Azerbaijan will introduce a new income tax scale that ends the seven-year tax exemption for workers outside the oil and gas sector.
Under the proposed state budget, citizens earning up to 2,500 manats per month will now pay a 3% income tax on their wages.
Economist Parviz Heydarov told Patrulaz.az that the reform will be implemented gradually to avoid a sudden shock to the labor market:
“Since 2019, employees in the non-oil sector earning up to 8,000 manats were exempt from income tax. That exemption period has now expired. Starting in January, a 3% rate will apply to incomes up to 2,500 manats, increasing to 5% in 2027 and 7% in 2028. This isn’t a new tax – it’s the phased reintroduction of the standard income tax,” he explained.
Heydarov noted that the measure will help strengthen state revenues and balance the budget but acknowledged that it will add financial pressure on workers.
Economist Resmiya Sabir warned that the new tax, combined with rising prices and stagnant wages, will likely harm household purchasing power:
“Consumer prices are climbing, while salaries remain unchanged. Once the 3% tax takes effect, real incomes will decline. This will reduce purchasing power and negatively affect living standards,” she said.
Experts say the government’s goal is to bring more fairness and transparency to the tax system while curbing the shadow economy. However, they argue that parallel measures – such as wage increases and social support programs – are necessary to soften the impact on ordinary citizens.
