State Tax Service of Azerbaijan talks tax fees for online services (UPDATE)

Finance Materials 16 April 2021 16:37 (UTC +04:00)

Details added: the first version posted on 13:31

BAKU, Azerbaijan, Apr. 16

By Fidan Babayeva - Trend:

The State Tax Service under the Ministry of Economy of Azerbaijan has commented on the tax fees charged from bank cards, Trend reports citing the service.

In Azerbaijan, 18-percent VAT on non-cash payments with cards is charged only for services, e-commerce operations from abroad, said the service.

The comments were issued following the spread of information on social networks that the 18-percent VAT was being charged for local payments as well.

“In recent days, information appeared on social networks that some citizens receive notifications about the withdrawal of large amounts from their cards. These citizens report that they were charged with VAT amounts not previously withdrawn for services rendered from abroad in previous periods,” the service said.

"In accordance with the provisions of the law, banks are obliged to withhold VAT on amounts paid for services provided via e-commerce. In this case, banks calculate and pay tax on each transaction, acting as a tax agent," the tax service added.

The State Tax Service informs that there are no changes in the tax legislation of Azerbaijan, and no new provisions on additional tax obligations have been introduced for citizens and taxpayers.

VAT is not charged on the following transactions for non-cash payments made by individuals:

- payment for the purchase of goods from abroad;

- payment for services for booking hotel services and air tickets abroad;

- payment for physical work performed abroad.

VAT is not levied on amounts paid to enterprises and organizations operating in the country by bank transfer by means of plastic cards. Thus, in settlements for goods, works, and services purchased from VAT payers operating in the country, the amount of VAT is reflected in the final price.

As is seen, no additional taxes are applied on non-cash payments made within the country, on the contrary, the legislation provides for appropriate benefits for non-cash payments for both entrepreneurs and citizens.

For example, for entrepreneurs working in the field of retail trade and public catering, incentives for income tax and simplified tax are applied in accordance with the amount of income received by non-cash through a POS terminal.

At the same time, citizens, when refunding part of the VAT for purchases made in a non-cash manner, receive 5 percent more than for purchases made in cash (with cash payments, a citizen is refunded 10 percent VAT, with non-cash payments - 15 percent VAT).

According to the legislation, the activity of buying and selling goods, providing services, and performing work using information systems (including downloading via the Internet e-books, music, audio-video materials, graphic images, virtual games, software, posting advertisements, other similar works) are considered services carried out in the form of electronic commerce.


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