Azerbaijan: VAT on cross-border provision of digital services
Technical regulations approved on 1 November 2023
Technical regulations approved on 1 November 2023
Technical regulations were approved on 1 November 2023 to implement value added tax (VAT) on cross-border provision of digital services.
- Scope: The regime applies to “the provision of services, and the performance of work using information systems.” This includes uploading electronic books, music, audio-video materials, graphic images, virtual games, software, placing advertisements, and other similar activities through the internet.
- Registration threshold: There is no registration threshold.
- Customer location: The customer location may be determined by IP address, or country code of the customer’s mobile number.
- B2B vs. B2C: The regime applies to both sales made to consumers (i.e., B2C sales), and to sales made to business customers (i.e., B2B sales).
- VAT invoice: Taxpayers are required to issue e-invoices for B2B sales. For this purpose, taxpayers may confirm the business status of their customers by verifying their tax identification numbers (TIN).
KPMG observation
While this regime was introduced as a provision of amendments to the tax code, effective from 1 January 2023, its implementation was postponed until technical regulations were approved. However, even though the technical regulations have now been approved, the implementation of the regime is still hampered by pending technical solutions (interface, software, electronic application forms, synchronization with other modules of the e-tax portal, etc.). As such, the tax authority is expected to issue further guidance regarding how taxpayers may begin compliance with the regime.
For more information, contact a KPMG tax professional:
Philippe Stephanny | philippestephanny@kpmg.com
Chinedu Nwachukwu | chinedunwachukwu@kpmg.com
Ulvi Mehraliyev | umehraliyev@kpmg.az
Rizvan Gubiyev | rgubiyev@kpmg.az
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