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trNon-VAT-paying businesses will also provide VAT refunds – “Tax Cashback” is coming
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Non-VAT-paying businesses will also provide VAT refunds – “Tax Cashback” is coming
According to the draft law on amendments to the Tax Code, consumers who make cashless purchases from businesses that are not registered VAT payers will also be eligible to receive a refund of a certain portion of the amount paid.
AZE Finance reports that this was announced by Avez Guliyev, Deputy Head of the Main Department of Tax Policy of the State Tax Service under the Ministry of Economy, during the ATV programme “İqtisadi zona”.
“As is known, since 2019, a mechanism has been in place to refund consumers a certain portion of VAT on purchases made from VAT-paying businesses in retail trade, catering and other service sectors. Different refund rates apply depending on whether payments are made in cash or electronically. As a result of the implementation of the ‘VAT Refund’ mechanism, the turnover of businesses operating in these sectors has become more transparent over this period.”
It should be noted that this innovation has brought about a significant change in consumers' demand for cash register receipts and the use of cashless payments in Azerbaijan. As a result, billions of manats in business turnover have been brought out of the shadow economy through VAT receipts, while hundreds of millions of manats in VAT have been refunded to consumers.
However, this mechanism previously applied only to businesses registered as VAT payers. Since purchases from non-VAT-paying businesses were not eligible for VAT refunds, consumers were less likely to request cash register receipts, and payment discipline in these businesses was comparatively weaker. Consequently, the government has decided to introduce a similar version of the “VAT Refund” mechanism for these businesses as well.
Avez Guliyev stated that following the introduction of the “VAT Refund” mechanism, public oversight encouraged consumers to request receipts more actively. This, in turn, contributed to an increase in tax revenues and the formalisation of business turnover in the relevant sectors.
“As a continuation of this project, it is proposed that consumers receive a refund of a certain portion of the amount paid exclusively through cashless transactions when purchasing goods or services from businesses that are not VAT payers. Unlike the mechanism applicable to VAT payers, the new system will cover only cashless payments. For this purpose, a refund of 0.9% of the cashless payment amount is proposed”, he stated.
According to the draft law on amendments to the Tax Code, consumers who make cashless purchases from businesses that are not registered VAT payers will also be eligible to receive a refund of a certain portion of the amount paid.
AZE Finance reports that this was announced by Avez Guliyev, Deputy Head of the Main Department of Tax Policy of the State Tax Service under the Ministry of Economy, during the ATV programme “İqtisadi zona”.
“As is known, since 2019, a mechanism has been in place to refund consumers a certain portion of VAT on purchases made from VAT-paying businesses in retail trade, catering and other service sectors. Different refund rates apply depending on whether payments are made in cash or electronically. As a result of the implementation of the ‘VAT Refund’ mechanism, the turnover of businesses operating in these sectors has become more transparent over this period.”
It should be noted that this innovation has brought about a significant change in consumers' demand for cash register receipts and the use of cashless payments in Azerbaijan. As a result, billions of manats in business turnover have been brought out of the shadow economy through VAT receipts, while hundreds of millions of manats in VAT have been refunded to consumers.
However, this mechanism previously applied only to businesses registered as VAT payers. Since purchases from non-VAT-paying businesses were not eligible for VAT refunds, consumers were less likely to request cash register receipts, and payment discipline in these businesses was comparatively weaker. Consequently, the government has decided to introduce a similar version of the “VAT Refund” mechanism for these businesses as well.
Avez Guliyev stated that following the introduction of the “VAT Refund” mechanism, public oversight encouraged consumers to request receipts more actively. This, in turn, contributed to an increase in tax revenues and the formalisation of business turnover in the relevant sectors.
“As a continuation of this project, it is proposed that consumers receive a refund of a certain portion of the amount paid exclusively through cashless transactions when purchasing goods or services from businesses that are not VAT payers. Unlike the mechanism applicable to VAT payers, the new system will cover only cashless payments. For this purpose, a refund of 0.9% of the cashless payment amount is proposed”, he stated.