Budget Revenues of Azerbaijan Grow as Non-Oil Sector Gains Momentum

Azerbaijan's state budget revenues reached approximately AZN 14.993 billion in tax collections in the first 11 months of 2024, marking a 4.1% increase compared to the same period last year, driven primarily by a surge in the non-oil sector, which accounted for an impressive 68.6% of the total, or over AZN 10 billion.

Key indicators reflect substantial growth:

• Total tax revenues: AZN 14.993 billion.
• Forecast performance: 104.1%.
• Share of non-oil sector: 68.6%.
• Share of oil and gas sector: 31.4%.
• Non-oil sector revenue growth: 18.9%, reaching approximately AZN 9.015 billion.

Non-oil tax revenues rose 14.1% year-on-year, underlining the effectiveness of Azerbaijan's economic diversification policies and reforms aimed at reducing reliance on hydrocarbon exports.

Since 2019, Azerbaijan has implemented significant tax system reforms to streamline administration and create a business-friendly environment. These initiatives include tax incentives for industries such as tourism and healthcare, promoting entrepreneurship, and formalizing economic activity.

The number of formal labor agreements in the private non-oil sector grew 1.6 times by early 2024, reflecting improved employment conditions and compliance. Industrialization and diversification efforts have further reduced dependence on oil and gas revenues. Investments in manufacturing, technology, and agriculture have spurred non-oil output and tax contributions.

The introduction of next-generation fiscal cash registers has enhanced transparency and curtailed informal economic practices. This technological shift improved tax collection efficiency and reduced the shadow economy. New incentives and lower tax burdens for businesses fueled non-oil sector growth, creating a virtuous cycle of productivity gains and increased revenues.

The results highlight Azerbaijan's progress in transitioning to a more balanced economy, although challenges remain in sustaining momentum and further diversifying growth drivers.