The Milli Majlis (National Assembly) adopted a significant decision regarding the digital economy during its plenary session of the spring session today. Criteria for the tax registration of non-residents conducting e-commerce in Azerbaijan were approved in the third reading.
Operative Information Center-OMM reports that the proposed amendments to the Tax Code, as well as the laws "On Banks" and "On Customs Tariffs," were extensively discussed in parliament in connection with this innovation.
New Tax Rules: $10,000 Limit and Conditions
According to the adopted bill, a specific turnover limit has been established for non-residents who provide services to persons not registered with the tax authorities and derive income from these activities. If a non-resident's annual turnover from works and services provided to buyers in Azerbaijan exceeds the manat equivalent of $10,000, that person must be registered for tax purposes electronically within 30 days.
For non-residents whose turnover is below $10,000, electronic tax registration will remain voluntary. This move is part of Azerbaijan's broader strategy to modernize its fiscal policy and ensure a level playing field between local and international digital service providers.
Exemptions from E-commerce Tax Regulations
The new legislation provides for several exceptions. The following types of activities are not considered services provided via e-commerce for the purposes of this article: consulting, legal, financial, accounting, design, and engineering services provided via email and other interactive communication tools.
Additionally, teaching and training services provided in real-time via the internet, as well as online ticket booking for science, education, culture, sports, and entertainment events, have been excluded from the list of e-commerce services requiring tax registration.
Regulation of Registration and VAT Payments
The administration of non-residents (excluding permanent establishments) conducting e-commerce through internet information resources will be determined by the relevant executive authority. These procedures include:
- Electronic tax registration and deregistration;
- Registration as a VAT payer;
- Submission of VAT declarations and payment of taxes.
The project was put to a vote and adopted following the discussions. These reforms align with international trends in digital taxation, aimed at capturing revenue from the growing global digital marketplace while simplifying administrative hurdles for smaller entities. By establishing clear thresholds, Azerbaijan seeks to integrate international digital platforms into the national tax framework effectively.
