Mirgasim Vahabov: “Import of cheap diesel cars from Europe to Azerbaijan is increasing” - INTERVIEW

Head of General Department of Customs Tariffs Regulation and Payments Vahabov Mirgasim’s interview with Report Information Agency

What changes have there been in the import of private cars and buses to Azerbaijan since the increase of excise tax on imported automobiles this year?

- Majority of cars imported to the country in 2019 are the cars with up to 2,000 cc engine and the highest excise tax on these cars is AZN 600. Therefore, increase of excise tax from AZN 0.20 a cubic centimeter to AZN 0.30 did not cause any problem in their import. Compared to 2018, the number of automobiles imported to the country increased in 2019. This year, 367 buses have been imported compared with 105 buses for 2018. Concessions, which are provided in the legislation, were made to 221 of these automobiles.

Are proposals planned to be made to government about any change in excise tax?

Discussions are being held with relevant bodies on renewal of automobiles in the country, stimulation of ecologically clean transport facilities, optimization of excise rates in relation to new and used vehicles in order to prevent import of old vehicles and vehicles with low level of technical safety and application of differential excise rates.

Today, many European countries impose limits on use of diesel cars and use of such cars will be completely prohibited in 2025. Such diesel cars are mainly brought to Azerbaijan and a number of countries. Does the State Customs Committee have any proposal in this regard?

While many European countries impose limit on use of diesel cars, the import of these cars to Azerbaijan is increasing. European countries plan to use diesel cars until 2025-2026. Therefore, relevant proposals will be made to the relevant bodies so as to reduce the interest to the import of environmentally unfriendly diesel cars, in the future.

You had earlier said that there would be amendments in the law on the period of stay of cars brought to and from Azerbaijan in this or another country. What can you say about it?

The number of vehicles without permanent registration has recently increased dramatically. At the same time, no Euro-4 standard is required for temporary entrance to the country, and  such ecologically harmful cars with poor technical safety stay in the country for a long period. Therefore, temporary stay and use of these cars in the country are under control. On the other hand, the Committee has submitted proposals to the Cabinet of Ministers on amendments to the legislative acts in order to eliminate the application of large amount of fines in connection with expiration of period for cars left country and then came back to the country.

At what level the import of hybrid cars to Azerbaijan is?

The number of imported hybrid cars to the country is increasing. 609 hybrid cars have been imported this year compared with 146 for 2018.

Will any concession be made to the import of such cars in the future?

Encouraging projects on import of such cars are being discussed with the central executive bodies.

This is interesting for the consumers of such cars: How are the customs duties calculated for import of such cars?

Customs duties for hybrid cars are the same with the customs duties for other vehicles with the internal combustion engine. Customs payments are applied depending on the country of origin, customs value, engine volume, as well as production year.

What tendency has been recorded in the number of electric cars this year?

Despite stimulating measures in the existing normative and legal acts, the number of electric cars has increased. In nine months of 2019, 112 electric cars were imported. It should be noted that according to the article #164.1.41 of the Tax Code, import of electric cars to the country will be exempted from value added from January 1, 2020.

On what level is the share of exemptions in import of the country? How much did this volume reduce in recent years? What was the main reason for this?

In accordance with the Free Trade Agreement and Production Share Agreement, the decision of the Cabinet of Ministers "On rates of custom duties on export-import operations in the Azerbaijan Republic No. 91" dated April 22, 1998, Law of the Republic of Azerbaijan on “Customs Tariff” No. 687-IVQ dated June 13, 2013, Article No.164 of the Tax Code, the Decree of the President of the Republic of Azerbaijan No 745 on additional measures in connection with the promotion of investment dated 18 January 2016, the share of exemptions on import duties in import goods made up 66.9%, exemptions on value added tax – 39.28% in order to enhance the non-oil sector and promote other priority fields.

What are the results of the monitoring conducted in this direction? What works are being done to reduce the share of exemptions?

In order to assess the impact of concessions in tax and customs fields set by legislation on the budget revenues and entrepreneurial subjects in accordance with the “Action Plan to Improve the Imports and Exports Control System” approved by the Presidential Decree dated June 28, 2018, with the participation of the State Customs Committee, the relevant executive body is preparing  the ‘Rules on assessment of effectiveness of the tax and customs concessions’. At the same time, certain works are underway to create a centralized registry on data about exemptions from customs duties and enabling relevant bodies to have access to those data.