From January 1, tax benefits for deposit income of individuals in banks came into force, Azernews reports. Thus, the interest income on deposits placed by natural persons in national currency for 18 months or more in each bank will be completely exempt from tax. The monthly income of 200 AZN on deposits kept in the bank for less than this period is tax-free.

This was written by Vugar Bayramov, a member of the Economic Policy, Industry and Entrepreneurship Committee of the Milli Majlis, on his social network account.

He noted that in two cases, citizens will not pay income tax.

"First, if a citizen's monthly income calculated in national currency is up to 200 AZN, then the funds will be completely exempted from income tax. If it is more than 200 AZN, the part up to this amount will be exempted from income tax.

For example, if a citizen has deposited 24,000 AZN at 10 percent, then his annual income is 2,400 AZN, and his monthly income is 200 AZN. This means that in this case, the citizen's savings income will be completely exempt from taxation. But if a citizen has deposited 30,000 AZN at 10 percent, then his annual income is 3,000 AZN, and 2,400 AZN are deducted from this amount, and the rest is subject to 10 percent income tax. In this case, the total tax paid by the citizen is 60 AZN.

Here, another question is related to how our citizens with a monthly deposit income of more than 200 AZN can fully use tax benefits. Thus, according to the change, the monthly interest income of individuals up to 200 AZN calculated on national currency deposits in each bank (foreign bank's branch in the Republic of Azerbaijan) is exempt from tax. This means that if a citizen has 50,000 manats and puts it as a deposit at 8 percent, his annual income will be 4,000 AZN.

If those funds are placed in a bank, then 1,600 AZN of the 4,000 AZN income will be taxed. In order to take full advantage of the tax relief, it would be more appropriate if the funds were placed in two banks instead of one. In such a case, if 50,000 AZN are placed in 2 banks with 25,000 AZN each at 8 percent, the citizen will not pay any tax on his income. If the funds are larger, for example, 100,000 AZN, then they can be placed in several banks. On the one hand, this will allow the citizen to fully use tax relief and not pay any taxes, and on the other hand, it will reduce the level of concentration in the banking sector. This means that even if your funds are large, it is possible to completely exempt your deposit income from tax," he said.