Azerbaijan introduces mandatory VAT Registration for foreign digital service providers

26 February 2026

Azerbaijan has approved significant reforms to its VAT rules for non‑resident digital service providers, moving from a withholding‑based model to a mandatory VAT registration system.

Under the new framework, intended to take effect from 1 January 2026 but only recently passed in parliament, foreign suppliers exceeding USD $10,000 (approx. £7,500) in local annual sales to both consumers and businesses must register for VAT, charge this to their customers, and remit this to the Azerbaijani tax authorities.

Azerbaijan first introduced VAT obligations for foreign digital service providers in 2017, but these were based on VAT withholding by payment providers such as banks and card companies. This mechanism will be replaced entirely by mandatory VAT registration.