en
Is the resident JSC required to pay VAT on services provided by a non-resident?
Is the resident JSC required to pay VAT on services provided by a non-resident?
The Joint Stock Company (JSC) provides financial services, is exempt from VAT, and is not registered for VAT purposes. However, it purchases various services or licenses from non-resident companies. In this case, is the resident JSC required to calculate and pay VAT on the services rendered by the non-resident, which should have been paid by the non-resident?
The State Tax Service under the Ministry of Economy has clarified that if a non-resident not registered for VAT purposes provides services (including electronic services for the tax agent, except for services related to hotel bookings and airline ticket purchases outside the territory of the Republic of Azerbaijan) or performs work within the territory of the Republic of Azerbaijan, such works or services are subject to VAT. The taxable event for such transactions is considered to occur at the time the payment is made. If the payment is made prior to the transaction, then the taxable event is deemed to have occurred at the moment the payment was made.
It has been noted that according to Article 169.5 of the Tax Code, if the tax agent is not registered for VAT purposes, it is required to pay the calculated tax within 7 days after the payment is made to the non-resident, and to submit a VAT return in the form prescribed by the relevant executive authority by the 20th of the following month. In accordance with the Tax Code, the amount payable to the non-resident is not considered a taxable transaction of the tax agent determined based on its VAT registration status. When the tax agent calculates and pays VAT to the budget on the amount payable to the non-resident, it must indicate in the payment documents that the tax has been calculated on the payment made to the non-resident.
The Joint Stock Company (JSC) provides financial services, is exempt from VAT, and is not registered for VAT purposes. However, it purchases various services or licenses from non-resident companies. In this case, is the resident JSC required to calculate and pay VAT on the services rendered by the non-resident, which should have been paid by the non-resident?
The State Tax Service under the Ministry of Economy has clarified that if a non-resident not registered for VAT purposes provides services (including electronic services for the tax agent, except for services related to hotel bookings and airline ticket purchases outside the territory of the Republic of Azerbaijan) or performs work within the territory of the Republic of Azerbaijan, such works or services are subject to VAT. The taxable event for such transactions is considered to occur at the time the payment is made. If the payment is made prior to the transaction, then the taxable event is deemed to have occurred at the moment the payment was made.
It has been noted that according to Article 169.5 of the Tax Code, if the tax agent is not registered for VAT purposes, it is required to pay the calculated tax within 7 days after the payment is made to the non-resident, and to submit a VAT return in the form prescribed by the relevant executive authority by the 20th of the following month. In accordance with the Tax Code, the amount payable to the non-resident is not considered a taxable transaction of the tax agent determined based on its VAT registration status. When the tax agent calculates and pays VAT to the budget on the amount payable to the non-resident, it must indicate in the payment documents that the tax has been calculated on the payment made to the non-resident.