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Limits applied to taxpayers’ cash transactions
According to Article 3.3 of the Law “On Cashless Settlements”, taking into account the provisions of Article 3.5 of the Law (payments that must be made exclusively through cashless means under the law), VAT-registered taxpayers, as well as taxpayers engaged in trade and/or catering whose taxable transaction volume exceeds AZN 200,000 in any month or months of a consecutive 12-month period, must make payments for settlements whose total amount during a calendar month exceeds 2% of the turnover from the sale of goods, works and services in the previous calendar month (including VAT) exclusively through cashless means. For other taxpayers, payments for settlements whose total amount exceeds AZN 15,000 during a calendar month must also be made exclusively through cashless means. This legislative requirement is explained by tax expert Tahmaz Gachayev.
In the case specified in the first sentence of this article, if 2% of the turnover from the sale of goods, works and services in the previous calendar month (including VAT) is less than AZN 30,000, payments for settlements exceeding AZN 30,000 in total during the calendar month must be made exclusively through cashless means. If 2% of the turnover in the previous calendar month exceeds AZN 50,000, payments for the portion of settlements exceeding AZN 50,000 during the calendar month must be made exclusively through cashless means.
Example 1: A restaurant whose turnover exceeds AZN 200,000 purchased goods worth AZN 45,000 during the month. The restaurant’s total turnover from services provided in the previous month was AZN 500,000. In this case, what portion of the AZN 45,000 payment for goods purchased in the current month must be made exclusively through cashless means?
In this case, it is necessary to determine 2% of the restaurant’s turnover for the previous month.
AZN 500,000 × 2% = AZN 10,000.
Therefore, 2% of the previous month’s turnover is AZN 10,000. Since this amount is less than AZN 30,000, under the law, settlements exceeding AZN 30,000 must be made through cashless means. Accordingly, the restaurant in the example may pay AZN 30,000 of the AZN 45,000 purchase in cash, while the remaining AZN 15,000 must be paid exclusively through cashless means. However, it should also be noted that the restaurant has the right to pay the entire amount through cashless means.
Example 2: The restaurant mentioned in the example above purchased goods (works, services) worth AZN 65,000 during the month. Its total turnover for the previous month was AZN 2,000,000. In this case, how much of the AZN 65,000 purchase may the restaurant legally pay in cash?
2% of the restaurant’s turnover for the previous month is AZN 40,000. This amount is above the AZN 30,000 threshold but below the AZN 50,000 threshold. Under these conditions, the restaurant must make settlements exceeding AZN 40,000 through cashless means.
Therefore, for the AZN 65,000 worth of goods (works and services) purchased during the current month, AZN 40,000 may be paid in cash, while AZN 25,000 must be paid through cashless means. It should also be kept in mind that the restaurant has the right to pay the entire amount through cashless means.
Example 3: The same restaurant purchased goods (works and services) worth AZN 70,000 during the current month. Its total turnover in the previous month was AZN 3,000,000. 2% of the previous month’s turnover is AZN 60,000. Since this amount exceeds the AZN 50,000 threshold, according to the law, settlements exceeding AZN 50,000 must be made through cashless means. Under these conditions, the restaurant may pay AZN 50,000 of the AZN 70,000 purchase in cash, while AZN 20,000 must be paid through cashless means. Here too, the restaurant has the right to pay the entire amount through cashless means.
In addition, does the settlement limit apply to both the restaurant’s incoming and outgoing transactions? Suppose that during the current month, the restaurant provided services worth AZN 1,500,000 and made purchases worth AZN 80,000. Its turnover for the previous month was AZN 3,000,000. 2% of the previous month’s turnover is AZN 60,000. Does the cashless settlement limit apply to the restaurant’s AZN 1,500,000 service transaction? In other words, must it receive AZN 50,000 in cash and AZN 1,450,000 through cashless means? No. The limit applies to payments related to outgoing transactions. In other words, the limit applies to the payment for its AZN 80,000 purchase.
It should also be noted that financial sanctions are предусмотрены under Article 58.7-1 of the Tax Code for violations of these legislative requirements. If transactions that are required by law to be conducted through cashless means are carried out in cash, a financial sanction is imposed on the taxpayer in the amount of 10% of the value of the transaction that should have been carried out through cashless means for the first violation during the calendar year, 20% for the second violation, and 40% for the third and subsequent violations.
