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trMust an individual entrepreneur selling household goods register as a VAT payer when their turnover increases?
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Must an individual entrepreneur selling household goods register as a VAT payer when their turnover increases?
In January 2026, an individual entrepreneur registered for tax purposes started engaging in the retail sale of household goods in the Yasamal district. Until May 2026, the entrepreneur’s non-cash transactions conducted through a POS terminal amounted to AZN 250,000, while cash transactions amounted to AZN 70,000. In this case, is the individual entrepreneur required to register for VAT?
The State Tax Service under the Ministry of Economy stated that, according to Article 155.1-1 of the Tax Code, added effective January 1, 2026, when determining the volume of taxable transactions, the turnover of a taxpayer generated from retail trade and services provided to persons not registered with the tax authority through non-cash POS-terminal payments is taken into account by applying a coefficient of 0.5.
According to Article 155.1 of the Tax Code, persons engaged in entrepreneurial activities whose volume of taxable transactions exceeds AZN 200,000 in any month or months of a consecutive 12-month period are required to apply for VAT registration.
Accordingly, although the individual entrepreneur’s total turnover from retail activities amounts to AZN 320,000, the turnover from non-cash POS-terminal transactions is calculated using the 0.5 coefficient and amounts to AZN 125,000 (250,000 × 0.5). Together with cash transactions, the turnover for VAT registration purposes is AZN 195,000 (125,000 + 70,000). Therefore, the individual entrepreneur is not required to register for VAT.
Basis: Articles 155.1 and 155.1-1 of the Tax Code.
In January 2026, an individual entrepreneur registered for tax purposes started engaging in the retail sale of household goods in the Yasamal district. Until May 2026, the entrepreneur’s non-cash transactions conducted through a POS terminal amounted to AZN 250,000, while cash transactions amounted to AZN 70,000. In this case, is the individual entrepreneur required to register for VAT?
The State Tax Service under the Ministry of Economy stated that, according to Article 155.1-1 of the Tax Code, added effective January 1, 2026, when determining the volume of taxable transactions, the turnover of a taxpayer generated from retail trade and services provided to persons not registered with the tax authority through non-cash POS-terminal payments is taken into account by applying a coefficient of 0.5.
According to Article 155.1 of the Tax Code, persons engaged in entrepreneurial activities whose volume of taxable transactions exceeds AZN 200,000 in any month or months of a consecutive 12-month period are required to apply for VAT registration.
Accordingly, although the individual entrepreneur’s total turnover from retail activities amounts to AZN 320,000, the turnover from non-cash POS-terminal transactions is calculated using the 0.5 coefficient and amounts to AZN 125,000 (250,000 × 0.5). Together with cash transactions, the turnover for VAT registration purposes is AZN 195,000 (125,000 + 70,000). Therefore, the individual entrepreneur is not required to register for VAT.
Basis: Articles 155.1 and 155.1-1 of the Tax Code.