Azerbaijan launches tax free system (UPDATE)

Details added (first version posted on 13:04)

Baku, Azerbaijan, June 24

By Elchin Mehdiyev, Maksim Tsurkov – Trend:

Azerbaijan’s parliament has approved the amendments to the country’s Tax Code, launching a tax free system, under which the goods purchased in the country’s territory by foreigners and stateless persons will be exempted from VAT.

Tax free is a mechanism of refunding the VAT paid by foreign citizens during purchase of the goods not meant for production or commercial needs.

During the Azerbaijani parliament’s plenary session, Chairman of the parliament’s Committee on economic policy, industry and entrepreneurship Ziya Samadzade said the aim of launching tax free system is the organization and promotion of the acquisition of goods and products by foreigners in Azerbaijan’s territory, to attract tourists and increase turnover.

It is expected that the amount returned on the tax free system (VAT) will be compensated by profit taxes against the background of the growth in the country’s trade and economic sphere, he added.

Foreign citizens can benefit from tax free system, if the cost of purchased goods per one e-tax invoice is not less than 300 Azerbaijani manats, including VAT. The goods should be taken out of Azerbaijan’s territory within 90 days from the date of purchase.

Standard VAT rate in Azerbaijan is 18 percent. Regardless of the transfer method, foreign citizens will be refunded the amount of VAT paid for the purchased goods after withholding 20 percent service fee.

How to benefit from Tax Free?

To benefit from Tax Free system, a customer must shop at Tax Free labeled shops. Customers can refund the VAT paid for the goods they purchased at Tax Free labeled shops during their departure at the airport.

While purchasing goods at Tax Free labeled shop customers need to inform a salesperson about the intention to benefit from Tax Free, show a passport confirming citizenship, and have the salesperson to fill in the electronic tax invoice enabling VAT refund. The salesperson, upon filling in the passport details, will provide the customer with 2 copies of signed and stamped e-tax invoice. The e-tax invoice, along with other information, will contain the amount of paid VAT, as well as the expiry date of VAT refund.

While departing from Azerbaijan, it is necessary to present purchased goods and e-tax invoice along with a passport to the customs checkpoint located at the airport. Customs staff will certify the e-tax invoice with a stamp and return it back to the customer after making relevant notes on it.

As the last step, customers need to present the e-tax invoice given by the customs checkpoint to the correspondent bank. They can receive their refund on foreign or local currency according to chosen method as follows: 1) Cash - immediately after presenting necessary document to the bank 2) Noncash - Within 10 working days from the date of submission, to the bank, of their bank card details to which customers wish to receive the refund.

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