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Article 111. Deduction of bad and doubtful debts
111.1. A taxpayer shall be entitled to a deduction for doubtful debts connected with goods, work and services that have been realized where income from them was previously included in the gross income received from entrepreneurial activity.
111.2. Doubtful debt deduction shall be allowed only if the debt is written off as worthless in taxpayer’s books.
111.3. Banks and credit entities engaged in certain types of banking activities shall be entitled dependent from classification of assets in order established under legislation, to deduct from income amounts assigned for establishment of special reserve funds in accordance with procedures established by the relevant executive authority.
Article 112. Deductions for allocations to reserve insurance funds
A legal entity engaged in insurance activity shall be entitled to deduct allocations to reserve insurance funds within the norms established by the legislation of the Republic of Azerbaijan.
Article 113. Deductions for expenditures on research, project-research and experimental-design work
Expenditures on research, project-research and experimental-design work connected with the receipt of gross income (except for the expenditures on the acquisition of fixed assets, their installation and other expenses of a capital nature) shall be deductible.
Article 114. Amortization charges and deductions for depreciated assets
114.1. Amortization charges for fixed assets used in entrepreneurial and non-entrepreneurial economic activity, specified in article 99 of this Code, shall be deductible in accordance with the conditions of this Article.
114.2. Land, arts, buildings, facilities representing rare historical or architectural monuments, as well as other wear-proof assets, determined under this Article shall not be depreciated:
114.2.1. equipment, exhibits, equipment, samples, operational and non-operations models, mock-ups and other visual aids used in cabinets and laboratories of for scientific, educational and practical purposes;
114.2.2. productive livestock (pedigree cows, buffalos, mares, camels, pigs, deer, sheep, goats; pedigree bulls, studs, camels and other similar productive cattle);
114.2.3. exhibits of fauna located in zoos and other similar facilities;
114.2.4. perennial plants;
114.2.5. library funds, film funds (vide, audio, photo), stage requisites, museum exhibits;
114.2.6. completely depreciated main assets if suitable for operation;
114.2.7. main assets undergone conservation;
114.2.8. public motor roads;
114.2.9. public park equipment;
114.2.10. main assets at stores, not issued for operations.
114.3. Annual amortization rates as per depreciated assets shall be classified as follows:
114.3.1. Buildings, facilities and installations, structures - up to 7%;
114.3.2. Machinery, equipment and calculation technology - up to 25%;
114.3.3. Transport means - up to 25%;
114.3.4. Draft animals - up to 20%;
114.3.5. Costs on geological exploration and preparation work for production of natural resources - up to 25%;
114.3.6. non-tangible assets- for those with undetermined period of use- up to 10 percent, for those with determined period of use- at years on amounts pro-rata to period of use;
114.3.7. Other fixed assets- up to 20%;
114.3.8. for production capital investments, as well as property subject to leasing, actual amount of which is paid in current year (with exception of capital investments of subjects of natural monopolies as well as enterprising subjects engaged in production of commodities, implementation of works, provision of services, pricing for which is regulated by the state), with increase for up to 2 times of annual amortization levels, stipulated under Articles 114.3.1., 114.3.2., 114.3.3. and 114.3.7 of this Code.
Capital construction, reconstruction in the form of new construction of premises - workshops, directly using in the process of production, expansion and technical renovation of operating plants, and also purchase of units, equipment, intraproduction transport means and fixed assets, their other facilities (or parts) are considered as capital investments.
Regulations, specified in the article 114.3.8 of this Code are not applied to:
· enterprises and organizations, being forbidden to carry out direct production activity according to the legislation;
· capital investments at the expense of sponsor`s financial assistance and other gratuitous allowances.
114.4. Amortization charges on each main category is calculated by applying the amortization levels established for fixed assets, related to each category, indicated in Article 114.3. of this Code, to the balance value of the category as for the end of the tax year.
If amortization charges applied are lower than those that are established for the tax year on fixed assets related to any category, the difference created as the result of this can be added to the amounts of amortization deducted from income in future tax years.
114.5. Amortization for buildings and structures (hereinafter - buildings) shall be charged for each building separately.
114.6. For the purposes of calculation of amortization the residual value on main assets (main asset) at the end of tax year shall be the amount established in following order (not less than zero):
To add value of main assets (main asset) obtained within current year in accordance with Article 143 of this Code and above limit part of repair costs for previous year established on the basis of Article 115 of this Code to the residual value of main assets (main asset) at the end of previous year (value upon the deduction of amortization amount calculated for subject year), minus residual value of main assets, submitted, liquidated within the tax year or having residual value of less than 500 manats or 5 percent of initial value. Gainarisingfrom the revaluationof fixed assets(funds) (positive difference arisingfrom the revaluation), for the purpose of depreciationcalculation is not included inthe depreciated cost of fixed assets (funds) at the end ofthe tax year.
114.7. If the amount obtained from provision of main assets (main asset) exceeds the residual value of these main assets (main asset), the difference shall be included as income.
114.8. If the residual value of main asset at the year-end is less than 500 manats or 5 % of initial value, the amount of residual value shall be deducted from income.
114.9. If amount obtained from provision of main assets (main asset) is less than the residual value of these main assets (main asset), the difference shall be deducted from income.
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