Azerbaijan VAT Rules for Foreign E-Commerce Platforms

March 11, 2026

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In late February, the government of Azerbaijan enacted comprehensive reforms impacting foreign e-commerce, cultural imports, and strategic investments. Among other things, the new legislation mandated electronic VAT registration for foreign e-commerce platforms that serve local customers. More specifically, the new legislation specifies a registration threshold, which services remain in and out of the scope of e-commerce rules, and how B2B and B2C transactions are treated.

Impact on Foreign Digital Service Providers

Before the new rules were enacted, foreign suppliers could provide cross-border digital services without mandatory registration, with compliance largely voluntary. However, under the new rules, these providers must register for VAT once their annual gross sales to Azerbaijani customers exceed the AZN equivalent of USD 10,000, currently AZN 17,000. The registration must be completed within 30 days of surpassing this threshold. The obligation to register for VAT will come into effect on August 23, 2026.

As a result of a change in rules, foreign VAT-registered providers are responsible for paying VAT directly to the state budget for B2C supplies, relieving local customers of the reverse-charge burden. In other words, foreign providers are not liable for collecting and remitting VAT on B2B transactions.

Notably, certain services, including consulting, legal, financial, accounting, design, engineering, real-time online education, and event ticket sales, remain outside the scope of e-commerce under these rules. Services that fall under the scope include downloading electronic books, music, audio-visual materials, graphics, virtual games, and software, and placing advertisements.

Conclusion

Given the new rules and regulations, foreign providers should assess whether their offerings fall under the definition of e-commerce, and determine their customers' VAT registration status, that is, whether their customers are individuals or businesses. Additionally, foreign businesses should track revenues from Azerbaijani sources to ensure timely compliance.

Furthermore, since additional implementing regulations are expected in the following months, foreign suppliers should monitor developments, as new official documentation should clarify reporting, administration, and practical compliance requirements.

Source: KPMG

What new VAT requirement applies to foreign e-commerce platforms in Azerbaijan?

Under the new legislation, foreign e-commerce platforms that sell digital services to customers in Azerbaijan must register for VAT once their annual gross sales exceed the AZN equivalent of USD 10,000, which is currently about AZN 17,000. After surpassing the threshold, providers must complete VAT registration within 30 days. The new obligation will officially take effect on August 23, 2026.

How were foreign digital service providers regulated before the new rules?

Prior to the reform, foreign providers could supply digital services to Azerbaijani customers without mandatory VAT registration. Compliance was largely voluntary, which meant that many cross-border digital services were delivered without formal tax registration requirements.

How are B2C digital services taxed under the new Azerbaijani VAT rules?

For business-to-consumer transactions, foreign providers that register for VAT must collect and pay the VAT directly to the Azerbaijani state budget. This change shifts the responsibility away from local customers, who previously had to account for VAT through a reverse-charge mechanism.

Do the new rules require foreign providers to charge VAT on B2B transactions?

No, the new rules do not require foreign VAT-registered providers to collect and remit VAT for business-to-business transactions. In these cases, the VAT obligation does not fall on the foreign supplier, distinguishing B2B supplies from B2C digital services under the new framework.

Which services are excluded from Azerbaijan’s e-commerce VAT rules?

Several services remain outside the scope of the e-commerce rules, including consulting, legal, financial, accounting, design, engineering services, real-time online education, and event ticket sales. These activities are not treated as e-commerce for VAT purposes under the new legislation.

What types of digital services fall within the scope of the new VAT framework?

The rules apply to various digital services typically delivered online, such as downloading electronic books, music, audio-visual content, graphics, virtual games, and software. They also cover online advertising services provided to Azerbaijani customers.

Digital Service Providers

VAT

E-Commerce

Digital