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Documentation Procedure for Services Provided on a Regular and Ongoing Basis
According to Article 71-1.1.3-2 of the Tax Code, for services provided on a regular and ongoing basis, an electronic tax invoice must be issued at the time the services commence for each calendar month. Tax expert Anar Bayramov explains the implications of this legislative requirement.
An analysis of the provision, which entered into force on 1 January 2026, indicates that three key conditions must be met for its application.
The first condition is that the service must be provided on a regular and ongoing basis. It should be noted that the concept of "regular and ongoing basis" is also used in other provisions of the Tax Code. Under Article 16.11.1, when making payments for goods, works or services regularly purchased from the same taxpayer and documented by electronic tax invoices, the payment order may indicate the date and number of the contract (or its annex) instead of the invoice details.
Example 1: A company signs a lease agreement with its business center for a monthly rent of AZN 1,000. In this case, the payer may indicate the contract number and date in the payment order instead of the electronic tax invoice details.
Accordingly, services provided on a regular and ongoing basis refer to long-term, recurring services that are rendered every month. A monthly internet service is a typical example.
The second condition is that the services must be provided for each calendar month. Therefore, a separate electronic tax invoice must be issued for every month.
The third condition concerns the timing of issuing the electronic tax invoice. While invoices for international transportation services must be issued before the transportation begins, invoices for regular and ongoing services must be issued when the provision of the services commences.
Example 2: A taxpayer provides telecommunications services for AZN 40 per month. The electronic tax invoice for March 2026 cannot be issued in February; it must be issued at the beginning of March, when the service period starts.
One practical issue is that the value of regular services may vary from month to month. For example, services provided by a card processing center to banks are regular and ongoing, but the monthly service fee depends on the number and value of transactions processed through POS terminals.
Another debatable issue concerns situations where the service is not fully completed, similar to international transportation services.
Example 3: A taxpayer engages an accounting consulting company on a regular basis. The consulting company issues an electronic tax invoice for AZN 2,000 for April 2026, and payment is made. However, if the taxpayer is dissatisfied with the quality of the services provided during April, a dispute may arise regarding incomplete performance and the refund of the payment.
Some experts believe that the requirement to issue electronic tax invoices in advance is intended to prevent taxpayers from artificially shifting invoice dates to a different reporting period.
Example 4: Under a contract, a taxpayer provides monthly IT services worth AZN 2,000. In some cases, to avoid exceeding the AZN 200,000 VAT registration threshold, the taxpayer delays issuing the electronic tax invoice and combines three months of services into a single invoice. As a result, the related tax liability is recognized in a later period.
Example 5: An individual entrepreneur provides accounting services every month but issues only one electronic tax invoice at the end of each quarter. Consequently, mandatory state social insurance contributions that should be recognized monthly are declared only once per quarter.
Example 6: A micro-entrepreneur determines in December that issuing electronic tax invoices on time may result in losing the 75% tax relief. Therefore, the taxpayer postpones issuing the invoice until the beginning of the following year so that the income is recognized in the next tax year.
Following this amendment, taxpayers providing services on a regular and ongoing basis will be required to issue electronic tax invoices at the beginning of each month, before the services are actually rendered. This measure is intended to prevent the artificial postponement of the recognition of VAT, corporate or personal income tax, mandatory state social insurance contributions, and other compulsory payments.
According to Article 71-1.1.3-2 of the Tax Code, for services provided on a regular and ongoing basis, an electronic tax invoice must be issued at the time the services commence for each calendar month. Tax expert Anar Bayramov explains the implications of this legislative requirement.
An analysis of the provision, which entered into force on 1 January 2026, indicates that three key conditions must be met for its application.
The first condition is that the service must be provided on a regular and ongoing basis. It should be noted that the concept of "regular and ongoing basis" is also used in other provisions of the Tax Code. Under Article 16.11.1, when making payments for goods, works or services regularly purchased from the same taxpayer and documented by electronic tax invoices, the payment order may indicate the date and number of the contract (or its annex) instead of the invoice details.
Example 1: A company signs a lease agreement with its business center for a monthly rent of AZN 1,000. In this case, the payer may indicate the contract number and date in the payment order instead of the electronic tax invoice details.
Accordingly, services provided on a regular and ongoing basis refer to long-term, recurring services that are rendered every month. A monthly internet service is a typical example.
The second condition is that the services must be provided for each calendar month. Therefore, a separate electronic tax invoice must be issued for every month.
The third condition concerns the timing of issuing the electronic tax invoice. While invoices for international transportation services must be issued before the transportation begins, invoices for regular and ongoing services must be issued when the provision of the services commences.
Example 2: A taxpayer provides telecommunications services for AZN 40 per month. The electronic tax invoice for March 2026 cannot be issued in February; it must be issued at the beginning of March, when the service period starts.
One practical issue is that the value of regular services may vary from month to month. For example, services provided by a card processing center to banks are regular and ongoing, but the monthly service fee depends on the number and value of transactions processed through POS terminals.
Another debatable issue concerns situations where the service is not fully completed, similar to international transportation services.
Example 3: A taxpayer engages an accounting consulting company on a regular basis. The consulting company issues an electronic tax invoice for AZN 2,000 for April 2026, and payment is made. However, if the taxpayer is dissatisfied with the quality of the services provided during April, a dispute may arise regarding incomplete performance and the refund of the payment.
Some experts believe that the requirement to issue electronic tax invoices in advance is intended to prevent taxpayers from artificially shifting invoice dates to a different reporting period.
Example 4: Under a contract, a taxpayer provides monthly IT services worth AZN 2,000. In some cases, to avoid exceeding the AZN 200,000 VAT registration threshold, the taxpayer delays issuing the electronic tax invoice and combines three months of services into a single invoice. As a result, the related tax liability is recognized in a later period.
Example 5: An individual entrepreneur provides accounting services every month but issues only one electronic tax invoice at the end of each quarter. Consequently, mandatory state social insurance contributions that should be recognized monthly are declared only once per quarter.
Example 6: A micro-entrepreneur determines in December that issuing electronic tax invoices on time may result in losing the 75% tax relief. Therefore, the taxpayer postpones issuing the invoice until the beginning of the following year so that the income is recognized in the next tax year.
Following this amendment, taxpayers providing services on a regular and ongoing basis will be required to issue electronic tax invoices at the beginning of each month, before the services are actually rendered. This measure is intended to prevent the artificial postponement of the recognition of VAT, corporate or personal income tax, mandatory state social insurance contributions, and other compulsory payments.