Value added tax (VAT) is the difference between the amount of tax calculated on the taxable turnover and the amount of tax that should be compensated according to the documents showing that VAT has been paid on importation or the electronic invoices issued.
What are the services for which VAT is charged at 0 rate?
VAT is charged at the rate of zero (0) for the following operations, works and services:
- Goods and services allocated for the official use of diplomatic and consular missions of foreign countries accredited in the Republic of Azerbaijan, diplomatic and administrative-technical staff of those missions who are not citizens of the Republic of Azerbaijan, and their family members living with them;
- import of goods at the expense of grants received from abroad based on the grant agreement (decision), presentation of goods to recipients, provision of services and performance of works;
- goods (goods not intended for production or commercial purposes acquired by foreigners and stateless persons from taxpayers who are registered as sellers in accordance with the legislation of the Republic of Azerbaijan in accordance with the legislation of the Republic of Azerbaijan) and In Article 168.1.5 of the Tax Code export of specified services;
- international and transit cargo and passenger transportation (except for international postal services), transshipment service related to transit cargo transportation. Provision of services related to international and transit flights, execution of works, provision of forwarding services;
- sending gold or other valuables to the Central Bank of AR;
- Provision of goods, performance of works and provision of services for the purposes of that activity by the contractor to the resident of the industrial park, who is engaged in activities in the industrial park created on the basis of the decision of the relevant executive authority, and to the contractor by the subcontractor who has entered into a direct contract with him - 5 years from May 1, 2016 for the duration;
- provision of goods, provision of services and performance of works by UEFA, legal entities created by it, non-resident natural persons involved by UEFA within the framework of this activity, in connection with the UEFA 2020 Football Championship games held in Azerbaijan in accordance with the procedure determined by the institution determined by the relevant executive power body;
- sale of goods with export registration in the manner determined by the institution determined by the relevant executive authority;
- investment of fixed assets in the form of shares in the charter fund of the enterprise (if it is not related to the acquisition of other property in return).
VAT refund procedure
The procedure for returning the VAT paid for goods purchased by foreigners or stateless persons in the Republic of Azerbaijan and not intended for commercial or production purposes is determined by the executive authority.
For goods purchased by consumers who are natural persons from persons engaged in retail trade or public catering activities in the Republic of Azerbaijan (excluding automobiles, oil and gas products, tobacco products and alcoholic beverages), medical institutions and medical services provided by natural persons engaged in private medical practice activities the procedure for returning the paid VAT is determined by the institution determined by the executive authority. The refunded amount is 5 percent of the VAT paid in cash and 17.5 percent of the VAT paid in cash. The check of the control-cash register presented at the time of VAT refund must comply with the requirements established by the legislation.
The procedure and conditions for the refund of VAT paid for residential and non-residential premises purchased non-cash by consumers who are physical persons from persons engaged in building construction activities on the territory of the Republic of Azerbaijan are approved by the institution determined by the relevant executive authority. The refunded amount is 30 % of VAT. If consumers who are natural persons purchase residential or non-residential premises from the same building, the VAT refund shall be limited to 500 m of the purchased residential area.2 and 500 m of non-residential area2is applied to the paid VAT for the part not exceeding
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