State Tax Service under the Ministry of Economy of the Republic of Azerbaijan is a central executive body that ensures the implementation of tax policy, timely and full collection of taxes and other revenues to the state budget and that exercises state control in this area within the framework of a unified financial and budgetary policy in the country.

The tax service in Azerbaijan was established on June 17, 1919 by the decision of the parliament during the Azerbaijan Democratic Republic (also known as Azerbaijan People's Republic) with the establishment of the Tax Inspectorate under the Ministry of Finance. Since Azerbaijan was a part of the USSR in 1920-1991, tax issues were regulated by the tax laws of the Soviet Union. After gaining independence, a tax service was established under the Ministry of Finance to ensure full and timely mobilization of taxes and other obligatory payments, provide state control over compliance with tax legislation and state price tariff by legal entities and individuals in the Republic of Azerbaijan. With the aim of improving the control system and ensuring the independent functioning of the state tax service in this area, this service was separated from the Ministry of Finance in October 1991 and started to function as an independent body – the Chief State Tax Inspectorate of the Republic of Azerbaijan.

In the following years, as economic reforms deepened in the country, there was a need to improve the legislative and methodological framework for taxation. A number of gaps in the tax legislation have caused justified discontent of both the taxpayers and the tax authorities. Under such conditions, the country's tax system has been rebuilt under the leadership of nationwide leader Haydar Aliyev. The first stage in tax reform was the decision of the great leader to establish the Ministry of Taxes on the basis of the State Tax Inspectorate. To this end, by the presidential decree of February 11, 2000, the State Tax Inspectorate was abolished and the Ministry of Taxes was established on its basis. Upon establishment of the Ministry of Taxes, preparatory work has been started to modernize structure of the tax authorities based on the recommendations of the great leader, the best international practice has been studied, various models of governance have been analyzed and, ultimately, application of the functional structure of tax authorities has been preferred.

With the view of improving the tax system and accelerating the radical reforms in this area, a Tax Code has been drafted to create a unified and improved legal framework for the regulation of tax relations based on the direct instruction of the nationwide leader Haydar Aliyev. The Tax Code with the effective date of 1 January 2001 has become a new development in the life of independent Azerbaijan as one of the most important steps taken to improve the tax system and bring it into line with international standards.

After the adoption of the Tax Code, a number of decisions were made to carry out scientific research on the training, retraining and professional development of tax officials, and on the formation, enhancement and legal support of the tax system. The Training Center was established under the Ministry of Taxes pursuant to the Decree on application of the Law of the Republic of Azerbaijan “On Approval of Regulations “On Service in State Tax Authorities” signed by nationwide leader Haydar Aliyev on July 19, 2001.

The tax system initiated and led by the nationwide leader had an important role to play in the successful completion of the transition period in our country and has become an effective management system.

The tax system in our country has entered a new stage of development under the leadership of President Ilham Aliyev. The year 2005 was just the beginning of a new phase for tax service in a qualitative sense, and the implementation of the "State Program for Improvement of Tax Administration in the Republic of Azerbaijan (2005-2007)" approved by the presidential decree has begun. As a result of the implementation of the State Program, 39 large-scale measures covering 5 key strategic directions were implemented during three years. These measures were aimed at bringing the tax administration system in line with international standards, establishing a system of voluntary tax compliance, protecting taxpayers' rights, strengthening the measures against tax evasion, improving the system of compulsory payment of taxes and preventing tax debts creation.

By the Decree of President of the Republic of Azerbaijan Heydar Aliyev of February 11, 2000, the State Tax Inspectorate was abolished and the Ministry of Taxes was established on its basis. Upon establishment of the Ministry of Taxes, preparatory work has been started to modernize structure of the tax authorities based on the recommendations of the great leader, the best international practice and various models of governance have been analyzed and, ultimately, application of the functional structure of tax authorities has been preferred.

According to the Presidential Decree "On measures to ensure the organization of business entity's activity on the principle of "One stop shop", business entities registration on the principle "One stop shop " has begun since January 1, 2008. The  One stop shop system allows the taxpayers to store all their data in the same center thereby enabling electronic tax and administrative registration. Registration on this principle has given impetus to business development.

The year of 2005 had been the beginning of a new phase in qualitative manner for Azerbaijani's tax system, and actions had been taken related to the "State Program on Improvement of Tax Administration in the Republic of Azerbaijan (2005-2007)" approved by the Act of president Ilham Aliyev

The State Tax Service broadly covers the use of innovative technologies in the framework of its activities.. The online clerical system, implemented since 2010, has helped to bring the “citizen-state”, “business-state” and “business-to-business” relations, which are key components of e-government building, in line with modern standards.

