Eco-friendly cars in Azerbaijan will become 20% cheaper

Azerbaijan plans to exempt eco-friendly cars with hybrid engines and electric vehicles from value added tax. After making such a decision, such cars will become 20% cheaper. However, one of the main problems is the almost complete absence of special stations for charging batteries of electric vehicles.

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In the coming days, the Milli Mejlis (Azerbaijani parliament) will consider the proposed amendments to the country’s Tax Code. One of these changes concerns hybrid vehicles and electric vehicles. So, according to the proposals, the import into the country and the sale of hybrid cars and electric vehicles with an engine capacity of less than 2,500 cubic centimeters and produced no more than 3 years ago will be exempt from value added tax (VAT) from January 1, 2022.

According to experts, if the parliament adopts this change, these cars will fall in price by about 20%.

Expert on road transport Eldaniz Jafarov noted that such a step in Azerbaijan is important both from the point of view of economy and ecology.

“For a year already, the government of the country has adopted an action plan to stimulate the import of environmentally friendly cars into the country. The current year was the last for the period for which this program was designed. The government has announced that fundamental steps will be taken in 2021 to address these challenges.

As far as I know, working groups are already being created in some government structures that will deal with these issues. It is clear that concrete steps will be taken to stimulate the import of environmentally friendly cars to Azerbaijan. The proposed changes to the tax and customs codes show that the government is determined. It will also create conditions for entrepreneurs engaged in the supply of environmentally friendly cars to the country”.

According to the specialist, in parallel with these steps, the banking sector should also offer the population the most favorable loan terms:

“If these measures are one-sided, they will ultimately turn out to be ineffective. If we lower the bar on taxes on imports and sales, but citizens cannot afford to buy such cars, then what is the point in such steps? I believe that these areas should work in parallel and synchronously.

First of all, it is necessary to simplify the process of lending to environmentally friendly cars. Banks must be sure to offer their customers preferential loans. For example, the first installment for the purchase of such a car cannot exceed 20% of its value. And the rest can be arranged at 9-10% per annum. This will create a real incentive for citizens to buy such cars”.

Currently, hybrid vehicles occupy only 10% of the total volume of the vehicle market in Azerbaijan.

Experts note that the advantage of hybrid cars over electric vehicles is in the mechanism for charging their batteries. For example, hybrid cars charge their batteries while driving with a conventional internal combustion engine. In other words, these machines do not require dedicated charging stations.

Electric cars need charging stations which Azerbaijan currently lacks.