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trIs it possible to purchase a fixed asset from an individual who is not registered with the tax authorities?
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Is it possible to purchase a fixed asset from an individual who is not registered with the tax authorities?
We intend to purchase a fixed asset from an individual who is not registered with the tax authorities (i.e., is not a taxpayer). Can this transaction be documented using an electronic purchase act? If so, how is the process regulated, and what tax obligations arise?
According to the State Tax Service under the Ministry of Economy, pursuant to Article 71-2.1 of the Tax Code, when goods are purchased from individuals who are not registered with the tax authorities, a purchase act must be prepared, and an electronic purchase act must be issued within five days from the date of purchase. If the electronic purchase act prepared by the taxpayer is printed and signed by the unregistered individual, it serves as a valid document confirming the purchase, and no separate paper purchase act is required.
Under Article 102.1.7 of the Tax Code, income derived from the sale of movable property is exempt from personal income tax, except for precious metals and stones, products made from them, works of art, antiques, property used or previously used in the taxpayer's business activity, and goods specified in Article 3.5 of the Law of the Republic of Azerbaijan "On Cashless Payments" (excluding agricultural products sold by their producers).
In addition, Article 109.8 of the Tax Code provides that, except for the goods specified in Article 3.5 of the Law "On Cashless Payments," as well as immovable property, motor vehicles, and movable fixed assets, deductible expenses for goods purchased from individuals who are not registered as taxpayers under a purchase act are limited to 2% of whichever is higher—the taxpayer's annual income or annual expenses—for each tax year. Any amount exceeding this limit is not deductible.
The State Tax Service also recommends applying to the tax authority where the taxpayer is registered, together with payment documents and other supporting evidence, in order to determine the exact tax obligations based on the specific circumstances of the transaction.
We intend to purchase a fixed asset from an individual who is not registered with the tax authorities (i.e., is not a taxpayer). Can this transaction be documented using an electronic purchase act? If so, how is the process regulated, and what tax obligations arise?
According to the State Tax Service under the Ministry of Economy, pursuant to Article 71-2.1 of the Tax Code, when goods are purchased from individuals who are not registered with the tax authorities, a purchase act must be prepared, and an electronic purchase act must be issued within five days from the date of purchase. If the electronic purchase act prepared by the taxpayer is printed and signed by the unregistered individual, it serves as a valid document confirming the purchase, and no separate paper purchase act is required.
Under Article 102.1.7 of the Tax Code, income derived from the sale of movable property is exempt from personal income tax, except for precious metals and stones, products made from them, works of art, antiques, property used or previously used in the taxpayer's business activity, and goods specified in Article 3.5 of the Law of the Republic of Azerbaijan "On Cashless Payments" (excluding agricultural products sold by their producers).
In addition, Article 109.8 of the Tax Code provides that, except for the goods specified in Article 3.5 of the Law "On Cashless Payments," as well as immovable property, motor vehicles, and movable fixed assets, deductible expenses for goods purchased from individuals who are not registered as taxpayers under a purchase act are limited to 2% of whichever is higher—the taxpayer's annual income or annual expenses—for each tax year. Any amount exceeding this limit is not deductible.
The State Tax Service also recommends applying to the tax authority where the taxpayer is registered, together with payment documents and other supporting evidence, in order to determine the exact tax obligations based on the specific circumstances of the transaction.