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:
- Cash portion: 8% × 10,000 = 800
- Non-cash portion: 6% × 40,000 = 2,400
- Total = 3,200 AZN. [azefinance.az], [erp.alba.az]
🧭 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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