Extensive use of POS terminals to minimize illicit business in Azerbaijan - tax service

Business Materials 1 May 2021 10:56 (UTC +04:00)
Extensive use of POS terminals to minimize illicit business in Azerbaijan - tax service

BAKU, Azerbaijan, May 1

By Fidan Babayeva - Trend:

Certain benefits are provided for citizens using non-cash payment methods in Azerbaijan, the State Tax Service under the Azerbaijani Ministry of Economy told Trend.

According to the tax service, benefits are applied when refunding value-added tax (VAT) paid for goods (except for oil and gas products) purchased by individuals in a retail or public catering network.

According to article 165.5 of the Tax Code, the procedure for refunding VAT upon payment by consumers (individuals) for goods (except for oil and gas products) in retail trade or in the public catering sector in Azerbaijan is determined by the relevant executive authority. In line with this article, upon payment by bank cards for purchasing goods, 15 percent out of the VAT paid is refunded, and when paying by cash - 10 percent of VAT.

“At the same time, upon payment with a plastic card, citizens return 5 percent more - 15 percent of the VAT paid by them, while upon payment in cash, this amount is 10 percent. Thus, the mechanism for refunding part of the VAT will optimize cashless payments and the use of POS terminals,” the state service said.

In addition, the State Tax Service emphasized that the massive introduction of POS terminals will significantly affect the reduction of illicit business in Azerbaijan.

“An important step that can significantly change the work of small and medium-sized enterprises (SMEs) in Azerbaijan is the creation of an opportunity for consumers to pay for a purchase or a service provided through a POS terminal. In the field of trade and services, SMEs are losing more and more in competition with large chains,” the message of the tax service said.

“There are a number of objective factors that hinder their internal development and limit their growth potential. One of them is purely technological - optimization and automation of service. The presence of POS terminals is important not only in terms of expanding the volume of non-cash payments, but also in terms of increasing transparency, preventing cases of tax evasion,” the service noted.

The message noted that according to Article 7 of the Law of Azerbaijan ‘On Protection of Consumer Rights’, the installation of POS terminals in trade, consumer services and other types of services is mandatory.

“For the absence of POS terminals, the law provides for bringing to the appropriate types of responsibility. Also, according to article 16 of the Tax Code, the installation of POS terminals is one of the duties of the taxpayer,” the tax service stated.

As reported, the absence of POS terminals or the refusal of non-cash payments may entail a fine of up to 6,000 manat ($3,530) for the owner of the facility.


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