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The cost of services purchased from foreign online platforms is changing
The final price of certain services purchased from foreign online platforms may change.
Under the new rule, if the annual turnover in Azerbaijan of a non-resident company providing digital services to users in Azerbaijan exceeds USD 10,000, the company must register for electronic tax purposes within 30 days. The requirement applies to foreign platforms and does not create additional obligations for local entrepreneurs.
The 18% “VAT” on digital services provided by foreign suppliers was already being collected. When a platform was not registered in Azerbaijan, the tax was withheld by the bank from the user’s card at the time of payment. Under the new mechanism, however, the registered foreign company itself will calculate the VAT and pay it to the state budget. If the platform does not change the service price, the final amount charged to the user’s card may decrease. If the tax is added to the service price, some digital services may become more expensive.
Consulting, legal, financial, accounting, design and engineering services provided via email and other interactive means, as well as live online training and the online booking of tickets for events, are not covered by this special mechanism.
Thus, the main purpose of the mechanism is to register foreign digital service providers for tax purposes and bring the conditions of competition closer to those applicable to local entrepreneurs.
The final price of certain services purchased from foreign online platforms may change.
Under the new rule, if the annual turnover in Azerbaijan of a non-resident company providing digital services to users in Azerbaijan exceeds USD 10,000, the company must register for electronic tax purposes within 30 days. The requirement applies to foreign platforms and does not create additional obligations for local entrepreneurs.
The 18% “VAT” on digital services provided by foreign suppliers was already being collected. When a platform was not registered in Azerbaijan, the tax was withheld by the bank from the user’s card at the time of payment. Under the new mechanism, however, the registered foreign company itself will calculate the VAT and pay it to the state budget. If the platform does not change the service price, the final amount charged to the user’s card may decrease. If the tax is added to the service price, some digital services may become more expensive.
Consulting, legal, financial, accounting, design and engineering services provided via email and other interactive means, as well as live online training and the online booking of tickets for events, are not covered by this special mechanism.
Thus, the main purpose of the mechanism is to register foreign digital service providers for tax purposes and bring the conditions of competition closer to those applicable to local entrepreneurs.