The Tax Code of the Republic of Azerbaijan

Chapter X. Articles concerning income taxes of natural and profit taxes of legal persons
Article 107. Area of Application
This section shall be applied for the purposes of the income tax and profit tax.
Article 108. Expenses connected with the generation of income
Except for non-deductible expenses determined under this Article, all expenses as well as mandatory payments stipulated under the law connected with obtaining income shall be deducted from such income.
Article 109. Non-Deductible Expenses
109.1. Expenses incurred on the acquisition and installation of fixed assets as well as other expenses that are characterized as expenses incurred on capital pursuant to Article 143 of this Code shall not be deducted.
109.2. Expenses that are not connected with economic activity shall not be deducted.
109.3. Deductions shall not be allowed with respect to representation or entertainment expenses, as well as expenses connected with food (with exception of costs on preventive health food, milk and equivalent products, as well as costs on food for the offshore crews within norms established by the relevant executive authority) and accommodation.
109.4. If the expenses of a taxpayer whose entrepreneurial activity is of entertainment nature are incurred within the framework of such activity, expenses incurred on entertainment shall be deducted from the income.
109.5. No deductions shall be allowed with respect to the expenses of a physical person incurred on personal consumption or receipt of the salary (wages), except forthe cost ofpayment cards obtaining.
109.6. Deductions to reserve funds shall be made from income only in accordance with articles 111 and 112 of this Code.
109.7. No deductions shall be allowed with respect to the actual travel costs exceeding the limit established by relevant authority of the executive power.
Article 110. Limitation of Interest Deduction
110. Actual amount of interest on debts obtained from abroad, and also paid to each other by interconnected persons (when applying payment method-amount of interest on payment), shall be deducted from the profit within period for which interests are applied, at the same currency and at the amount not exceeding 125 percent of the average interest on inter-bank trade on credits with similar periods, or, if no trade was conducted - on inter-bank credits published by the Central Bank of the Republic of Azerbaijan.