The Tax Code of the Republic of Azerbaijan

Article 140. Financial lease
140.1. If a lessor lets tangible assets to lease under a financial lease agreement, the lessee shall, for taxation purposes, be considered owner of the assets and lease payments - payments on the loan granted to the lessee.
140.2. Lease of assets shall be considered a financial lease in the following cases:
140.2.1. the assets are to be transferred to ownership upon the termination of the lease period or the lessee is entitled to purchase the assets at a determined or presumed price upon the termination of the lease period; or
140.2.2. the lease term exceeds 75% of the service period of the leased assets; or
140.2.3. the residual value of the leased assets upon the termination of the lease is less than 20 percent of their value at the beginning of the lease;
140.2.4. the current discounted value of payments over the entire lease term is greater than or equal to 90% of the fair market value of the assets as of the beginning of the lease.
140.2.5. the leased property has been prepared for the lessee by the order of the lessee and may not be used, upon the termination of the lease term, by any person other than the lessee.
140.3. The Article 140.2.4. of this Code shall not apply to a lease that started during the final quarter of the term of utilization of assets.
140.4. In case when no interest rate is mentioned on loan payments in a financial leasing contract or to non-residents carrying out financial leasing, as well as to interdependent persons the interest rate used for establishment of current value of financial leasing payments shall be taken for the period to which payments are applied in the same currency at volume of 125 percent of the average interest on inter-bank trade on credits with similar periods, or, if no trade was conducted В?” on inter-bank credits.
140.5. For the purposes of this Article, the lease term shall include any period for which the lessee is entitled to extend the lease.
140.6. In the cases where the lessee is the owner of the assets before the start of the financial lease, the transaction property shall, in addition to the regime of granting loan stipulated in Article 140.1. of this Article, be regarded as a sale by the lessor and purchase by the lessee.