Implementation of VAT compensation mechanism in factoring operations

• Factoring operations are being implemented in Azerbaijan.
• Expanding access to financial resources for small and medium-sized businesses is a priority in the country’s development strategy.
• Factoring is a useful tool for quickly financing the operations of entrepreneurial entities.
• It helps reduce the financial burden and increase liquidity in businesses.
• The delayed payment of goods sold by producers and wholesalers creates cash flow problems.
• Banks provide financial liquidity to businesses through factoring.
• However, there are limitations in the VAT reimbursement process for factoring operations.
• It is necessary to clarify the legal framework for factoring in tax legislation.
• Recent changes have been made to ensure the effectiveness of financial instruments and the smooth operation of businesses.
• The possibility of reimbursing VAT amounts paid during factoring operations has been included in the legislation.

Source: taxes.gov.az

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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