A new tax incentive will be introduced for apartment sales in Azerbaijan, APA reports.
This is reflected in a proposed amendment to the Tax Code.
According to the draft, it is proposed that, for a period of three years, value-added tax (VAT) be calculated on the trade margin when VAT payers engaged in building construction or other participants in the housing market resell apartments purchased from individuals through non-cash payments.
It was noted that one of the main issues raised in appeals submitted by taxpayers to the tax authorities concerned the high VAT burden on transactions involving the resale of apartments purchased from individuals by VAT payers engaged in building construction or other participants in the housing market.
Currently, the sale of such apartments is formalized not as commission-based trade but as the repurchase and subsequent resale of apartments. As a result, VAT on these transactions is calculated on the full sale price, meaning that the tax is effectively imposed on the apartment's total value rather than only on the trade margin earned by the seller.
This approach creates a heavier tax burden compared to commission-based trade, which has the same economic nature, contributing to higher prices in the second-hand housing market, reducing the competitiveness of official sales channels, and encouraging informal transactions.
Taking these factors into account, it is considered appropriate to calculate VAT only on the trade margin when apartments purchased from individuals are resold. In addition to being consistent with the economic nature of taxation, this approach will contribute to the development of the housing market, increased transparency, and higher tax revenues in the medium and long term.
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