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Tax and VAT rules for non-resident social media service providers
Tax and VAT rules for non-resident social media service providers
We inform you that the taxation of income earned by a non-resident without a permanent establishment in the Republic of Azerbaijan from sources in Azerbaijan is governed by Article 125 of the Tax Code, while the scope of income from Azerbaijani sources is regulated by Article 13.2.16 of the Tax Code.
Accordingly, income earned by non-resident social media platforms without a permanent establishment in the Republic of Azerbaijan for advertising services provided through electronic commerce is not subject to withholding tax.
At the same time, the provision of advertising services by non-resident social media platforms to resident individuals is subject to VAT at a rate of 18%.
According to the provisions of Article 168.1.5 of the Tax Code, for VAT purposes, the place where the work is performed or the service is provided is considered to be the location or registration of the recipient of the work or services.
Please note that if the tax agent is registered for VAT purposes, the calculated tax is paid when submitting the VAT return for the month in which the transaction was conducted. The payment document confirming the tax payment is an electronic invoice, which, in accordance with Article 175 of this Code, gives the tax agent the right to offset the amount of VAT.
If the tax agent is not registered for VAT purposes, they are required to pay the calculated tax within 7 days after making the payment to the non-resident and to submit a VAT return in the form determined by the relevant executive authority by the 20th of the following month.
According to this Code, the amount payable to the non-resident does not fall under taxable operations defined by the tax agent’s registration for VAT purposes. When the tax agent calculates VAT on the amount payable to the non-resident and pays it to the budget, the payment documents must include a corresponding note indicating that the tax was calculated based on the amount paid to the non-resident.
We inform you that the taxation of income earned by a non-resident without a permanent establishment in the Republic of Azerbaijan from sources in Azerbaijan is governed by Article 125 of the Tax Code, while the scope of income from Azerbaijani sources is regulated by Article 13.2.16 of the Tax Code.
Accordingly, income earned by non-resident social media platforms without a permanent establishment in the Republic of Azerbaijan for advertising services provided through electronic commerce is not subject to withholding tax.
At the same time, the provision of advertising services by non-resident social media platforms to resident individuals is subject to VAT at a rate of 18%.
According to the provisions of Article 168.1.5 of the Tax Code, for VAT purposes, the place where the work is performed or the service is provided is considered to be the location or registration of the recipient of the work or services.
Please note that if the tax agent is registered for VAT purposes, the calculated tax is paid when submitting the VAT return for the month in which the transaction was conducted. The payment document confirming the tax payment is an electronic invoice, which, in accordance with Article 175 of this Code, gives the tax agent the right to offset the amount of VAT.
If the tax agent is not registered for VAT purposes, they are required to pay the calculated tax within 7 days after making the payment to the non-resident and to submit a VAT return in the form determined by the relevant executive authority by the 20th of the following month.
According to this Code, the amount payable to the non-resident does not fall under taxable operations defined by the tax agent’s registration for VAT purposes. When the tax agent calculates VAT on the amount payable to the non-resident and pays it to the budget, the payment documents must include a corresponding note indicating that the tax was calculated based on the amount paid to the non-resident.