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Draft changes to the Tax Code

The draft law on changes to the Tax Code of the Republic of Azerbaijan has been submitted to the 2nd reading of the Milli Majlis (Parliament). Draft changes to the Tax Code related to VAT and excise taxes.

The proposed changes to the VAT stipulate an increase in the exemption period for some transactions.  According to the draft changes the below exemptions to be extended:

  • The exemption period for the import and sale of grain, production, and sale of grain flour and bread for a period of 4 years from January 1, 2017, is extended up to 7 years;
  • The exemption period for the provision of non-performing (toxic) assets by the insolvent banks, as part of the resolution and rehabilitation measures in (as well as the provision of bank assets as part of a bankruptcy procedure) for a period of 3 years (effective from 1 January 2017) is extended to 5 years;
  • The exemption period from March 1, 2019, for the production and sale of bran is extended up to 5 years;
  • The exemption period provided for a year from 1 January 2020 for the provision of works and services by public legal entities created on behalf of the state under the conditions provided in the Tax Code is extended up to 2 years.

In addition, new exemptions for unlimited and limited periods to be provided for some transactions. As such:

  • the import of jewelry equipment and devices provided for in the Tax Code - from 1 January 2021 for a period of 3 years; and
  • sale of gold and silver in the form of ingots, coins, or pellets is exempt from VAT for an unlimited period.

The proposed changes to excise taxes provide for a temporary exemption from tax on some imported goods, as well as an increase in excise rates on some goods or the establishment of new objects of taxation. As such:

  • Imported platinum, gold and jewelry, and other products made from them processed, sorted, framed and fixed diamonds are exempt from excise duty for a period of 3 years from 1 January 2021
  • From 2021, the following goods will be subject to an excise tax at the appropriate rates:
  • smoking tobacco other than for industrial purposes, "homogenized" or "reconstituted" tobacco, chewed or snuffed tobacco, as well as tobacco for hookah - 30.0 manats per kilogram;
  • Tobacco and tobacco products consumed as a result of heating (vapor) - 12.9 manats per 1000 units.
  • Excise rates on the following goods are increased:
  • cigarillos (thin cigars) - from 31 to 43 manats per 1000 pieces;
  • cigarettes made of tobacco and its substitutes - from 31 to 35 manats per 1000 units;
  • liquid for e-cigarettes - from 20 to 100 manats per liter.

 

You can contact us with any of the above changes or any other questions:

            Mushfig Aliyev:         +994 50 229 69 22

            Fariz Yadigarov:         +994 70 250 55 60

22 Feb, 2021