16:51 - 15.01.2024

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January 15, Fineko/abc.az. Since 2024, Azerbaijan has launched a mechanism for reimbursement of VAT on factoring operations, ABC.AZ reports with reference to the State Tax Service.

The active use of lending to business entities through a factoring tool allows reducing the financial burden on businesses and increasing the level of liquidity.

In practice, the cost of goods sold by manufacturers and business entities engaged in wholesale trade is usually reimbursed within 2-3 months, and in some cases later. This leads to shortage of funds in the activities of manufacturers and wholesalers. In such a situation, banks, using the factoring tool, provide financial liquidity to business entities.

Since the factoring tool is a right arising from civil legislation and provided to business entities, it has become necessary to clearly consolidate this right in tax legislation. With the latest amendments to the Tax Code, the legislation introduced the possibility of compensating VAT amounts paid when using a factoring instrument to increase the attractiveness of financial instruments and ensure business stability.

Factoring is a complex of financial services for manufacturers and suppliers conducting trading activities on deferred payment terms.