Foreign Trade Regulation

Azerbaijan has started negotiations with the WTO on accession to the organization. The government has undertaken a number of steps to liberalize foreign trade. As of the end of 2011, the weighted average import tariff in Azerbaijan was 5.8% i.e. significantly below the international average. Import–export activity is one of the most rapidly developing business segments in Azerbaijan. In recent years, foreign trade has grown by an annual average of approximately 15%. 

Azerbaijan is developing trade relations with a number of countries. In 2012, there were trade operations with 155 partners. The European Union remained the major destination for the export of Azerbaijani goods. Turkey, Russia and CIS are the major importers. 

The main export commodities are crude oil, natural gas and petrochemicals, plant products, foodstuffs, animal and vegetable oils, chemicals, ferrous metals and agricultural products. Imports mainly include machinery and equipment, vehicles and spare parts, chemicals and plant products.  

Import and export operations are regulated by the Presidential Decree No 609 “On Further Liberalization of Foreign Trade in the Republic of Azerbaijan” and the customs legislation.

Azerbaijani law recognizes several customs procedures applicable to goods imported into Azerbaijan, the most important of which to foreign investors are transit (international and national), warehouse (temporary storage and customs warehouse), free zone, special use (temporary import and end use); and processing (in and outside customs territories).

In the case of temporary imports, no duties or reduced duties are applied and the goods must be re-exported from Azerbaijan by the deadline established by the customs authorities. Goods brought in as temporary imports should be re-exported without substantial changes in their nature. 

In accordance with Decree of the President of the Republic of Azerbaijan “On the Application of the ‘Single Window’” Principle during the Inspection of Goods and Vehicles Crossing the Inspection Points at the State Border of the Azerbaijan Republic” dated 12 November 2008, a single window system was established for the inspection of goods and vehicles crossing the state borders of the Azerbaijan Republic commencing 1 January 2009. 

On 24 June 2011 the President approved the New Customs Code, effective since 1 January 2012. Apart from that, the Custom Authorities of the Republic of Azerbaijan has introduced 'e-Customs' (http://www.customs.gov.az/en/e-Xidmetler.html) which gives participants in foreign trade activities the ability to declare goods in electronic form from any location. Based on President's Decree dated 25 February 2011, the State Customs Committee is responsible for customs processing, payment of customs duties via bank transfer or by use of plastic cards.

The importation of goods into Azerbaijan is subject to import duties (ad valorem duties ranging from 0% to 15%, per unit duties, duties per metric units).

Excise tax applies to certain types of goods (e.g., tobacco and alcohol products). Azerbaijan has adopted a “destination VAT” principle and VAT (currently set at 18%) is payable (subject, of course, to the applicable customs regime) on the declared value of goods (including assessed import duties and excise tax). Certain categories and types of goods are import exempt and certain other types of goods 0% VAT applies. 

Pursuant to free trade agreements concluded between the Government of Azerbaijan and the Governments of Russia, Ukraine, Georgia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Moldova and Belarus, goods imported from these countries are free of customs duties. 

According to the resolutions of Cabinet of Ministers (No 11, dated 31 January 2005 and No 91, dated 22 April 1998) certain goods are exempted from import duties and VAT. For example, under the PSA (Production Sharing Agreement) regime, contractors, their agents and sub-contractors are entitled to import and re-export from Azerbaijan goods employed for hydrocarbon activities free from import duties. Imports under the PSA regime are subject to zero rate VAT. A similar regime applies under HGAs (Host Government Agreements).

Advantages for Azerbaijan: 

Azerbaijan is the beneficiary of the preferential trade scheme GSP, adopted by the USA, Canada, Japan, Switzerland, Norway and Turkey. The resulting advantages for Azerbaijan are the following:

* Access with preferential duties to the markets controlling 53% of all import operations.

* Exemption of duties for the export of more than 7000 items of goods produced in Azerbaijan to EU states, as well as 3400 items to the US.

* Diversification of the economy and growth of the non-oil sector.

The GSP USA state program makes possible the duty-free import of about 5,000 products from 132 countries into the United States.

Another important development worth mentioning is progress in a number of regional trade initiatives, including Central Asia–Caucasus–Europe transport corridor (TRACECA) and the Russia–Azerbaijan–Iran transport corridor (North–South Transport Corridor). The projects are directed at stimulation of international trade along the above routes via coordination of trade policies and tariffs, upgrade of infrastructure, simplification of customs procedures, etc. The impact of the above initiatives on Azerbaijan’s international trade and on its status as a regional transportation hub is substantial.

In order to facilitate internal trade www.b2b.az internet portal has been launched in 2010.