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Tax Headline Data / Stock Option Plan / Azerbaijan

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Grant

  • There are no income or social security taxes.

Exercise

  • Income Tax is payable up to a maximum rate of 25%, withheld by the Local Company.

  • Employee State Social Insurance is payable up to a maximum rate of 3%, withheld by the Local Company (uncapped).

  • Employer State Social Insurance is payable up to a maximum rate of 22%, payable by the Local Company (uncapped).

  • The taxable amount is the amount by which the market value of the shares on exercise exceeds the exercise price.

Sale

  • Income Tax is payable on the growth in value of the shares up to a maximum rate of 20%, payable by the Participant.

Other / Notes

Dividends

Once a Participant has acquired shares in the Company, they will pay Income Tax on dividends received at a maximum rate of 14%.  The Income Tax is payable by the Participant and there are no withholding or reporting obligations for the Local Company.  

Reporting

The Local Company must file areport with the State Tax Service by the 20th day of the month following the quarter in which the tax event arises.

Corporate Tax Deduction

The availability of a corporate tax deduction for share based awards is unclear, even where a recharge arrangement is in place. Local advice is recommended.