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How is VAT applied to non-resident services?
How is VAT applied to non-resident services?
When specialized software (intangible assets) purchased from non-residents is subject to an 18% VAT in accordance with Article 169 of the Tax Code, and the calculated VAT is not refunded, can this amount be considered as an expense that increases the value of intangible assets?
According to Article 169.1 of the Tax Code, if a non-resident who is not registered for VAT purposes provides services or performs work on behalf of a tax agent mentioned in Articles 169.2 or 169.5 of this Code within the territory of the Republic of Azerbaijan (excluding services for hotel bookings and airline tickets ordered via electronic commerce outside the Republic of Azerbaijan), such work or services are subject to taxation in accordance with this provision.
A non-resident who provides services or performs work without VAT registration and is subject to taxation under Article 169 of the Tax Code is considered a taxpayer for those works or services.
If a VAT-registered taxpayer pays VAT on the amount owed for services provided by a non-resident, they have the right to offset this VAT according to the provisions of the Tax Code, provided the VAT is paid to the state budget.
According to Article 169.4 of the Tax Code, if a tax agent is registered for VAT purposes, the calculated VAT is paid when the VAT declaration for the relevant month is submitted. The payment document confirming the payment of the calculated VAT is the electronic invoice, which, under Article 175 of the Tax Code, grants the tax agent the right to offset the VAT amount.
In response to your inquiry, we would like to inform you that the VAT amount that is not refunded increases the cost of goods, work, and services.
When specialized software (intangible assets) purchased from non-residents is subject to an 18% VAT in accordance with Article 169 of the Tax Code, and the calculated VAT is not refunded, can this amount be considered as an expense that increases the value of intangible assets?
According to Article 169.1 of the Tax Code, if a non-resident who is not registered for VAT purposes provides services or performs work on behalf of a tax agent mentioned in Articles 169.2 or 169.5 of this Code within the territory of the Republic of Azerbaijan (excluding services for hotel bookings and airline tickets ordered via electronic commerce outside the Republic of Azerbaijan), such work or services are subject to taxation in accordance with this provision.
A non-resident who provides services or performs work without VAT registration and is subject to taxation under Article 169 of the Tax Code is considered a taxpayer for those works or services.
If a VAT-registered taxpayer pays VAT on the amount owed for services provided by a non-resident, they have the right to offset this VAT according to the provisions of the Tax Code, provided the VAT is paid to the state budget.
According to Article 169.4 of the Tax Code, if a tax agent is registered for VAT purposes, the calculated VAT is paid when the VAT declaration for the relevant month is submitted. The payment document confirming the payment of the calculated VAT is the electronic invoice, which, under Article 175 of the Tax Code, grants the tax agent the right to offset the VAT amount.
In response to your inquiry, we would like to inform you that the VAT amount that is not refunded increases the cost of goods, work, and services.