The tasks set by the President Ilham Aliyev's Decree of May 23, 2011 "About some measures for provision of electronic services by government agencies" have given a serious impetus to the application of e-services. By expanding the scope of e-services,  State Tax Service has introduced a system of real-time registration of individual entrepreneurs without coming to tax authorities since 2011, and electronic registration of legal entities since 2012. In 2013, Twinning Project titled "Support to the Ministry of Taxes of the Republic of Azerbaijan in the field of computer-assisted audit system", one of the real results of effective cooperation between Azerbaijan and the European Union in 2013, opened wide opportunities for electronic audit. Currently, the number of e-services provided by the Ministry of Taxes is 64.

A new training center has been built in Shamakhi as commissioned by President Ilham Aliyev to ensure improvement of the level of knowledge and professional training of employees working in state tax bodies, acquisition of working skills with new technologies and techniques, as well as adaptation to constantly changing and updated working conditions. On September 13, 2011, the complex was opened with the participation of the Head of State.

The center has been equipped with the newest information technologies and the necessary tools for the implementation of modern training processes.

The Ministry of Taxes has given wide coverage to the use of innovative technologies in its activities framework. The system of online clerical work, implemented since 2010, has helped to bring the “citizen-state”, “business-state” and “business-to-business” relations, which are key components of e-government building, in line with modern standards.

The tax administration in Azerbaijan has recently entered a qualitatively new phase with the implementation of the Presidential Decree "On approval of "Tax reform directions for 2016" and improvement of tax administration". One of the objectives of the Decree was to obtain a high international rating on transparency and information sharing in the tax field. As a result of the efforts of the State Tax Service to obtain such rating, the Economic Cooperation and Development Organization's (OECD) Global Forum on Transparency and Information Exchange for Tax Purposes ranked Azerbaijan as "Largely Compliant" in terms of transparency and information sharing for tax purposes in 2016.

State Tax Service has made significant progress in the study of tax legislation of other countries and exchange of experience, ensuring effective participation in the work of international and regional tax organisations, drafting projects of international agreements on tax issues, and informing tax service employees and taxpayers regarding the application of these agreements. At present Azerbaijan has signed international treaties with 55 countries on the avoidance of double taxation and 51 of them are in force. State Tax Service has close cooperation with Association of Tax Authorities of Islamic Countries (ATAIC), Economic Cooperation Organization (ECO), Black Sea Economic Cooperation Organization (BSECO), Organization for Economic Co-operation and Development (OECD), Inter-American Center of Tax Administration (CIAT), Intra-European Organization of Tax Administrations (IOTA), International Tax and Investment Center (ITIC). At the same time, international cooperation is developing rapidly with financial institutions such as the International Monetary Fund, the International Finance Corporation, the World Bank and others.

Reforms carried out by State Tax Service contribute to achieving high rates in international rankings. In Doing Business 2019 report which includes an assessment of the World Bank's business environment, Azerbaijan has risen to 25th place among 190 countries.

The report includes two indicators - Starting business and Paying Taxes - which refer to the direct tax issues. Our country has significantly improved its position on both indicators, from 18th to 9th rank over the past year in Starting Business and from 35th to 28th on the "Paying Taxes" indicator.

Reducing the shadow economy, developing the electronic payment infrastructure and strengthening its institutional framework, expanding the use of innovative technologies, and involving the population and economic entities to use electronic payment services are of particular importance to make progress in State Tax Service in the area of ​​increasing non-cash payments. State Tax Service is focusing on international trends in this area with the aim of improving and expanding the scope of non-cash payments in the country. For the implementation of the "State Program for Increasing Digital Payments in the Republic of Azerbaijan for 2018-2020" approved by President Ilham Aliyev's Decree, State Tax Service has approved the Action Plan and established modern standards for more efficient organization of activities in this area.

At present, the tax system, which is an integral part of economic reforms that define Azerbaijan's socio-economic development line, is being reconstructed. New tax reforms include supporting entrepreneurship, reducing the shadow economy and increasing the transparency of the economy, expanding the tax base, improving the economic efficiency of tax breaks and tax administration. Reforms in these areas open new opportunities for the tax system to adapt to new challenges, to establish modern business relationships and to increase the role of the tax system in the development of the country's economy.

On October 23, 2019, the State Tax Service under the Ministry of Economy of the Republic of Azerbaijan was established by the Decree of the President of the Republic of Azerbaijan on "Expansion of the functions and structure of the Ministry of Economy of the Republic of Azerbaijan".