Azerbaijan to Require Foreign E-commerce Companies to Register with Tax Authorities

In Azerbaijan, foreign companies providing works and services to buyers through e-commerce will be required to register for tax purposes electronically within 30 days if their turnover for a calendar year exceeds the equivalent of $10,000 in manats.

The relevant amendments, provided for by a law adopted on February 13, will come into force on August 23.

According to the law, foreign companies engaged in e-commerce through internet information resources and deriving income from providing works and services to persons not registered for tax purposes are required to register with tax authorities electronically within 30 days after their turnover from providing works and services to buyers located in Azerbaijan exceeds the equivalent of $10,000 in manats for a calendar year. Exceptions are permanent establishments of foreign legal entities and individuals in Azerbaijan, as provided for by the Tax Code.

At the same time, consulting, legal, financial, accounting, design, and engineering services provided via email and other interactive means of communication, educational and training services provided in real time via the internet, as well as online ticket booking services for scientific, educational, cultural, sports, and entertainment events will not be considered services provided in the course of e-commerce for the purposes of this provision.

The procedure for electronic tax registration, re-registration, and deregistration of foreign companies engaged in e-commerce through internet information resources and deriving income from providing works and services to persons not registered for tax purposes (except for permanent establishments in Azerbaijan of foreign legal entities or foreign individuals, as provided for by the Tax Code), as well as the procedure for registration as a VAT payer, submission of VAT returns, and payment of VAT, will be determined by the body (institution) established by the relevant executive authority.

The taxpayer will be obliged to pay VAT to the budget in respect of foreign persons registered for tax purposes in the manner provided for in the three preceding paragraphs, for each reporting period no later than the last day of the month following the reporting period.

According to the legislation in effect until August 23, the procedure for electronic tax registration, re-registration, and deregistration of a foreign person engaged in e-commerce through an internet information resource and deriving income from providing works and services to residents (except for permanent establishments in Azerbaijan of foreign legal entities or foreign individuals, as provided for by the Tax Code), as well as the procedure for registration as a VAT payer, submission of VAT returns, and payment of VAT, is determined by the body (institution) authorized by the relevant executive authority.