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Procedure for vat refund/offset on imports
Procedure for vat refund/offset on imports
According to Article 175.10 of the Tax Code, import documents issued by customs authorities that confirm the payment of Value Added Tax (VAT) on imports, regardless of the form of payment, serve as the basis for the deduction of tax for the purposes of this Article. The procedure for deducting VAT paid on imports has been explained by expert Elshad Ahmadli.
Condition of being a VAT payer
Under the requirements of the legislation, only persons registered as VAT payers are eligible to deduct VAT paid on imports. In other words, the taxpayer pays VAT during operations and may deduct it at the end of the reporting period through submission of a VAT declaration. However, it is important that the customs declaration for the imported goods is issued and the release of goods is ensured within the same reporting month.
Deduction of VAT paid on imports
For imports, the date of deduction is considered to be the date of import. The date of import is defined by Article 170 of the Tax Code. According to customs legislation, the time at which customs duties are imposed on goods is considered the time of import. If the imported goods are exempt from customs duties, the time of import is considered to be the moment the goods are released from customs control.
The imported goods or services must be used in accordance with the business activity of the taxpayer. If the goods are imported for personal use or other unrelated purposes, the VAT paid on such goods cannot be deducted.
To deduct VAT paid on imports, the taxpayer must provide the details from the import declaration in Annex 1 of the VAT declaration.
Example 1: “AA” LLC, a VAT-registered entity, paid 7,200 manats in VAT to customs authorities in January 2025 when importing goods intended for VAT-taxable sales. In which month can the company deduct this amount?
According to the deduction rules, the company must submit its VAT return for January 2025 by February 20, 2025. Following submission, it may deduct the 7,200 manats paid as VAT in that return.
According to Article 175.10 of the Tax Code, import documents issued by customs authorities that confirm the payment of Value Added Tax (VAT) on imports, regardless of the form of payment, serve as the basis for the deduction of tax for the purposes of this Article. The procedure for deducting VAT paid on imports has been explained by expert Elshad Ahmadli.
Condition of being a VAT payer
Under the requirements of the legislation, only persons registered as VAT payers are eligible to deduct VAT paid on imports. In other words, the taxpayer pays VAT during operations and may deduct it at the end of the reporting period through submission of a VAT declaration. However, it is important that the customs declaration for the imported goods is issued and the release of goods is ensured within the same reporting month.
Deduction of VAT paid on imports
For imports, the date of deduction is considered to be the date of import. The date of import is defined by Article 170 of the Tax Code. According to customs legislation, the time at which customs duties are imposed on goods is considered the time of import. If the imported goods are exempt from customs duties, the time of import is considered to be the moment the goods are released from customs control.
The imported goods or services must be used in accordance with the business activity of the taxpayer. If the goods are imported for personal use or other unrelated purposes, the VAT paid on such goods cannot be deducted.
To deduct VAT paid on imports, the taxpayer must provide the details from the import declaration in Annex 1 of the VAT declaration.
Example 1: “AA” LLC, a VAT-registered entity, paid 7,200 manats in VAT to customs authorities in January 2025 when importing goods intended for VAT-taxable sales. In which month can the company deduct this amount?
According to the deduction rules, the company must submit its VAT return for January 2025 by February 20, 2025. Following submission, it may deduct the 7,200 manats paid as VAT in that return.