Tax accounting of non-residents providing works and services in the manner of e-commerce will be regulated in a new way.
According to Elchi.az, this was reflected in the amendment proposed to the Tax Code, which was discussed at today’s meeting of the Committee on Economic Policy, Industry and Entrepreneurship of the Milli Majlis.
These changes improve the mechanism of tax registration for VAT purposes of non-resident persons who provide works and services (carry out e-commerce) to persons not registered with the tax authority, and cover tax issues on these transactions. Thus, in cases where the volume of turnover of electronic services provided by the above-mentioned non-residents to buyers located in the Republic of Azerbaijan exceeds the established limit (the manat equivalent of 10,000 US dollars), their tax registration will be mandatory, and if it does not reach that limit, it will be voluntary. The establishment of such a limit, on the one hand, creates conditions for low-turnover non-residents not to be exposed to administrative burden, and on the other hand, ensures the mandatory tax registration of non-resident suppliers providing services of economically significant volume.
Due to the large number and volume of works and services provided in the manner of e-commerce, exceptions are established by law that are not included in the scope of such services. These exceptions include the provision of consulting, legal, financial, accounting, design and engineering services via e-mail and other interactive communication tools, educational and training services provided online in real time, as well as online ordering services for tickets for science, education, culture, sports and entertainment events. Taking into account that these services are essentially personalized, performed on the basis of direct interaction in real time, and are closer to traditional service relations, they are not included in the services provided in the manner of e-commerce. The amendment stipulates that VAT must be paid for each reporting period, but no later than the last day of the month following the reporting period.
This requirement of the legislation on mandatory registration will be applied after 6 (six) months and tax registration will be carried out on the basis of a simplified procedure (online registration, minimal reporting requirements) in accordance with the rules to be approved after the adoption of the law. This will allow non-residents to adapt their systems, tax infrastructure and reporting mechanisms to the requirements of the law.
As a whole, the change will create conditions for the tax registration of non-residents operating in the field of e-commerce whose turnover exceeds the established limit, for increasing VAT revenues from this area and ensuring the transparency of the tax base.