Azerbaijan has established a comprehensive electronic invoicing (e-invoicing) system, mandating its use for various business transactions. This initiative aims to modernize tax administration, enhance transparency, and improve compliance.
Legal Framework and Mandate
Since 2010, Azerbaijan has required all taxpayers engaged in entrepreneurial activities to issue e-invoices for goods delivered, services rendered, and works performed. This mandate is grounded in Article 2 of the Tax Code of the Republic of Azerbaijan.
Further amendments to the Tax Code, effective from April 1, 2017, stipulate that entities registered for VAT purposes and certain other persons must submit e-invoices for their business activities.
️ Technical Infrastructure
The State Tax Service under the Ministry of Economy provides the infrastructure for e-invoicing through the Internet Tax Administration portal (www.e-taxes.gov.az). Taxpayers can issue e-invoices via two methods:
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Online Mode: Taxpayers use the “Electronic Invoice” sub-system within the portal to create and submit invoices directly online.
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Offline Mode: Taxpayers download the “Electronic Invoicing Software – eFP” to prepare invoices offline. These invoices are then signed using an enhanced electronic signature tool (such as Asan Imza) and uploaded to the portal.
The system assigns unique serial numbers to each e-invoice, ensuring traceability and compliance.
Scope and Applicability
E-invoicing is mandatory across various transaction types:
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Business-to-Business (B2B): All transactions between businesses require e-invoices.
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Business-to-Government (B2G): Suppliers to government entities must issue e-invoices.
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Business-to-Consumer (B2C): While not universally mandated, certain B2C transactions, especially those involving VAT-registered entities, may require e-invoicing.
Non-resident providers of digital services to consumers in Azerbaijan are subject to VAT but are not obligated to issue e-invoices.
Compliance and Security
The e-invoicing system incorporates enhanced electronic signatures to authenticate documents, ensuring the integrity and security of transactions. Taxpayers must use certified digital signature tools, such as Asan Imza, to sign e-invoices.
Additionally, the system supports real-time monitoring by tax authorities, facilitating efficient VAT reporting and reducing the risk of tax evasion.
Benefits and Outlook
The implementation of e-invoicing in Azerbaijan offers several advantages:
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Efficiency: Streamlined invoicing processes reduce administrative burdens for businesses.
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Transparency: Real-time data access enhances transparency in financial transactions.
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Compliance: Automated systems improve adherence to tax regulations.
As Azerbaijan continues to refine its digital tax infrastructure, businesses operating within the country should stay informed about updates to e-invoicing requirements to ensure ongoing compliance.
In Azerbaijan, the status of electronic invoicing is well-established and mandatory for all taxpayers. Electronic tax invoices have been mandatory for all taxpayers in Azerbaijan since 2010. This requirement is based on Article 2 of the Tax Code of the Republic of Azerbaijan, which mandates the submission of e-invoices for goods delivered, works done, and services provided in connection with entrepreneurial activities.
Additionally, the government of Azerbaijan adopted a new law that made the issuance of e-invoices mandatory for legal entities and individual entrepreneurs. This initiative aimed to modernize the tax administration system and enhance the efficiency of tax-related processes in the country. The electronic tax invoices are issued through the Internet Tax administration portal EVHF.
Therefore, businesses operating in Azerbaijan are obligated to use electronic invoices for tax reporting and compliance purposes, and this practice has been in place for several years, demonstrating a commitment to digitalization in the country’s financial processes.
Sources
- Taxes.Gov.Az
- Tipalti
- Azerbaijan Launches Registration Portal for VAT on Cross-Border Digital Services
- electronicinvoicing.global – Everything you need to know about e-invoicing in Azerbaijan
- taxtechnologytalks.com – Azerbaijan
- iota-tax.org – Record number of reforms implemented in Azerbaijan
- Invopop
- See also
- Join the Linkedin Group on Global E-Invoicing/E-Reporting/SAF-T Developments, click HERE
