A number of amendments have been approved to the Tax Code of the Republic of Azerbaijan and the Law “On Customs Tariff”. Most of the new provisions will enter into force on January 1, 2026, while certain rules will be implemented gradually until August 23, 2026.
The amendments mainly cover the taxation of non-residents engaged in e-commerce, income and profit tax exemptions, VAT incentives, and exemptions related to excise tax and customs duties.
New Rules for Non-Residents Engaged in E-Commerce
Under the new amendments, the tax registration mechanism for non-residents providing electronic services has been clarified. Unlike the previous rules, the obligation to register will now apply specifically to services rendered to persons not registered with the tax authorities.
In addition, the legislation introduces both mandatory and voluntary registration procedures. If a non-resident earns more than the equivalent of 10,000 US dollars per calendar year from electronic services provided to customers in Azerbaijan, that person must register electronically with the tax authorities within 30 days.
Non-residents whose turnover remains below this threshold may register voluntarily.
Registered non-residents will also be required to pay VAT. The VAT amount for each reporting period must be transferred to the state budget no later than the end of the following month.
Which Services Will Not Be Considered E-Commerce?
The amendments also clarify which activities will not be classified as electronic services. These include:
- legal, financial, accounting, engineering, and design services provided via email or other interactive communication tools;
- real-time online education and training services;
- online ticket sales and reservations for scientific, cultural, sports, and entertainment events.
Expanded Information Exchange Concerning State Entities
According to the amendments to the Tax Code, information related to state bodies, state-owned legal entities, and public legal entities will be electronically submitted to the Ministry of Finance.
The information will include the entity’s name, taxpayer identification number (TIN), and bank account details. Furthermore, bank account information regarding such entities must be forwarded to the Ministry of Finance within one business day after the tax authority receives the information.
Tax Incentives Related to WUF13
Several tax incentives have been introduced in connection with the 13th Session of the World Urban Forum (WUF13), which will be hosted in Azerbaijan.
Income earned by non-resident individuals involved in the supply of goods, works, and services within the framework of the forum will be exempt from income tax for one year starting from September 1, 2025.
Additionally, royalties and service income paid to non-resident legal entities related to the forum will also be exempt from profit tax during the same period.
VAT Exemptions and New Incentives
The amendments also introduce VAT exemptions for the import of rare and collectible vehicles. Each individual may import one rare vehicle per calendar year without paying VAT, while the nationwide limit is set at 10 vehicles.
Moreover, works of art, collectibles, and antique items imported on the basis of certification issued by the Ministry of Culture will also be exempt from VAT.
Goods, works, and services related to WUF13 will similarly benefit from temporary VAT exemptions.
Excise and Customs Duty Exemptions for Rare Vehicles
The changes extend beyond VAT exemptions. Rare vehicles imported with approval from the Ministry of Culture will also be exempt from excise tax and customs duties.
This privilege applies to one vehicle per person annually, with a total nationwide limit of 10 vehicles.
The adopted amendments are aimed at improving tax administration, regulating electronic commerce more effectively, and encouraging international events and investment-related activities.
The new rules concerning non-resident electronic services, information exchange involving public entities, and VAT exemptions are expected to have significant practical importance for businesses and legal entities operating in Azerbaijan.
