Baku:A new tax incentive is set to be introduced for apartment sales in Azerbaijan, aimed at alleviating the VAT burden on transactions involving the resale of apartments. This development is part of a proposed amendment to the Tax Code.

According to Azeri-Press news agency, the draft amendment suggests that for a three-year period, the value-added tax (VAT) on apartments resold by VAT payers in building construction or other housing market participants will be calculated based on the trade margin. This applies to apartments purchased from individuals through non-cash payments.

The current VAT system imposes a tax on the full sale price, rather than just the trade margin, which has led to a heavier tax burden and higher prices in the second-hand housing market. This approach has reduced the competitiveness of official sales channels and encouraged informal transactions.

The proposed change aims to address these issues by aligning VAT calculations with the economic nature of the transactions. The amendment is expected to foster housing market development, improve transparency, and boost tax revenues over the medium and long term.