Tax Free rules approved

/By Azernews/

By Amina Nazarli

Azerbaijani President Ilham Aliyev signed a decree on July 12 approving the Rules for VAT refund (Tax Free) for foreigners and persons without citizenship and the associated measures.

The application of Tax Free system is believed to positively affect tourist flow into the country and ensure competitiveness of the tourism sector.

Thus, under the presidential order the Taxes Ministry is commissioned to determine within 15 days in coordination with the Finance Ministry the VAT refund authorized banks and approve the form of contracts and stickers for labeling the TAX FREE system-covered goods.

The Ministry is also tasked to create single e- information database TAX FREE and secure its integration with the systems of other state bodies and authorized banks. Within two months the TAX FREE system should be integrated with automated system ‘entry/departure and registration’.

The Finance Ministry should determine within 15 days the minimum advance amount for its transferring to authorized banks’ accounts and transfer it.

Foreign citizens can benefit from tax free system, if the cost of purchased goods per one e-tax invoice is not less than 300 Azerbaijani manats ($192), including VAT. The goods should be taken out of Azerbaijan’s territory within 90 days from the date of purchase, according to the rules earlier approved by the Parliament.

Chairman of the State Customs Committee Aydin Aliyev said that Tax Free system will be used at all checkpoints of Azerbaijan.

“We are fully ready to apply this system. The tax free system in Azerbaijan will first be applied at international airports,” he told reporters on July 13.  

He said that foreigners doing shopping in Azerbaijan will be refunded VAT in convertible currency while leaving the country.

Standard VAT rate in Azerbaijan is 18 percent. Regardless of the transfer method, foreign citizens will be refunded the amount of VAT paid for the purchased goods after withholding 20 percent service fee.

This system will make shopping in the “Land of Fire” more affordable and attractive for foreigners.

To benefit the tax-free service it is necessary to buy tax-free goods at specific Tax Free shops. Then, passport is to be produced for filling an electronic tax invoice. The signed and stamped tax invoice will include the amount of the paid VAT and its last return date.

When leaving the country, a visitor should present to airport customs his electronic tax invoice together with passport. Finally, the custom’s tax invoice should be presented to an authorized bank. The refund can be made both in cash and non-cash (after 10 days) way.

Tax-free does not apply to the following products: excisable goods; foodstuffs; medicines and medical equipment; items which are of particular value to the preservation of cultural heritage and is considered the country's cultural and historical value; products, the sale of which is exempt from VAT in the country; goods which requires a license for export; frameless, raw or ungraded precious stones; precious metals in the form of ingots; goods exported from Azerbaijan without accompaniment; vehicles and spare parts; goods exported by mail service or Internet.

The system is not applied for Azerbaijani citizens, persons under 14 years, stateless persons and foreigners who have obtained a permit for temporary or permanent residence in Azerbaijan or get a work permit for paid employment as well as persons who are crew members of Air Transport, performing direct duties.