The New Rule on Tax Free- VAT Refund System in Azerbaijan

On 12th July 2016 The President of the Republic of Azerbaijan signed Order on “Rule on refund of VAT paid by foreigners and stateless persons for goods purchased in the territory of the Republic of Azerbaijan and not intended for production or commercial purposes”. Over the past 20 years, there’s been a growing trend for countries to apply Value-Added Tax (hereinafter VAT) refunds for foreign citizens. VAT is an indirect tax which, normally, is included into the price of most goods and services and the final burden of which is borne by the private consumer. According to the Order, foreigners and stateless persons may be granted VAT refund for goods intended for personal or familiar use purchased in Azerbaijan. Nowadays, tax-free shopping services are available more than fifty countries around the world and indeed, it is essential step by Azerbaijan to join this system. However, in order to benefit tax free, foreign citizens should meet some requirements. First of all, if the goods are purchased for commercial and production purposes, VAT tax refund is not granted. Second, the goods should be exported Azerbaijan’s territory within 90 days from the date of purchase. Moreover, the cost of purchased goods per one e-tax invoice should not less than 300 Azerbaijani manats, including VAT. It should be also noted that, excised goods, food stuffs, medicines and medical equipment, goods regarded as national cultural and historical treasures, as well as those items that are considered to be significant in terms of protection of cultural heritage, goods which are exempt from VAT in Azerbaijan, goods requiring a license for export purposes, unframed, raw or ungraded precious stones, precious metals in bars, goods taken out of the territory of Azerbaijan in an unaccompanied luggage, vehicles and spare parts of thereof, goods exported via post or internet service are not eligible for VAT refund.

While purchasing goods foreign national need to inform salesperson about the intention of benefit Tax Free system. In this case tax-free labeled shop gives customer an electronic tax-invoice enabling VAT refund. Upon departure from Azerbaijan, foreign nationals have to present purchased goods and e-tax invoice to the customs checkpoint located at the airport. Customs officer will verify the e-tax invoice. After verification of the e-tax invoice by Customs officer, customers could refund the VAT by cash or non-cash from correspondent bank. Regardless of the transfer method, foreign nationals will receive the refunded amount after deducting a service fee of 20 percent.

The purpose of tax free system is the organization and promotion of the acquisition of goods and products by foreigners in Azerbaijan’s territory, to attract tourists, boost trade turnover.



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