One of the changes envisaged in the Tax Code for 2023 is related to tax benefits for enterprises that support funds created for public and social purposes. So that, the amendment provides for applying the exemption specified in Article 106.1.18 of the Tax Code to legal entities whose shares are 51 or more percent directly or indirectly owned by the state, at the same time, determining the list of funds created by the President of the Republic of Azerbaijan for public and social purposes for the purpose of applying this concession.
As you know, a number of tax incentives have been determined for the development of science, education, culture, medicine and sports in our country. Thus, the part transferred by taxpayers to enterprises, departments and organizations operating in the fields of science, education, healthcare, sports and culture that meet the criteria established by the Cabinet of Ministers and does not exceed 10 percent of the profit of the reporting year exempted from profit tax for 10 years from January 1, 2019. Later, the scope of the concession was expanded, and in addition, a portion of the taxpayer's profit of the reporting year, not exceeding 10 percent, which is transferred to funds (the fund "Yashat", "Karabakh Revival Fund", etc.) created for public and social purposes, is also exempted from tax for a period of 8 years from January 1, 2021.
However, in order to expand the scope of tax benefit in the mentioned direction and to account for such expenses incurred by state enterprises within the framework of social corporate responsibility for taxation purposes, this benefit is also extended to legal entities whose shares (stakes) are 51 or more percent directly or indirectly owned by the state. The change in question will arouse the interest of state-owned legal entities in providing financial assistance in social areas and at the same time increase the financial income of these areas.
Another change concerns funds created for public and social purposes. Thus, at present, only transfers to funds created by the President of the Republic of Azerbaijan are tax-free. As amended by legislation, a discount was also applied to the payments made to a number of other public and social purpose funds, that were not created by the relevant decision of the head of the country, but are on the list to be determined.
