Ministry of Taxes of the Republic of Azerbaijan 

EXCISE TAXES 

Taxpayers

All legal entities or physical persons engaged in the production of excise goods in the Republic of Azerbaijan, or importation of such goods into the Republic of Azerbaijan are payers of excise tax.
Residents of the Azerbaijan Republic involved in the production of excise goods directly or via contractor outside of the territory of Azerbaijan, who are not registered as taxpayers at the manufacturing location of such goods are payers of excise tax.
Manufacturers (contractors) of goods which are produced from raw materials delivered by customer are excise taxpayers. In such case the manufacturer (contractor) holds the right to request the compensation for the amount of excise from the customer.

Taxable base

For the excise goods produced in the territory of the Republic of Azerbaijan the taxable base is their release outside the boundaries of their production facilities and for imported goods it is their passage through customs service control.
Production facilities are warehouses, secondary storage areas and other similar premises.

Amount of taxable operation

With respect to petroleum materials and tobacco production produced in the territory of the Republic of Azerbaijan, the amount of the taxable operation is determined based on the compensation (including barter) received, or receivable, by the taxpayer from a customer or any other person the amount of which is not less than the wholesale market price of the relevant goods (excluding the VAT and excise amounts).
For other excise goods produced in the territory of the Republic of Azerbaijan the taxable operation is the quantity of the produced goods.
With respect to the imported light vehicles, leisure and sports yachts and other floating transports, the amount of the taxable operation is - the volume of their engine.
With respect to import goods, the amount of the taxable operation is the customs value of the goods
not less than the wholesale market price (excluding the excise and VAT).

Date of the taxable operation

With respect to goods produced in the territory of the Republic of Azerbaijan, the time of the taxable operation is the time when the goods are released outside the boundaries of their production facilities.
With respect to the import of goods, the time of the taxable operation is the time when excise goods pass through the customs service control.

Exemptions from excise

The followings are exempted from excise:
- import of three litres of alcoholic beverage and three blocks of cigarettes by a physical person for personal consumption and, with respect to persons entering the territory of the Republic of Azerbaijan by automobiles, one tank of fuel stipulated by the technical passport of the vehicle;                 
- goods transported through the territory of the Republic of Azerbaijan by transit;
- temporary import of goods into the Republic of Azerbaijan, except for goods intended for re- export;
- goods that are intended for re-export and secured under a pledge.

Credit of excise for production needs

A person purchasing excise goods (raw materials) and using these goods for the production of other excise goods is entitled to a credit in the amount of the excise paid on the purchase of the raw materials or to a refund of the excise amount. A credit or refund of excise is allowed only when the producer of the raw materials submits a supporting invoice and while importing raw materials, when submits the relevant documents. The amount is returned to taxpayer within 45 days after the filing a relevant document to tax authorities.

Tax rates and the list of excise goods

Following goods are subject to excise tax:

• alcohol, beer and all types of alcoholic beverages;
• tobacco products;
• oil products;
• light vehicles (excluding the special appointed motor transports with special sign and equipment);                                                                                                                       
• leisure and sports yachts and other floating transports.

The following tax rates applied to imported light vehicles proportionate to the volume of its engine:

The amount of excise tax for imported leisure and sports yachts and other floating transports calculated as 1 manat in respect to per cubic centimetres of volume of its engine.

The Cabinet of Ministers determines the rates of excise tax for imported excise goods as well as for produced automobiles and yachts for sports and rest and other floating means for these purposes.
Following excise rates are imposed on food alcohol, beer, alcoholic beverages and tobacco products produced in the territory of the Azerbaijan Republic:

• food alcohol (including ethyl alcohol not-denatured with alcohol content of not less than 80 percent; ethyl alcohol non-denatured with alcohol content of less than 80 percent) – 0,80 manats per litre;
• vodka, strong drinks and strong beverage materials, liqueurs and liqueur products – 0,50 manats per litre;
• cognac and cognac products – 0,20 manats per litre;
• sparkling wines – 0,20 manats per litre;
• wine and vineyard materials – 0,10 manats per litre;
• beer (with exception of non-alcoholic beer) and other beverages containing beer – 0,08 manats per litre;
• all types of tobacco products – 12,5 per cent

Excise rates imposed on a ton of petroleum materials produced in the Azerbaijan Republic are as follows:

• motor gasoline AI-95 - 101%
• motor gasoline AI-92 - 92%
• motor gasoline AI-80 - 93%
• diesel – 24%
• fuel for domestic stoves - 28%
• kerosene (Co 20) - 32%
• reactive motor fuel – 14%
• naphtha (primary refine gasoline) - 19%
• liquid gas (butane-butylenes and propane-propylene fraction)-30%
• casing head gasoline – 37%
• engine fuel DT36 – 52%
• engine fuel DT20 – 31%
• stove black oil – 11%
• engine oils M-12VB, M-14V2 52%
• industrial oils I-12A, I-20V, I-40A, I-8B1, I-30V - 72%
• turbine oils T-22, T-30,T-46 - 39%
• transformer oil T-1500 - 54%
• other types of oil AK 15, S-11, XM-6, K-12, K-19, VM-4 - 56%
• coke K-8, K-0, K-0,25 - 19%
• coke general - 18%
• bitumen BN 60/90, BNB 60/70 - 33%
• bitumen MQO - 34%
• bitumen BNV, mineral rubber A-30, BNB 70/30, BNB 85/25 - 31%
• casing head gasoline - 1,7%

Export of excise goods is taxed at a zero rate*.
* - Taxation of export of excise goods at a zero rate is considered taxable operation and the amount of excise tax paid by persons carrying out such operations at purchase of excise goods for production of other excise goods is credited in accordance with the provisions of Tax Code.

Provision of tax invoices

Taxpayers supplying excisable goods shall write out and issue tax invoices filled in accordance with the existing instructions to the receivers of the goods.
When goods are supplied on a retail basis receipts may be used instead of tax invoices

Accounting period and payment of excise tax and filling of returns

With respect to the production of excise goods, excise tax on taxable operations carried out during each accounting month must be paid no later than 20th of the month following the accounting period.
If a taxpayer has fallen into arrears on excise tax for any period, the excise tax must, starting from the moment of initiation of the arrears until the time of its settlement, be paid when carrying out the taxable transaction. In addition, the taxpayer does not have the right to remove the goods out of their production facilities before said excise tax is paid on such goods.
When excise goods are imported excise is collected under the procedure established for the collection of customs duties.
Excise is paid to the state budget.
Taxpayer is required to file a tax return indicating taxable operations during each accounting period
Not later that 20th of the next month.
When the taxpayer is abolished (his activities have stopped) the tax return covering the period from the first day of the accounting month until the day when the activities have stopped should be submitted within 30 days not later than 20th of the next month.
Excise taxpayer must submit an application for a credit along with the tax return.

Refund of excise during re-export

With respect to imported goods intended for further re-export, excise must be paid upon the import of the goods and is subsequently refunded within 15 days in the amount corresponding to the actual quantity of the re-export by the customs authorities collecting that excise. This regime does not apply to the import goods that are exempted from excise – goods intended for re-export and secured under a pledge.

The tax control over excise goods

Control over the marking of excisable goods is implemented by tax authorities through installation of control posts, measurement devices and seals in appropriate premises of the taxpayer, as well as other measures.

In the event of changes to indicators of instrumentation, damage to seals on process equipment within the period between application of the seal and its removal, found deviations in marking of production by excise marks, as well as delivery of final products outside of the production site financial sanction in the amount of 5000 manats applied to taxpayer.