Customs revenues to increase in Azerbaijan [UPDATE]

By Azernews

By Kamila Aliyeva

Customs revenues's share in Azerbaijan's state budget for 2018 has been increased as excise tax rates and customs duties for certain goods and products might be changed.

The forecast for customs revenues of Azerbaijan’s state budget for next year has been increased by 180 million manats [$105,9 million] up to 2.43 billion manats [$1.43 billion], Aydin Aliyev, chairman of the State Customs Committee, told reporters on October 25.

“We are optimistic about this forecast. If we take into account that this year we have already transferred 2.13 billion manats [$1.25 billion] to the state budget, I think we will be able to meet the revenue forecast for the next year,” he said.

The 2017 forecast for Azerbaijani state budget’s customs revenues is 2.25 billion manats [$1.32 billion].

The Committee transferred more than 243 million manats  [$143 million] to the budget in September 2017. Revenues from customs duties amounted to nearly 56.2 million manats [$33 million], revenues from value added tax (VAT) hit 176.3 million manats [$103.8 million], revenues from excise duty amounted to 7.8 million manats [$4.5 million], and revenues from highway-user tax were 3.4 million manats [$2 million] in September.

Aliyev went on to say that the Customs Committee has submitted proposals to the Cabinet of Ministers regarding transition to a three-level customs tariff system, which envisages changing customs duties on raw materials and goods imported to the country.

Proposals for the transition from a multi-level to a three-level differentiated tariff system provide for the preservation of customs duty rates at 0, 5 and 15 percent in Azerbaijan.

Today, the customs rates of 0, 0.5, 1, 3, 5, 10 and 15 percent are applied in the country. It is proposed to exempt the majority of the goods (raw materials and equipment) from customs duties.

“It is proposed to raise the custom duties for the import of finished products to Azerbaijan to 15 percent. On the one hand, this will stimulate and support domestic production, and on the other hand, it will prevent the outflow of foreign currency,” the chairman noted.

Speaking of an increase of excise tax rates on import of tobacco and alcohol products in Azerbaijan, Aliyev said that it will not lead to a strong rise in prices.

Earlier, the government discussed changes in excise tax rates for tobacco and alcohol products, relying on the fact that excise tax rate in Azerbaijan is quite low.

“When raising excise tax rates, we carefully analyze the situation. Tobacco and alcohol products are not essential goods, and in addition, the increase in excise tax rates will not be too sharp,” he said.

Changing excise tax rates for imported products is considered within the draft amendments to the Tax Code of Azerbaijan for 2018. It was expected that the change in excise tax rates will lead to the increase in prices for cigarettes with a share of 1.92 percent in country’s total import.

At the same time, such a decision may result in further development of local production of tobacco and alcohol. At present, the excise tax rate on malt beer imported to Azerbaijan is 1 manat per liter; wines from fresh grapes, including fortified wines; grape must – 2 manats per liter; sparkling wines - 2.5 manats per liter; whiskey, vodka, liqueur, rum and other alcoholic beverages - 6 manats per liter.

In January-August 2017, tobacco and tobacco products worth $101.914 million were imported into the country. The excise tax rate on imported cigarettes, cigarillos is 4 manats per 1,000 units; cigars - 10 manats per 1,000 units.

Currently, over 10 billion cigarettes are consumed in the country. Of these, only 1.6 billion are produced in Azerbaijan, thus 9 billion cigarettes are being imported.

The price of a pack of cigarettes in Azerbaijan in average amounted at $1.2, while it is $3 in Turkey, $3.5 in Russia, and $4 in Poland.