and tax advice is recommended.
