According to the amendment to the Tax Code discussed in the Milli Majlis, if the annual turnover of non-residents providing services to Azerbaijani citizens through e-commerce exceeds 10,000 US dollars, they must be registered for tax purposes electronically within 30 days.
Registration is voluntary for non-residents whose annual turnover is less than 10,000 dollars.
The law applies to e-commerce activities. If the amendments are adopted, an increase in the prices of products sold on platforms such as Temu and Trendyol, Shein, Alibaba, etc., may be observed. This is because if the law is adopted, these e-commerce platforms will be registered for tax purposes, carry out VAT registration, submit electronic declarations, and calculate and pay VAT themselves.
However, consulting, legal, financial, accounting, design, engineering, online education and training services, as well as online ticket sales for cultural, sports, and entertainment events, are not included in this regulation. The rules for tax registration, VAT registration, declaration submission, and VAT payment for non-residents will be determined by the relevant executive authority.
Milli Majlis member Azer Badamov, commenting on the amendment to Modern.az, stated that the Labor Code is not entirely realistic for individuals engaged in the aforementioned activities:
“For this, the trader must conclude an employment contract in the context of employee-employer relations with other individuals. Only then can money transfers to the pension fund and other social security payments be made. This includes state social insurance and compulsory medical insurance. However, if a person conducts e-commerce themselves without hiring employees, the requirements of the Labor Code do not apply here. Therefore, the person only needs to pay taxes. In such a case, the person can benefit from medical services by paying 16 manats for Compulsory Medical Insurance.”
The deputy noted that any citizen can also create a basis for pension provision by making payments to a private pension fund:
“However, if a person engaged in e-commerce is registered as an individual entrepreneur, they are obliged to make other stipulated payments in addition to taxes. Without control, the turnover may exceed the established limit, and the citizen may face fines. If the online trader's annual turnover does not exceed 10,000 dollars, their voluntary tax payment will prevent this,” Azer Badamov added.
