Azerbaijan: Government approves increase of import excise rates on alcohol and cigarettes

The Cabinet of Ministers of Azerbaijan has approved new excise tax rates on imported goods, which will come into force on January 22, 2018, AzerNews reported on December 25.

In particular, the excise on malt beer imported to Azerbaijan will be 1.7 manats [$1] per litre, wines from fresh grapes, including fortified wines; grape must - 3.5 manats [$2.06] per litre, sparkling wines - 5 manats [$2.94] per litre, and whiskeys - 10 manats [$5.88] per litre.

For import of whiskey, vodka and liqueur, the excise tax is set at the level of 10 manats [$5.88] per 1 litre.

By the decision of the Cabinet, excises for the import of cigars were set at 20 manats [$11.77] per 1,000 pieces, cigarettes - 12 manats [$7.06] for 1,000 pieces.

Earlier, Azerbaijan’s Finance Minister Samir Sharifov stated that the country’s government plans to double excise rates for the import of alcoholic beverages and tobacco products in 2018.

Such a decision was made due to the fact that a sharp reduction in the exchange rate of Azerbaijani manat against the U.S. dollar led to an increase in prices for imported alcohol and tobacco products, as well as to a reduction in excise tax rates in manat.

Earlier, the head of the State Customs Committee, Aydin Aliyev, noted that an increase of excise tax rates on import of tobacco and alcohol products in Azerbaijan will not lead to a strong rise in prices.

“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.

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 litre; wines from fresh grapes, including fortified wines; grape must – 2 manats per litre; sparkling wines - 2.5 manats per litre; whiskey, vodka, liqueur, rum and other alcoholic beverages - 6 manats per litre.

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.

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