From September 1, a new mechanism for taxing the digital economy will be introduced in Azerbaijan.

Axar.az reports, citing APА, that under an amendment to the Tax Code, if the annual turnover in Azerbaijan of a non-resident e-commerce platform providing electronic services to persons not registered with the tax authorities in Azerbaijan exceeds the manat equivalent of USD 10,000, such companies must register for tax purposes electronically within 30 days. This requirement will come into force in September this year.

The Service said that, in preparation for the implementation of the new rules, it is carrying out information and communication activities with non-resident e-commerce platforms providing electronic services in Azerbaijan. The registration process is currently underway. Information on registered e-commerce platforms is published on the official website of the State Tax Service, where the list of companies registered to date is available.

The new mechanism applies only to electronic services provided to persons who are not registered with the tax authorities. VAT on digital services provided to such persons will be paid to the state budget by non-residents.

Persons who use digital services for business purposes and are registered with the tax authorities must correctly enter their taxpayer identification numbers (TINs) in the systems of non-resident e-commerce platforms. When TINs are entered, the non-resident e-commerce platform does not add VAT to the cost of the service or collect it from the taxpayer. Instead, the taxpayer using the service calculates the relevant VAT and pays it to the state budget in accordance with the procedure prescribed by law. Therefore, taxpayers must provide accurate and complete information about their tax status when using such services.

At the same time, the scope of electronic services covered by the new mechanism has been determined by the relevant legislation. Under the Rules approved by Resolution No. 387 of the Cabinet of Ministers dated October 30, 2023, works and services provided within the framework of e-commerce include the downloading of electronic books, music, audio and video materials, graphic images, virtual games and software, the placement of advertisements on the internet, as well as other similar services provided via the internet.

It was additionally reported that four more international digital service providers have been registered for tax purposes through the electronic registration portal of the State Tax Service under the Ministry of Economy.

The registered companies are U.S.-based Anthropic, PBC and Aghanim Inc., Switzerland-based eBay Marketplaces GmbH, and Netherlands-based Netflix International B.V. Their registration for VAT purposes will take effect on September 1, 2026.