According to Article 3.3 of the Law “On Cashless Settlements”, taking into account the provisions of Article 3.5 of the Law (payments that must be made exclusively through cashless means under the law), VAT-registered taxpayers, as well as taxpayers engaged in trade and/or catering whose taxable transaction volume exceeds AZN 200,000 in any month or months of a consecutive 12-month period, must make payments for settlements whose total amount during a calendar month exceeds 2% of the turnover from the sale of goods, works and services in the previous calendar month (including VAT) exclusively through cashless means. For other taxpayers, payments for settlements whose total amount exceeds AZN 15,000 during a calendar month must also be made exclusively through cashless means. This legislative requirement is explained by tax expert Tahmaz Gachayev.
In the case specified in the first sentence of this article, if 2% of the turnover from the sale of goods, works and services in the previous calendar month (including VAT) is less than AZN 30,000, payments for settlements exceeding AZN 30,000 in total during the calendar month must be made exclusively through cashless means. If 2% of the turnover in the previous calendar month exceeds AZN 50,000, payments for the portion of settlements exceeding AZN 50,000 during the calendar month must be made exclusively through cashless means.
Example 1: A restaurant whose turnover exceeds AZN 200,000 purchased goods worth AZN 45,000 during the month. The restaurant’s total turnover from services provided in the previous month was AZN 500,000. In this case, what portion of the AZN 45,000 payment for goods purchased in the current month must be made exclusively through cashless means?
In this case, it is necessary to determine 2% of the restaurant’s turnover for the previous month.
AZN 500,000 × 2% = AZN 10,000.
Therefore, 2% of the previous month’s turnover is AZN 10,000. Since this amount is less than AZN 30,000, under the law, settlements exceeding AZN 30,000 must be made through cashless means. Accordingly, the restaurant in the example may pay AZN 30,000 of the AZN 45,000 purchase in cash, while the remaining AZN 15,000 must be paid exclusively through cashless means. However, it should also be noted that the restaurant has the right to pay the entire amount through cashless means.
Example 2: The restaurant mentioned in the example above purchased goods (works, services) worth AZN 65,000 during the month. Its total turnover for the previous month was AZN 2,000,000. In this case, how much of the AZN 65,000 purchase may the restaurant legally pay in cash?
2% of the restaurant’s turnover for the previous month is AZN 40,000. This amount is above the AZN 30,000 threshold but below the AZN 50,000 threshold. Under these conditions, the restaurant must make settlements exceeding AZN 40,000 through cashless means.
Therefore, for the AZN 65,000 worth of goods (works and services) purchased during the current month, AZN 40,000 may be paid in cash, while AZN 25,000 must be paid through cashless means. It should also be kept in mind that the restaurant has the right to pay the entire amount through cashless means.
Example 3: The same restaurant purchased goods (works and services) worth AZN 70,000 during the current month. Its total turnover in the previous month was AZN 3,000,000. 2% of the previous month’s turnover is AZN 60,000. Since this amount exceeds the AZN 50,000 threshold, according to the law, settlements exceeding AZN 50,000 must be made through cashless means. Under these conditions, the restaurant may pay AZN 50,000 of the AZN 70,000 purchase in cash, while AZN 20,000 must be paid through cashless means. Here too, the restaurant has the right to pay the entire amount through cashless means.
In addition, does the settlement limit apply to both the restaurant’s incoming and outgoing transactions? Suppose that during the current month, the restaurant provided services worth AZN 1,500,000 and made purchases worth AZN 80,000. Its turnover for the previous month was AZN 3,000,000. 2% of the previous month’s turnover is AZN 60,000. Does the cashless settlement limit apply to the restaurant’s AZN 1,500,000 service transaction? In other words, must it receive AZN 50,000 in cash and AZN 1,450,000 through cashless means? No. The limit applies to payments related to outgoing transactions. In other words, the limit applies to the payment for its AZN 80,000 purchase.
It should also be noted that financial sanctions are предусмотрены under Article 58.7-1 of the Tax Code for violations of these legislative requirements. If transactions that are required by law to be conducted through cashless means are carried out in cash, a financial sanction is imposed on the taxpayer in the amount of 10% of the value of the transaction that should have been carried out through cashless means for the first violation during the calendar year, 20% for the second violation, and 40% for the third and subsequent violations.