According to a senior tax ministry official, income from cryptocurrency transactions will be taxed in Azerbaijan. The authorities of the energy-rich nation intend to tax both corporate profits and personal income. The country has previously held a conservative stance on cryptocurrency, but a new emphasis on taxation signals a change in Baku.
Both corporate and private income
“Income from cryptocurrency transactions is subject to taxation in Azerbaijan,” said Nijat Imanov, deputy director of the Tax Policy and Strategic Research Department under the Ministry of Taxes. Imanov clarified the position of his department at the financial and investment forum held in Baku this Saturday.
A representative of the Ministry of Taxes, Mr. Imanov, stated:
Income from transactions with cryptocurrencies will be taxed. Formally, this means income tax for organizations for legal entities and income tax for individuals. If someone bought a cryptocurrency and then sold it for a higher price, that amount should be treated as income and subject to taxation.
The profits of all resident enterprises in Azerbaijan are taxed according to the country's tax code. The income tax rate is currently 20%. Personal income tax is levied on a progressive scale. Income less than 2,5 thousand manats per month (~ $ 1) are taxed at a rate of 500%, for an amount exceeding this limit, the tax is 14%.
Purchase and storage of bitcoins
Cryptocurrency trading is on the rise in Azerbaijan, and the state hopes to boost budget revenues by taxing cryptocurrencies and related businesses. The crypto markets grew rapidly between May and December of last year. “During this period, even small investments of $10 or so in almost any cryptocurrency were profitable,” writes Trend News, citing Crypto Consulting CEO Elnur Guliyev. “After several weak months this year, the markets are gaining momentum again,” the publication adds.
However, Guliyev warned that the markets do not grow every day and added that a certain skill set is needed to predict which cryptocurrencies will rise. The obvious choice again, according to the expert, is to buy bitcoin and hold until its value increases enough to justify a sale. “This option still works, but it's hard to say how long it will last,” Elnur Guliyev said.
Azerbaijan and blockchain
In December, the chairman of the Central Bank of Azerbaijan Elman Rustamov said that cryptocurrencies "are not recognized as a legal tender." He also insisted that cryptocurrencies “continue to be a dangerous investment vehicle,” emphasizing the need for global regulation. Nonetheless, current government action indicates that sentiment is shifting along the corridors of power in Baku.
Earlier this month, representatives of the crypto sector created a new association called the Center for the Study and Development of Cryptocurrency Markets and Blockchain Technologies. Its main areas of activity will be educational work, preparation of regulatory proposals and the provision of consulting services. The center will also focus on introducing blockchain technology into the corporate and banking sectors and supporting ICO-funded projects.