How much is the net minimum wage in Azerbaijan?

How much is the net minimum wage in Azerbaijan?

As of September 1, 2019 the amount of minimum wage reached 250 manat. Although the minimum wage was set at 250 manat ($147.05 US) , the net minimum wage in Azerbaijan is knowingly lower. Even if the given amount of 250 manat is considered as a minimum, it is still a subject to the income tax. No matter how strange it may sound, but those who work in the state and oil sector, receiving the minimum wage, continue to pay taxes. Thus, according to the existing legislation, employees that are not involved into non-state and non-oil sectors and does not fall into preferential category, by signing a contract per 250 manat , are going to be paid less than the given amount. According to the legislation, 7 manat from the given salary ((250 manat-200 manat) x 14%)-income tax, 7.50 manat ((250 manat x 3%) – social deduction and 1.25 manat (250 manat x 0.5%) – unemployment insurance. Thus, the amount paid to the employee is 234.25 manat ( 250 manat- 7 manat- 7.50 manat -1.25 manat). This means that an employee with a minimum wage contract (250 manat ) has a real monthly salary of 234.25 manat ($ 137.79 US) . Nevertheless, the minimum wage income tax does not consist the considerable share in the budget. Therefore, there is a need for tax exemption for people with minimum wage payment. In this regard it is recommended to increase the income from 200 to 300 apart regarding to the income tax share’s exemption. It goes without a doubt that the tax exemption amount is not associated with the minimum wage. Those who work in non-state and non-oil sectors and whose monthly salaries are less than 8.000 manat , will be able to avail of these benefits within the next 7 years. Taking it into consideration, there is a need to increase the tax-exempt amount in other sectors. This will result in higher salaries for those who earn minimum wage ratio.

© CESD, 2019

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