Azerbaijan is set to introduce a new package of tax incentives for food-service businesses registered as VAT payers, offering substantial relief over a three-year period beginning January 1, 2026.
According to APA, the measures are included in amendments to the Tax Code discussed today in the Milli Majlis.
Under the new rules, restaurants, cafés, and other food-service enterprises will be allowed to exclude 50 percent of their non-cash turnover from the VAT-taxable base when calculating the amount owed to the state budget. The incentive applies exclusively to payments processed through POS terminals integrated into the national cash-register system, ensuring transparency and traceability.
The three-year exemption aims to accelerate the sector’s shift toward cashless payments and strengthen oversight of financial flows. Lawmakers argue that increasing digital transactions will help curb the shadow economy and support modernization across the hospitality industry.
Additionally, any income generated as a result of the reduced VAT obligation will also be exempt from taxation, offering businesses a direct financial gain.
After a round of debate, the draft legislation was put to a vote and approved in its first reading.
