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trUntil when can a taxpayer apply the simplified tax regime by paying 2% tax on turnover?
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Until when can a taxpayer apply the simplified tax regime by paying 2% tax on turnover?
A person engaged in restaurant activities in Sumgayit and applying the simplified tax regime by paying 2% of turnover plans to switch to the simplified tax regime at the 8% rate in the coming months due to an increase in turnover. An informational notification received from the tax authority in January 2026 stated that, starting from the current year, a 0.5 coefficient is applied to turnover generated through non-cash payments when determining the threshold for VAT registration.
The restaurant's total turnover for 12 consecutive months amounted to AZN 190,000, of which AZN 150,000 was generated through POS-terminal payments. Until when can the person continue to apply the simplified tax regime by paying 2% of turnover?
The State Tax Service under the Ministry of Economy stated that, as of 1 January 2026, under Article 218.1-1 of the Tax Code, when determining the volume of taxable transactions in accordance with Articles 218.1.1 and 218.1.2 of the Tax Code, the taxpayer's turnover generated from non-cash payments made through a POS terminal for retail trade and services provided to persons not registered with the tax authority is taken into account by applying a 0.5 coefficient.
At the same time, pursuant to Article 18.1 of the transitional provisions of Law No. 297-VIIQD of the Republic of Azerbaijan dated 9 December 2025, the provisions of Articles 155.1-1 and 218.1-1 of the Tax Code apply to taxable transactions carried out after 1 January 2026.
Accordingly, under Article 218.1-1 of the Tax Code, when determining the turnover threshold of a taxpayer engaged in catering activities whose volume of taxable transactions exceeds AZN 200,000 in any month of a consecutive 12-month period, the 0.5 coefficient is applied only to turnover generated from POS-terminal payments relating to taxable transactions carried out after 1 January 2026.
Turnover generated before 1 January 2026 is fully included in taxable transactions for VAT registration purposes, even if it was generated through POS-terminal payments.
In accordance with the relevant provisions of the Tax Code, if the determined volume of taxable transactions exceeds AZN 200,000 in any month of a consecutive 12-month period, a taxpayer engaged in catering activities must submit a written application to the tax authority within 10 days from the first day of the month following the month in which the turnover threshold was exceeded in order to exercise the right to apply the simplified tax regime at the 8% rate.
Legal basis: Articles 155.1 and 218.1-1 of the Tax Code and Article 18.1 of the transitional provisions of Law No. 297-VIIQD dated 9 December 2025.
A person engaged in restaurant activities in Sumgayit and applying the simplified tax regime by paying 2% of turnover plans to switch to the simplified tax regime at the 8% rate in the coming months due to an increase in turnover. An informational notification received from the tax authority in January 2026 stated that, starting from the current year, a 0.5 coefficient is applied to turnover generated through non-cash payments when determining the threshold for VAT registration.
The restaurant's total turnover for 12 consecutive months amounted to AZN 190,000, of which AZN 150,000 was generated through POS-terminal payments. Until when can the person continue to apply the simplified tax regime by paying 2% of turnover?
The State Tax Service under the Ministry of Economy stated that, as of 1 January 2026, under Article 218.1-1 of the Tax Code, when determining the volume of taxable transactions in accordance with Articles 218.1.1 and 218.1.2 of the Tax Code, the taxpayer's turnover generated from non-cash payments made through a POS terminal for retail trade and services provided to persons not registered with the tax authority is taken into account by applying a 0.5 coefficient.
At the same time, pursuant to Article 18.1 of the transitional provisions of Law No. 297-VIIQD of the Republic of Azerbaijan dated 9 December 2025, the provisions of Articles 155.1-1 and 218.1-1 of the Tax Code apply to taxable transactions carried out after 1 January 2026.
Accordingly, under Article 218.1-1 of the Tax Code, when determining the turnover threshold of a taxpayer engaged in catering activities whose volume of taxable transactions exceeds AZN 200,000 in any month of a consecutive 12-month period, the 0.5 coefficient is applied only to turnover generated from POS-terminal payments relating to taxable transactions carried out after 1 January 2026.
Turnover generated before 1 January 2026 is fully included in taxable transactions for VAT registration purposes, even if it was generated through POS-terminal payments.
In accordance with the relevant provisions of the Tax Code, if the determined volume of taxable transactions exceeds AZN 200,000 in any month of a consecutive 12-month period, a taxpayer engaged in catering activities must submit a written application to the tax authority within 10 days from the first day of the month following the month in which the turnover threshold was exceeded in order to exercise the right to apply the simplified tax regime at the 8% rate.
Legal basis: Articles 155.1 and 218.1-1 of the Tax Code and Article 18.1 of the transitional provisions of Law No. 297-VIIQD dated 9 December 2025.