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Azerbaijan

Azerbaijan Introduces Tax Incentives for Cashless Payments in Catering Sector from 2026

4 weeks ago
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Article covering the new tax incentives for cashless payments in the catering sector, effective January 1, 2026 in Azerbaijan:

📉 Reduction of VAT Burden on Non-Cash POS Transactions

  • 50% VAT base deduction: Starting January 1, 2026, VAT-registered catering businesses in Azerbaijan can exclude half of their non-cash POS-terminal turnover from total VAT-applicable turnover, valid for three years. [erp.alba.az], [azefinance.az]
  • This measure mirrors existing VAT benefits for private medical practitioners and institutions (effective from 2024), now extending similar relief to catering businesses. [erp.alba.az], [abc.az]

Example for VAT Payer

  • Monthly turnover: 50,000 AZN (10 k cash + 40 k non-cash).
  • Pre-change VAT calculation: Turnover × 18% = 9,000; assuming VAT offset leaves 6,000 to be remitted.
  • Post-change: Only 20,000 AZN of VAT-applicable turnover (50% of 40k non-cash), making the amount = 3,600 total VAT – offset 3,000 = 2,400 AZN payable. [azefinance.az]

💳 Simplified Tax Rate Reduction for Non-Cash Sales

  • Simplified Tax Scheme: Applies to catering businesses not registered for VAT, currently paying 8% on total turnover.
  • New incentive: 6% rate on non-cash turnover via POS-terminal, valid for three years from January 1, 2026. [erp.alba.az], [azefinance.az], [erp.alba.az]

Example for Simplified Tax Payer

  • Monthly turnover: 50,000 AZN (10 k cash + 40 k non-cash).
  • Pre-change tax: 8% × 50,000 = 4,000 AZN.
  • Post-change tax:

🧭 Objectives & Broader Context

  • Encouraging digital payments: This initiative promotes POS usage and transparency across the catering sector.
  • Consistent with broader policy: Aligns with increased VAT-registration thresholds and incentives for cashless transactions in retail and public services. [vatupdate.com]

✅ Summary

Taxpayer Type Pre-2026 Treatment Post-2026 Treatment
VAT-registered Full VAT on total turnover 50% deduction on POS turnover for 3 years
Simplified scheme 8% tax on total turnover 6% on POS turnover for 3 years

These changes aim to reduce tax burden on catering businesses while incentivizing non-cash transactions—a strategic move to modernize tax compliance and boost digitalization in Azerbaijan’s service sector.

Source gov.az

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