Azerbaijan: Registration portal for VAT on cross-border provision of digital services

Azerbaijan on June 1, 2024, launched a registration portal for complying with its value added tax (VAT) regime on cross-border provision of digital services.

As Azerbaijan requires local financial institutions to withhold VAT on purchases of digital services made by consumers in Azerbaijan, the registration is currently optional for taxpayers. The tax authorities have also clarified the following points:

• 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 only applies to made to consumers (i.e., B2C sales), and sales made to business customers (i.e., B2B sales) are subject to the VAT self-assessment mechanism.
• E-invoice: There is no electronic invoicing (e-invoicing) obligation for nonresident providers of digital services.