Market Entrepreneurs to Be Registered for Taxation. Will Prices Rise?

Entrepreneurs operating in markets across Azerbaijan will be required to register for taxation. Failure to do so will result in a financial penalty of 2,000 manat for each unregistered entrepreneur, imposed on market owners or administrators. This requirement is included in proposed amendments to the Tax Code, set to be discussed in Parliament.

The draft amendments will apply to entrepreneurs operating in markets, including shopping centers, starting in 2025. However, those engaged in the sale of agricultural products are expected to be exempt.

A construction materials vendor in a market in Baku, commonly known as "8th Kilometer," told Azadlıq Radio that the new rules are likely to increase prices: "If a seller pays taxes, they won’t sell goods at a loss—the tax will be added to the price. They claim this rule will only apply to new sellers, but I don’t believe it. It’s unlikely that one person pays while ten others don’t."

The vendor also noted that taxation should provide benefits: "What advantage will we get from paying these taxes? They don’t say. People are already ordering goods from Turkey and China because they’re cheaper. After this new rule, our market will completely collapse."

The State Tax Service under the Ministry of Economy told Turan that the proposed changes will not apply to agricultural markets. “However, the project will cover other markets, including shopping centers. Entrepreneurs operating there will need to register their business entities for taxation.”

The agency emphasized that market owners and administrators must facilitate the registration process by formalizing rental agreements with entrepreneurs before they commence operations: “Entrepreneurs who are not registered for taxation will not be allowed to operate in the markets.”

The agency stated that the goal of the amendments is to ensure effective tax control over markets. “If the law is adopted, it will take effect nine months later, and market owners and administrators will be given six months to sign formal rental agreements with entrepreneurs and ensure they are registered for taxation.”

Economist Natig Jafarli highlighted a key concern in his comments to Radio Azadlıq : "If entrepreneurs in markets are to be registered for taxation, will this apply to those selling goods along the roadside near markets? If so, these individuals will need to acquire POS terminals and register for taxation, which will bring additional costs. These costs will inevitably be added to product prices."

Jafarli expressed skepticism about the financial impact of the new rule on the state budget: "Even if the tax rate is 2-3%, it would only bring in a maximum of 5-10 million manat annually. Does the Azerbaijani budget need this? The logic behind this change is hard to understand. I’m not saying they shouldn’t pay taxes, but centralizing this process doesn’t seem beneficial."

He proposed an alternative solution: issuing sales licenses through municipalities. "Entrepreneurs would acquire these licenses, which would serve as municipal taxes. The municipalities, in turn, would act as intermediaries for vendors operating in their jurisdiction, whether in markets or as mobile sellers. The money collected would be reinvested into local infrastructure, benefiting both the entrepreneurs and the community."