One of the most popular initiatives in recent years has been the refund of part of the paid Value Added Tax (VAT) on purchased goods and services.
It’s no coincidence that, according to the latest data, nearly 1.9 million users have registered on the www.edvgerial.az portal for VAT refunds. As reported by the State Tax Service under the Ministry of Economy, from the launch of the “VAT Refund” project up to September 2022, consumers registered on the portal submitted 732 ,105,401 receipts and received over AZN 305.5 million in VAT refunds. In just January–August this year, for 303 ,851,384 receipts, more than AZN 133.6 million was refunded.
So, which goods and services are eligible for VAT refunds?
Although the State Tax Service has provided extensive information, some consumers still have questions.
APA conducted research to clarify exactly which services and goods qualify for VAT refunds.
Eligibility requirements:
-
The purchaser or service user must be a natural person, while the seller or service provider must be a VAT payer.
-
The purchased goods or services must be subject to VAT.
-
VAT refunds are only available at outlets using next-generation cash registers.
Note: Until 2024, flour, bread, and animal/poultry meat were VAT-exempt. As of this year, books are also exempt from VAT.
Moreover, for three years starting this year, VAT on agricultural products sold at retail is calculated only on the markup, not the full price—so VAT on these items is lower than on other goods.
However, not all VAT‑applicable goods are eligible for refunds. Article 165.5 of the Tax Code excludes petroleum and gas products, automobiles, alcoholic beverages, and tobacco products.
Since January 1, 2022, under the amended Tax Code, a portion of VAT paid for medical services by natural person consumers is also refundable.
Currently, refunded amounts are:
-
15% of VAT paid by non-cash methods,
-
10% of VAT paid by cash.
Starting 2023, it’s expected that 20% of non-cash VAT and 10% of cash VAT will be refunded.
One more exception: starting this year, for residential or non-residential properties purchased non-cash from individuals involved in construction, 30% of the VAT paid is refundable. Under Article 165.6 of the Tax Code, this applies proportionally to up to 500 m² of residential and 500 m² of non-residential space within the same building when purchased by a natural person.