New Electronic Tax Registration and VAT Obligations for Non-Resident E-Commerce Providers

In brief

Law No. 355-VIIQD of 13 February 2026, enacted by Presidential Decree No. 606 of 23 February 2026, amended Article 33.8-1 of the Azerbaijani Tax Code. From 23 August 2026, a non-resident carrying out electronic commerce through an internet information resource must register electronically with the tax authorities within 30 days of the point at which its calendar-year turnover from works and services supplied to persons not registered with the tax authorities exceeds the manat equivalent of USD 10,000. Below that threshold, registration is voluntary.

Registration brings VAT at 18% on in-scope supplies, reporting through the State Tax Service e-commerce platform and payment of VAT to the state budget. Those that do not register remain subject to VAT withholding at source by Azerbaijani banks and payment service providers.

I. What has changed

The amendment does two things. It specifies the customer base that triggers registration as persons not registered with the tax authorities, which is in substance a business-to-consumer test, and it introduces a USD 10,000 calendar-year threshold with a 30-day registration deadline and an express voluntary route below it. A list of services is also carved out of the electronic commerce definition (section 2).

The procedure sits in the Rules approved by Cabinet of Ministers Decision No. 387 of 30 October 2023, as amended by Decisions No. 163 of 16 March 2024 and No. 369 of 30 July 2024 (the “Rules”).

II. Who is affected

In scope: a non-resident acting as seller or supplier of works and services delivered through an internet information resource to a person not registered with the Azerbaijani tax authorities. The Rules cite downloads of e-books, music, audio and video material, graphic images, virtual games and software, and the placement of advertising, among other analogous supplies (paragraph 1.4); the list is illustrative. A supply is connected to Azerbaijan where any one of four factors is present (paragraph 1.5): payment through a local bank, an Azerbaijani branch of a foreign bank, the national postal operator or another payment service provider; the recipient located in Azerbaijan; an Azerbaijani IP address; or an Azerbaijani mobile country code.

Out of scope:

• non-residents operating through a permanent establishment under Article 19 of the Tax Code (paragraph 1.2), which remain within the general regime;
• business-to-business supplies to persons registered with the Azerbaijani tax authorities, which continue under the general Tax Code rules; and
• consulting, legal, financial, accounting, design and engineering services delivered by email or other interactive means, real-time online education and training, and online ticketing for scientific, educational, cultural, sporting and entertainment events — all expressly excluded by the amended Article 33.8-1.

III. Registration procedure and key deadlines

Eleven data points must be entered on the platform (paragraph 2.7), including country of residence, legal and actual addresses, incorporation and foreign tax registration numbers, principal activity, the currency in which tax will be paid (manat, US dollars, euro or pounds sterling), the intended commencement date, and the details of at least two responsible persons. Two documents must be uploaded (paragraph 2.8): the incorporation or tax registration document, and the document appointing the responsible person. These require legalisation through the Ministry of Foreign Affairs or an Azerbaijani diplomatic mission, unless an apostille suffices under the 1961 Hague Convention or the document falls within the 2002 Chisinau Convention. The documents specified in the Rules shall be submitted in Azerbaijani or English. If the documents or information are in another language, their certified translation into Azerbaijani or English shall also be submitted. Registration may be refused for prohibited activity, incorrect or distorted information, or failure to meet requirements set out by the Rules.

IV. Compliance obligations and consequences of non-compliance

Once registered

• VAT at 18% on in-scope supplies; returns filed through the platform in the form set by the Ministry of Economy, with VAT remitted to the state budget by the last day of the month following the reporting period.
• Tax paid in the currency elected at registration, converted into manat at the Central Bank of Azerbaijan rate on the payment date (paragraph 3-1.4).
• Changes to registration data notified within 20 working days (paragraph 4.1.2); the non-resident remains responsible for the accuracy of everything submitted (paragraph 4.2).
• Article 169 withholding ceases to apply to those transactions (paragraph 1.7); registration status is shared with banks and payment service providers in real time through the Automated Tax Information System (paragraph 1.8).

Where obligations are not met

• Continued withholding at source.  Unregistered non-residents stay within the Article 169 tax-agent mechanism (paragraph 1.7-1): 18% is deducted at source by the Azerbaijani bank or payment service provider — a margin and cash-flow cost the supplier cannot manage.
• Late payment interest.  0.1% of the unpaid tax for each day of delay under Article 59.1, for up to one year (paragraph 3-1.6).
• Failure to file.  A financial sanction of AZN 40 under Article 57.1.
• Understated or undeclared tax.  50% of the amount under Article 58.1, reduced to 25% under Article 58.1-1 where the violation is identified from electronically submitted information.
• Assessment and de-registration.  Tax may be assessed under Article 37 where requested documents or explanations are not provided without valid reason (paragraph 3-1.3). Failure to file, or to pay, within 30 working days of a warning results in removal from the register (paragraphs 3.1.1–3.1.2); re-registration requires outstanding obligations to be met first (paragraph 3.2).
• Cross-border collection.  Azerbaijani law applies to recovery, and where a treaty on the collection of tax debts is in force with the state of residence, recovery proceeds under that treaty (section 6 of the Rules).

V. Recommended actions

1. Measure the threshold.  Test Azerbaijani revenue against the four connecting factors in paragraph 1.5 and establish whether calendar-year turnover from supplies to unregistered persons exceeds the USD 10,000 AZN equivalent.
2. Start the document trail early.  Legalization, translation and a 20-working-day review all sit ahead of registration: obtain legalized or apostilled incorporation and tax registration documents with certified translations, and record the appointment of at least two responsible persons in writing.
3. Choose the settlement currency deliberately.  AZN, US dollars, euro and pounds sterling are available, with conversion at the Central Bank rate on the payment date, so the election carries FX consequences.
4. Build the compliance calendar and review historical exposure.  Set up periodic reporting, payment by the last day of the following month and 20-working-day change notifications, and assess any earlier periods in which the threshold was crossed.