The Tax Code of the Republic of Azerbaijan

Article 119. Limitation of deductions from income
119.1. No deduction from the income with respect to the following taxes, interests and financial sanctions and penalties shall be allowed :
119.1.1. profit tax or any other tax calculated on income which has been paid in the territory of the Republic of Azerbaijan or other countries;
119.1.2. interests,financial penaltiesand administrative fines, calculated in the manner prescribedby this Code andother laws (except for interest, penalties (fines)forcivil legal contractsrelated to thereceipt of income, compensation for damages causeddue to thedelay of performanceand othersimilarpenalties).
Article 120. Losses upon the realization of property
Losses arising upon the realization by a physical person of property (except for property used for economic activity or property the income upon the realization of which is exempt from tax) shall be compensated from the gains received upon the realization of such property. If the losses cannot be compensated in the year in which they took place, they shall be carried forward for a period of up to three years and compensated from the income received from the gains upon the realization of property.
Article 121. Loss Carry-Forward
121.1. Part of expenses exceeding the profit, which is allowed to exclude from the profits of the enterprise, shall be switched to the next period continuing for up to five years, and shall be compensated at the expense of the profits of these years with no limitation on years.
121.2. With respect to physical persons, expenses deductible from gross income generated from the non-entrepreneurial economic activity, which exceed said gross income may not be deducted from salaries and wages, but shall be carried forward for a period of up to three years and shall be covered at the expense of the gross income generated from entrepreneurial economic activity of future periods.
Article 122. Withholding of tax at the source of payment
122.1. Dividends paid by resident enterprises shall be subject to taxation at the source of payment at a rate of 10 percent.
122.2. If dividends are taxed pursuant to Article 122.1 of this Code from natural and legal persons, then the specified income of natural and legal persons shall not be taxed again.
Such income shall not be liable to taxation when paying it repeatedly as dividends.
122.3. Distribution of profit under the agreements on exploration, development and production sharing of oil and gas resources, export pipelines and other similar agreements, as well as transfers of net profit of subsidiaries wholly owned by this legal entity and income of this entity, accumulated in the centralized fund of the legal entity are not taxed. (27)