2026 Tax Code: Innovations in Simplified Tax - FChain

2026 Tax Code

Innovations in Simplified Tax

Main change:

Starting from 2026, several changes are being implemented in the simplified tax system. These changes primarily concern the volume of taxable transactions, tax rates, and new regulations for specific sectors.

 Who it applies to:

• Small and medium-sized enterprises (SMEs).
• Entities engaged in retail trade.
• Entities engaged in public catering activities.
• Entities providing passenger transportation by motor vehicle.

 New rule for POS-terminals:

According to Article 218.1-1 added to the Tax Code:

• A special rule applies to persons not registered for VAT whose taxable transactions over 12 consecutive months amount to 200,000 AZN or less.
• This also applies to public catering entities with a turnover exceeding 200,000 AZN.
• Non-cash payments made via POS-terminals will be calculated with a 0.5 coefficient when determining the total volume of taxable transactions.

 New Tax Rates in public catering:

According to Article 218.1.2 of the Tax Code

• For services provided to the population – 6% (based on non-cash payments via POS-terminal).
• For other simplified tax objects – 8%.

These changes will be applied for a period of 3 years, starting from January 1, 2026.

 Changes to “distinction marks” and passenger transportation: According to amendments to Article 221.4.7 of the Tax Code:

• Persons providing passenger transportation by motor vehicle must register electronically to obtain a “distinction mark”.
• Registration is conducted through the agency determined by the relevant executive authority.
• The distinction mark must be obtained for each motor vehicle by the end of the calendar month.
• A special distinction mark is also required for vehicles used for entrepreneurial activities.

 Who these changes affect:

• Retail trade and service enterprises operating with non-cash payments.
• Physical and legal entities providing passenger transportation by motor vehicle.
• Other taxpayers utilizing the simplified tax regime.

These amendments further improve the simplified tax system, specifically serving to reduce the tax burden on small and medium enterprises and easing the financial load in certain sectors. Those engaged in passenger transportation will be able to continue their activities by obtaining the required “distinction mark.”

 

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