Azerbaijan revises tax rates

Tax regulations on the import of alcohol and tobacco products to Azerbaijan will change from the beginning of 2018 effectively doubling the income received from it, while duties on oil are expected to decrease threefold.

The Azerbaijani parliament is currently discussing the budget for next year, with many proposals specifically related to the revenues and expenditures of the budget on the agenda.

Alcohol and cigarettes

At the moment, the customs fee for importing one liter of beer to Azerbaijan is one manat. However, from January 2018 it will be two manats. The Minister of Finance, Samir Sharifov, said that raising the excise tax ‘will protect the domestic market and help ensure a healthy lifestyle for the population’.

Oil

About two months ago, the Azerbaijani media and the public were concerned about the price of oil. The price had doubled in a year, exceeding other products which had also risen in price. Officials explained that it was due to a worldwide increase in oil prices.

At the same time, economist Natig Jafarli wrote on his Facebook page that the cost of import tax should be dropped from 15% to 5%, which would allow the price of oil to drop. Such a proposal was submitted to parliament for discussion.

From 7 December this year, the duty on oil imports to Azerbaijan will be 5%, three times less than it currently is.

Expert economist Torgul Mashialli commented on these changes:

“First of all, the increase of excise taxes is aimed at replenishing the revenue part of the state budget and helping local production. It will be very difficult to do this, because in connection with the drop in the incomes of the population, the consumption of alcoholic beverages also decreases. In the instance of oil, the desire is to somehow affect the formation of the price of oil, which has recently increased greatly. The reduction of the import duty will allow for at least a 5% reduction in the price.”