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In which cases are goods exempt from excise tax?
In which cases are goods exempt from excise tax?
The application of excise tax has both economic and social significance. From an economic perspective, the excise tax aims to ensure that a portion of the additional profit from the sale of highly profitable products is collected into the state budget by including the excise tax in the sales price. From a social perspective, the excise tax serves to limit the consumption of harmful goods that negatively affect the environment and those around, by increasing the sales price. In some cases, these goods are exempted from excise tax. Tax expert Ismail Bağırov explains these exemptions:
According to Article 188.1 of the Tax Code, the following are exempt from excise tax:
- Importation of the following quantities of excise goods for personal use by an individual:
- 1.5 liters of alcoholic beverages;
- 2 liters of energy drinks;
- 200 cigarettes, 20 cigars, and 10 cigarellos;
- 3 disposable electronic cigarettes, hookahs, and their substitutes;
- 100 items of products designed for inhalation without ignition, containing tobacco or reconstituted tobacco;
- 100 grams of smoking tobacco, “homogenized” or “reconstituted” tobacco, chewing tobacco, or snuff tobacco, as well as hookah tobacco and tobacco substitutes;
- 50 milliliters of liquid for electronic cigarettes;
- 20 grams of gold, jewelry made from it, and other household items;
- 0.5 carats of processed, sorted, framed, and set diamonds;
- Fuel in the tank of a car arriving in the Republic of Azerbaijan, as specified in the technical passport of the vehicle.
Example 1: A citizen of the Republic of Azerbaijan brings 2 liters of Russian-made, 1.5 liters of Polish-made alcoholic beverages, 200 Russian-made cigarettes, and 400 American-made cigarettes into Azerbaijan for personal use. How will the excise tax exemption apply to these imported goods? In this case, the exemption will apply to 1.5 liters of alcoholic beverages and 200 cigarettes.
Example 2: An individual imports 30 grams of platinum, 70 grams of 750-grade gold, and 2.4 carats of diamonds from the Republic of Turkey for personal use. In this case, 30 grams of platinum, 50 grams of gold (70-20), and 1.9 carats of diamonds (2.4-0.5) will be subject to excise tax.
According to Article 188.1.2 of the Tax Code, goods transiting through the territory of the Republic of Azerbaijan are also exempt from excise tax.
Example 3: Alcoholic spirits are being sent from the Republic of Turkey to Russia. The vehicle carrying these spirits passes through Azerbaijan on its way to the Russian Federation. Since the vehicle is transiting through the Republic of Azerbaijan, no excise tax is collected when it crosses the customs border. This is because Article 188.1.3 of the Tax Code states that the temporary importation of goods into the Republic of Azerbaijan, as provided in Articles 192 and 194 of the Customs Code, is exempt from excise tax.
Example 4: Company A buys alcohol from Georgia to sell it to Russia for re-export. When the goods cross the customs border of the Republic of Azerbaijan, the company presents a bank guarantee to the customs authority equivalent to the excise tax amount it is required to pay. In this case, no excise tax is applied to these goods.
According to Article 188.1.5 of the Tax Code, platinum, gold, and processed, sorted, framed, and set diamonds imported for placement in the assets of the Central Bank of the Republic of Azerbaijan, as well as gold imported for placement in the assets of the State Oil Fund of the Republic of Azerbaijan, are exempt from excise tax.
Example 5: The Central Bank of Azerbaijan imports 2 tons of platinum and 5 tons of gold from France for placement in its assets. In this case, the Central Bank will not pay excise tax on the imported goods.
According to Article 188.1.7 of the Tax Code, taking into account the provisions of Article 188.1.1 of this Code, imported platinum, gold, and jewelry made from them, as well as other products, processed, sorted, framed, and set diamonds, are exempt from excise tax for a period of 6 years starting from January 1, 2021.
It should be noted that platinum, gold, and jewelry made from them, as well as processed, sorted, framed, and set diamonds, as provided in Articles 190.4.2, 190.4.3, and 190.4.4 of the Tax Code, are exempt from excise tax for a period of 6 years starting from January 1, 2021.
According to Article 188.1.8 of the Code, the importation of motorcycles with an engine capacity not exceeding 125 cubic centimeters is also exempt from excise tax for a period of 3 years starting from January 1, 2024.
Article 188.2 of the Tax Code stipulates that the exemptions from excise tax mentioned in Article 188.1 are only applied if the conditions for exemption from customs duties are fulfilled. If the goods are subject to the regime of customs duties refund, or if the conditions of exemption are violated, requiring the payment of customs duties, this regime will also apply to the imposition of excise tax.
According to Article 128.3 of the Customs Code, goods re-exported from the customs territory within one year of being released for free circulation, when they meet the conditions set by the relevant executive authority, will have the customs duties and taxes paid for their import refunded. If the imported goods fall under the customs duties refund regime, they will also be exempt from excise tax. If customs duties are required to be paid on the goods, excise tax will also be levied on them.
