Starting from 2026, the tax control system will be built primarily on risk-based and preventive mechanisms. The goal is to identify tax violations in advance, rather than after audits are conducted.

Key Changes in Tax Control

• The concept of electronic audit has been abolished.
• A financial penalty of AZN 200 is imposed for failure to record transactions in accounting records on time.
• All correspondence with tax authorities is conducted via the electronic tax cabinet.

Horizontal Monitoring

Horizontal monitoring is a control mechanism based on continuous information exchange between the taxpayer and the tax authority.

Eligibility requirements:

• status of a medium or large-sized business entity;
• automated accounting and tax reporting systems;
• an established internal control system.

Taxpayers classified as high-risk and entities involved in criminal proceedings are not eligible for this mechanism.

Sanctions

If a tax violation is identified during horizontal monitoring, a financial penalty equal to 25% of the evaded tax amount is applied.

If the risks were disclosed in advance, penalties are not applied.

Electronic Invoices

• Advance payment invoices must be issued before receiving the advance.
• For international transportation services, invoices must be issued before the service begins.
• For recurring services, mandatory monthly invoicing is required.

VAT and POS Rules

• A 0.5 coefficient is applied to non-cash turnover conducted via POS terminals.
• In the public catering and healthcare sectors, 50% of non-cash turnover is excluded from the taxable base.
• Certain VAT exemptions have been extended, while others have been restricted.

Excise Duties and Other High-Risk Areas

• Introduction of excise duty on mobile phones.
• 10% tax imposed on rental income.
• New requirements for cashless settlements.

Practical Conclusion

The new tax control mechanisms require businesses to ensure transparency, internal control, and proactive risk management. For companies that successfully adapt, the risk of tax audits is significantly reduced.

To identify tax risks in advance, it is recommended to order a professional tax audit.