Baku: The right to be a payer of simplified tax in Azerbaijan will undergo significant changes as outlined in recent amendments to the Tax Code, reported by APA. This development was sanctioned by President Ilham Aliyev and introduces a novel approach to determining taxpayer eligibility.

According to Azeri-Press News Agency, the amendments specify that when assessing taxable transactions, the turnover derived from non-cash payments via POS terminals for retail trade and services offered to individuals not registered with tax authorities will now incorporate a coefficient of 0.5. This adjustment targets individuals who are not registered for value-added tax (VAT) and whose taxable transactions do not surpass 200,000 manats within any month or across any 12-month period, enabling them to qualify as simplified taxpayers.

The revised process for determining eligibility as a simplified taxpayer involves considering the turnover generated from retail trade and services to non-registered individuals, based on non-cash transactions through POS terminals, with the application of a 0.5 coefficient. Previously, despite rising prices and increased income levels since 2016, the threshold for simplified taxpayers was set at 200,000 manats over any 12-month span. The amendment proposes doubling this threshold to 400,000 manats, aiming to reduce tax evasion among small and medium enterprises and enhance fiscal transparency.

Furthermore, for services provided to the population, a 6% simplified tax rate will be applied to cashless payments made through POS terminals, effective for three years starting January 1, 2026. This marks a reduction from the existing 8% rate. It is mandated that these cashless transactions occur via POS terminals linked to a unified transaction system with cash registers.

These legislative changes will be applicable to taxable transactions executed after January 1, 2026.