Will market vendors in Azerbaijan pay taxes?
Entrepreneurs trading in markets in Azerbaijan will be required to register for tax purposes. Failure to do so will result in a financial penalty of 2,000 manats (about $1,200) for each unregistered entrepreneur, which will be imposed on the owners or managers of the markets. This provision is included in the proposed amendments to the Tax Code, which will be presented for discussion in the Milli Majlis (Azerbaijani parliament).
The new rules will apply to entrepreneurs operating in shopping centers starting in 2025. It is expected that the new regulation will not apply to those involved in the sale of agricultural products.
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“Taxes will increase the cost of goods”
An entrepreneur selling building materials at the market known as “Eighth Bazaar” stated in an interview with the Azerbaijani edition of Radio Free Europe that the new regulations will lead to higher prices:
“If the seller pays taxes, they won’t sell at a loss—taxes will be added to the price of goods. They say the new rules will only apply to new sellers. I don’t believe that. It’s impossible that one person pays taxes while others don’t.”
According to the interviewee, if a person pays taxes, they should feel some benefit from it: “What benefit do I get from this? What privileges will I have because of these taxes? No one talks about that. People are already ordering goods from Turkey, China—because it’s cheaper. And after these new rules are implemented, our sales will die.”
“Six months for transition”
According to the State Tax Service under the Ministry of Economy of Azerbaijan, the goal of the amendments to the Tax Code is to establish effective tax control over markets:
“If the law is adopted, it will come into effect nine months later. However, even after that, the owners and managers of markets will be given six months to sign official contracts with entrepreneurs, after which the entrepreneurs will be registered for tax purposes.”
“Does Azerbaijan’s budget need this?”
Economist and chairman of the opposition party “Republican Alternative,” Natig Jafarli, highlights an important point:
“If it’s stated that entrepreneurs working at markets must register for taxes, will the new rule also apply to those who trade a little on the side, on the roadside? If so, then the purchase of POS terminals, registration with the tax authorities—all of these are unnecessary expenses. And if there are extra costs, this will inevitably affect the price of goods.”
Jafarli believes that the new measure will not bring significant revenue to the budget:
“If taxes are set at 2-3 percent, it could only amount to 5-10 million over the course of a year. Does Azerbaijan’s budget really need this money? It’s hard to understand the logic behind these changes. I’m not saying people shouldn’t pay taxes, but it’s pointless to do this in a centralized manner.”
According to the economist, the only reasonable solution is for entrepreneurs to purchase licenses to sell in municipalities:
“Entrepreneurs buy this license, and it is paid as a municipal tax. In this way, municipalities become one of the contributors to entrepreneurs engaged in mobile trade or market commerce. In other words, a person lives and works within this municipality, and their taxes are spent on them.”
