en
The VAT registration threshold is being increased
The VAT registration threshold is being increased
The draft law “On Amendments to the Tax Code” has been adopted in the third reading by the Milli Majlis (Parliament). Within the framework of these amendments, one of the next steps aimed at promoting cashless transactions and ensuring transparency is to encourage such operations in business-to-population relations, which are characteristic of the “shadow economy.” According to the tax legislation, taxpayers whose taxable transactions exceed 200,000 manats within a consecutive 12-month period are required to register for VAT. Starting from 2026, it is proposed to double the VAT registration threshold in the retail trade and consumer service sectors—from 200,000 manats to 400,000 manats—taking into account cashless transactions carried out via POS terminals.
Example 1:
An individual entrepreneur engaged in retail trade has generated a turnover of 250,000 manats through cashless transactions via POS terminal and 50,000 manats through cash transactions over a consecutive 12-month period. Although the entrepreneur’s total turnover for 12 months is 300,000 manats, according to the proposed amendment, cashless transactions carried out via POS terminal are taken into account at a rate of 50%, resulting in a VAT-calculated turnover of 175,000 manats. In this case, since the taxable turnover amount is below the mandatory VAT registration threshold of 200,000 manats, the entrepreneur does not incur an obligation to register for VAT.
Example 2:
A company providing legal services to citizens has conducted only cashless sales through POS terminals during a consecutive 12-month period, generating a turnover of 400,000 manats. Although the company’s total turnover is 400,000 manats, in accordance with the proposed amendments to the Tax Code, the turnover calculated for VAT purposes—based on cashless transactions carried out via POS terminals—will be determined as 200,000 manats. In this case, since the taxable turnover does not exceed the mandatory VAT registration threshold of 200,000 manats, the company is not required to register for VAT.
Example 3:
An individual entrepreneur providing translation services has generated 250,000 manats in cashless transactions via POS terminal and 100,000 manats in cash transactions over a consecutive 12-month period. Although the total turnover is 350,000 manats, according to the proposed amendments to the Tax Code, the turnover calculated for VAT purposes—based on cashless POS-terminal transactions—will be determined as 225,000 manats. In this case, since the taxable turnover exceeds the mandatory VAT registration threshold of 200,000 manats, the entrepreneur is required to register for VAT.
The draft law “On Amendments to the Tax Code” has been adopted in the third reading by the Milli Majlis (Parliament). Within the framework of these amendments, one of the next steps aimed at promoting cashless transactions and ensuring transparency is to encourage such operations in business-to-population relations, which are characteristic of the “shadow economy.” According to the tax legislation, taxpayers whose taxable transactions exceed 200,000 manats within a consecutive 12-month period are required to register for VAT. Starting from 2026, it is proposed to double the VAT registration threshold in the retail trade and consumer service sectors—from 200,000 manats to 400,000 manats—taking into account cashless transactions carried out via POS terminals.
Example 1:
An individual entrepreneur engaged in retail trade has generated a turnover of 250,000 manats through cashless transactions via POS terminal and 50,000 manats through cash transactions over a consecutive 12-month period. Although the entrepreneur’s total turnover for 12 months is 300,000 manats, according to the proposed amendment, cashless transactions carried out via POS terminal are taken into account at a rate of 50%, resulting in a VAT-calculated turnover of 175,000 manats. In this case, since the taxable turnover amount is below the mandatory VAT registration threshold of 200,000 manats, the entrepreneur does not incur an obligation to register for VAT.
Example 2:
A company providing legal services to citizens has conducted only cashless sales through POS terminals during a consecutive 12-month period, generating a turnover of 400,000 manats. Although the company’s total turnover is 400,000 manats, in accordance with the proposed amendments to the Tax Code, the turnover calculated for VAT purposes—based on cashless transactions carried out via POS terminals—will be determined as 200,000 manats. In this case, since the taxable turnover does not exceed the mandatory VAT registration threshold of 200,000 manats, the company is not required to register for VAT.
Example 3:
An individual entrepreneur providing translation services has generated 250,000 manats in cashless transactions via POS terminal and 100,000 manats in cash transactions over a consecutive 12-month period. Although the total turnover is 350,000 manats, according to the proposed amendments to the Tax Code, the turnover calculated for VAT purposes—based on cashless POS-terminal transactions—will be determined as 225,000 manats. In this case, since the taxable turnover exceeds the mandatory VAT registration threshold of 200,000 manats, the entrepreneur is required to register for VAT.