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trWhat is the amount of the VAT (VAT/ÖDV) relief for an individual entrepreneur engaged in catering and food service activities?
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What is the amount of the VAT (VAT/ÖDV) relief for an individual entrepreneur engaged in catering and food service activities?
An individual entrepreneur engaged in catering and food service activities is registered as a VAT payer. Starting from 2026, a number of amendments were introduced to the Tax Code concerning catering activities, including a VAT relief for cashless turnover. In January 2026, the entrepreneur’s turnover amounted to AZN 80,000, of which AZN 30,000 was generated from customer payments made through a POS terminal. In this case, what is the amount of VAT relief applicable to the taxpayer for January 2026?
According to the State Tax Service under the Ministry of Economy, starting from January 1, 2026, pursuant to the amendment to Article 174.5 of the Tax Code, for a period of three years, 50% of the turnover of persons engaged in catering activities, generated from cashless payments made through a POS terminal for services provided to the public during the reporting period, is deducted from their total taxable turnover. Cashless payments must be made through a POS terminal integrated with the cash register in a unified operating system.
At the same time, starting from January 1, 2026, pursuant to the amendment to Article 102.1.41 of the Tax Code, income received by individuals engaged in catering activities as a result of the reduction of the VAT amount in accordance with Article 174.5, when calculating VAT payable to the state budget, is exempt from income tax.
Accordingly, if the cashless payments of a VAT-registered individual entrepreneur engaged in catering activities are made through a POS terminal integrated with the cash register in a unified operating system, 50% of the turnover generated from cashless POS-terminal payments for services provided to the public is deducted from the total taxable turnover:
AZN 30,000 × 50% = AZN 15,000
The remaining amount:
AZN 80,000 − AZN 15,000 = AZN 65,000
is subject to VAT at a rate of 18%.
In addition, the AZN 15,000 income resulting from the reduction of the VAT amount is exempt from income tax.
Legal basis: Articles 106.1.34 and 174.5 of the Tax Code.
An individual entrepreneur engaged in catering and food service activities is registered as a VAT payer. Starting from 2026, a number of amendments were introduced to the Tax Code concerning catering activities, including a VAT relief for cashless turnover. In January 2026, the entrepreneur’s turnover amounted to AZN 80,000, of which AZN 30,000 was generated from customer payments made through a POS terminal. In this case, what is the amount of VAT relief applicable to the taxpayer for January 2026?
According to the State Tax Service under the Ministry of Economy, starting from January 1, 2026, pursuant to the amendment to Article 174.5 of the Tax Code, for a period of three years, 50% of the turnover of persons engaged in catering activities, generated from cashless payments made through a POS terminal for services provided to the public during the reporting period, is deducted from their total taxable turnover. Cashless payments must be made through a POS terminal integrated with the cash register in a unified operating system.
At the same time, starting from January 1, 2026, pursuant to the amendment to Article 102.1.41 of the Tax Code, income received by individuals engaged in catering activities as a result of the reduction of the VAT amount in accordance with Article 174.5, when calculating VAT payable to the state budget, is exempt from income tax.
Accordingly, if the cashless payments of a VAT-registered individual entrepreneur engaged in catering activities are made through a POS terminal integrated with the cash register in a unified operating system, 50% of the turnover generated from cashless POS-terminal payments for services provided to the public is deducted from the total taxable turnover:
AZN 30,000 × 50% = AZN 15,000
The remaining amount:
AZN 80,000 − AZN 15,000 = AZN 65,000
is subject to VAT at a rate of 18%.
In addition, the AZN 15,000 income resulting from the reduction of the VAT amount is exempt from income tax.
Legal basis: Articles 106.1.34 and 174.5 of the Tax Code.