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Beauty Salons Are Next – TAX RULES ARE CHANGING
The next sector targeted for tax regulation in Azerbaijan is beauty salons.
According to AZE Finance, starting from 2027, a different tax system is expected to apply to beauty salons. This is reflected in the proposed amendments to the Tax Code.
Under the proposed changes, different tax rates will apply to cash and card payments at beauty salons.
Accordingly, a new simplified tax regime is being proposed for entrepreneurs providing beauty services in Azerbaijan. Over the next five-year period, a simplified tax rate of 8% is planned for cash turnover and 6% for non-cash turnover.
In other words, the tax rate on non-cash payments will be 2 percentage points lower than the rate applied to cash payments.
For example, a cash turnover of AZN 10,000 will result in a tax liability of AZN 800, while the same amount in non-cash turnover will result in AZN 600 in simplified tax.
A new tax incentive is also proposed for beauty salons registered as VAT payers. Under this proposal, 50% of non-cash turnover generated through POS terminals will be excluded from VAT-taxable turnover.
What does this mean? For example, suppose a beauty salon has a monthly turnover of AZN 30,000, of which AZN 10,000 is received through non-cash payments, such as card transactions, and AZN 20,000 is received in cash.
In this case, half of the non-cash payments, amounting to AZN 5,000, will be deducted from the total turnover. As a result, VAT for the beauty salon will be calculated on AZN 25,000 instead of AZN 30,000.
According to the proponents of the amendments to the Tax Code, the aim of these changes is to increase non-cash payments at beauty salons and ensure more transparent recording of transactions.
The next sector targeted for tax regulation in Azerbaijan is beauty salons.
According to AZE Finance, starting from 2027, a different tax system is expected to apply to beauty salons. This is reflected in the proposed amendments to the Tax Code.
Under the proposed changes, different tax rates will apply to cash and card payments at beauty salons.
Accordingly, a new simplified tax regime is being proposed for entrepreneurs providing beauty services in Azerbaijan. Over the next five-year period, a simplified tax rate of 8% is planned for cash turnover and 6% for non-cash turnover.
In other words, the tax rate on non-cash payments will be 2 percentage points lower than the rate applied to cash payments.
For example, a cash turnover of AZN 10,000 will result in a tax liability of AZN 800, while the same amount in non-cash turnover will result in AZN 600 in simplified tax.
A new tax incentive is also proposed for beauty salons registered as VAT payers. Under this proposal, 50% of non-cash turnover generated through POS terminals will be excluded from VAT-taxable turnover.
What does this mean? For example, suppose a beauty salon has a monthly turnover of AZN 30,000, of which AZN 10,000 is received through non-cash payments, such as card transactions, and AZN 20,000 is received in cash.
In this case, half of the non-cash payments, amounting to AZN 5,000, will be deducted from the total turnover. As a result, VAT for the beauty salon will be calculated on AZN 25,000 instead of AZN 30,000.
According to the proponents of the amendments to the Tax Code, the aim of these changes is to increase non-cash payments at beauty salons and ensure more transparent recording of transactions.