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Application of VAT and Excise Tax to Alcoholic Beverages
A company engaged in the production of alcoholic beverages previously charged VAT and excise tax when supplying its products to the “XX” store. However, the store stated that, as of January 1, 2026, these products should be subject to a zero tax rate. Is this treatment provided for under the legislation?
The State Tax Service under the Ministry of Economy stated that, until January 1, 2026, taxpayers supplying goods to duty-free shops were required to calculate VAT and excise tax in accordance with the general rules and pay the amounts due to the state budget.
As of January 1, 2026, pursuant to the amendment to Article 165.1.3 of the Tax Code, the supply to duty-free shops of excisable goods produced in the Republic of Azerbaijan and bearing the special marking required for sale in duty-free shops is subject to VAT at the zero rate.
Furthermore, under the amendment to Article 187 of the Tax Code, effective January 1, 2026, the supply to duty-free shops of excisable goods bearing the special marking required for sale in such shops is subject to excise tax at the zero rate.
Accordingly, from January 1, 2026, the supply to duty-free shops of excisable goods produced in the Republic of Azerbaijan and bearing the special marking required for sale in duty-free shops, including alcoholic beverages, is subject to VAT and excise tax at the zero rate.
Legal basis: Articles 165.1.3 and 187 of the Tax Code.
A company engaged in the production of alcoholic beverages previously charged VAT and excise tax when supplying its products to the “XX” store. However, the store stated that, as of January 1, 2026, these products should be subject to a zero tax rate. Is this treatment provided for under the legislation?
The State Tax Service under the Ministry of Economy stated that, until January 1, 2026, taxpayers supplying goods to duty-free shops were required to calculate VAT and excise tax in accordance with the general rules and pay the amounts due to the state budget.
As of January 1, 2026, pursuant to the amendment to Article 165.1.3 of the Tax Code, the supply to duty-free shops of excisable goods produced in the Republic of Azerbaijan and bearing the special marking required for sale in duty-free shops is subject to VAT at the zero rate.
Furthermore, under the amendment to Article 187 of the Tax Code, effective January 1, 2026, the supply to duty-free shops of excisable goods bearing the special marking required for sale in such shops is subject to excise tax at the zero rate.
Accordingly, from January 1, 2026, the supply to duty-free shops of excisable goods produced in the Republic of Azerbaijan and bearing the special marking required for sale in duty-free shops, including alcoholic beverages, is subject to VAT and excise tax at the zero rate.
Legal basis: Articles 165.1.3 and 187 of the Tax Code.