Over the past two years, Azerbaijan has significantly updated its VAT rules for foreign e-commerce platforms to ensure compliance with national VAT legislation and generate additional revenue for the state budget. In addition to implementing new VAT e-commerce rules for non-residents, the government announced plans to expand its VAT rules for digital services in 2026.

Key Changes for Digital Service Providers

Although the government previously announced that starting from August 23, 2026, non-resident digital service providers will be subject to mandatory VAT registration in Azerbaijan, the implementation of these obligations has been slightly postponed. The new effective date is September 1, 2026. Consequently, from September 1, non-resident companies supplying digital services to consumers in Azerbaijan must register for VAT once their sales exceed USD 10,000. 

Registration must be completed within 30 days of crossing the threshold. Once registered, these providers must charge Azerbaijan’s standard 18% VAT rate on their B2C digital service supplies. The postponement offers only a short window, so businesses should use the extra time now to finalize compliance

The new rules operate alongside Azerbaijan's existing mandatory e-invoicing requirements. Non-resident companies doing business in the country must issue e-invoices for relevant goods, services, and works performed. These must be issued using certified digital-signature systems such as Asan İmza and the State Tax Service's electronic systems. As a result, foreign digital service providers must pay close attention not only to VAT registration and charging requirements but also to the accuracy and consistency of their electronic records.

Impact on Businesses

New VAT requirements entering into force on September 1 affect both domestic and foreign businesses. For Azerbaijani businesses purchasing digital services from foreign suppliers, the new rules increase the importance of checking whether a non-resident supplier is properly registered for VAT and applying the correct VAT treatment. Foreign suppliers, on the other hand, especially those operating in multiple jurisdictions, are now facing another country where they must meet VAT rules and requirements.