Article 174.5 of the Tax Code – 50% VAT Relief
Under Article 174.5 of the Tax Code, 50% of the turnover generated from cashless payments made via POS terminals for services provided to the public during the reporting period—by entities engaged in public catering, medical institutions, and individuals engaged in private medical practice—is deducted from their total taxable turnover for a specified period.
This relief applies for a period of 3 years starting from January 1, 2024, for medical institutions and taxpayers engaged in private medical practice, and for a period of 3 years starting from January 1, 2026, for taxpayers engaged in public catering.
The key requirement here is that cashless payments must be processed via a POS terminal integrated with the cash register within a unified operating system. Customer pays via POS terminal → 50% of the POS turnover is deducted from the VAT-taxable turnover → VAT is not calculated on that 50% portion. In other words, half of the turnover generated by the entrepreneur via POS terminals is treated as a deduction when calculating VAT.
Example
Suppose a restaurant has a total monthly turnover of 50,000 manats (excluding VAT).
Of this amount:
10,000 manats represents cash payments;
40,000 manats represents cashless payments made via POS terminals.
50 percent of the POS turnover:
40,000 × 50% = 20,000 manats
Consequently, 20,000 manats is deducted from the total turnover subject to VAT.
If we calculate this simply, without considering other factors:
Total turnover:
50,000 manats
Deduction:
20,000 manats
Turnover subject to VAT:
50,000 − 20,000 = 30,000 manats
VAT:
30,000 × 18% = 5,400 manats
Thus, the 50 percent deduction applied to POS payments results in a reduction of the entrepreneur's VAT burden. The example released by the State Tax Service also indicates that, where 40,000 manats of a 50,000-manat monthly catering turnover is generated via POS terminals, a 20,000-manat portion of that turnover is treated as a concession.