Article 28.4 of the Customs Code states that the rules for the placement of goods under the re-export customs procedure will be determined by the relevant executive authority.
The application of excise tax has both economic and social significance. From an economic perspective, the excise tax aims to ensure that a portion of the additional profit from the sale of highly profitable products is collected into the state budget by including the excise tax in the sales price. From a social perspective, the excise tax serves to limit the consumption of harmful goods that negatively affect the environment and those around, by increasing the sales price. In some cases, these goods are exempted from excise tax. Tax expert Ismail Bağırov explains these exemptions:
According to Article 188.1 of the Tax Code, the following are exempt from excise tax:
- Importation of the following quantities of excise goods for personal use by an individual:
- 1.5 liters of alcoholic beverages;
- 2 liters of energy drinks;
- 200 cigarettes, 20 cigars, and 10 cigarellos;
- 3 disposable electronic cigarettes, hookahs, and their substitutes;
- 100 items of products designed for inhalation without ignition, containing tobacco or reconstituted tobacco;
- 100 grams of smoking tobacco, “homogenized” or “reconstituted” tobacco, chewing tobacco, or snuff tobacco, as well as hookah tobacco and tobacco substitutes;
- 50 milliliters of liquid for electronic cigarettes;
- 20 grams of gold, jewelry made from it, and other household items;
- 0.5 carats of processed, sorted, framed, and set diamonds;
- Fuel in the tank of a car arriving in the Republic of Azerbaijan, as specified in the technical passport of the vehicle.
Example 1: A citizen of the Republic of Azerbaijan brings 2 liters of Russian-made, 1.5 liters of Polish-made alcoholic beverages, 200 Russian-made cigarettes, and 400 American-made cigarettes into Azerbaijan for personal use. How will the excise tax exemption apply to these imported goods? In this case, the exemption will apply to 1.5 liters of alcoholic beverages and 200 cigarettes.
Example 2: An individual imports 30 grams of platinum, 70 grams of 750-grade gold, and 2.4 carats of diamonds from the Republic of Turkey for personal use. In this case, 30 grams of platinum, 50 grams of gold (70-20), and 1.9 carats of diamonds (2.4-0.5) will be subject to excise tax.
According to Article 188.1.2 of the Tax Code, goods transiting through the territory of the Republic of Azerbaijan are also exempt from excise tax.
Example 3: Alcoholic spirits are being sent from the Republic of Turkey to Russia. The vehicle carrying these spirits passes through Azerbaijan on its way to the Russian Federation. Since the vehicle is transiting through the Republic of Azerbaijan, no excise tax is collected when it crosses the customs border. This is because Article 188.1.3 of the Tax Code states that the temporary importation of goods into the Republic of Azerbaijan, as provided in Articles 192 and 194 of the Customs Code, is exempt from excise tax.
Example 4: Company A buys alcohol from Georgia to sell it to Russia for re-export. When the goods cross the customs border of the Republic of Azerbaijan, the company presents a bank guarantee to the customs authority equivalent to the excise tax amount it is required to pay. In this case, no excise tax is applied to these goods.
According to Article 188.1.5 of the Tax Code, platinum, gold, and processed, sorted, framed, and set diamonds imported for placement in the assets of the Central Bank of the Republic of Azerbaijan, as well as gold imported for placement in the assets of the State Oil Fund of the Republic of Azerbaijan, are exempt from excise tax.
Example 5: The Central Bank of Azerbaijan imports 2 tons of platinum and 5 tons of gold from France for placement in its assets. In this case, the Central Bank will not pay excise tax on the imported goods.
According to Article 188.1.7 of the Tax Code, taking into account the provisions of Article 188.1.1 of this Code, imported platinum, gold, and jewelry made from them, as well as other products, processed, sorted, framed, and set diamonds, are exempt from excise tax for a period of 6 years starting from January 1, 2021.
It should be noted that platinum, gold, and jewelry made from them, as well as processed, sorted, framed, and set diamonds, as provided in Articles 190.4.2, 190.4.3, and 190.4.4 of the Tax Code, are exempt from excise tax for a period of 6 years starting from January 1, 2021.
According to Article 188.1.8 of the Code, the importation of motorcycles with an engine capacity not exceeding 125 cubic centimeters is also exempt from excise tax for a period of 3 years starting from January 1, 2024.
Article 188.2 of the Tax Code stipulates that the exemptions from excise tax mentioned in Article 188.1 are only applied if the conditions for exemption from customs duties are fulfilled. If the goods are subject to the regime of customs duties refund, or if the conditions of exemption are violated, requiring the payment of customs duties, this regime will also apply to the imposition of excise tax.
According to Article 128.3 of the Customs Code, goods re-exported from the customs territory within one year of being released for free circulation, when they meet the conditions set by the relevant executive authority, will have the customs duties and taxes paid for their import refunded. If the imported goods fall under the customs duties refund regime, they will also be exempt from excise tax. If customs duties are required to be paid on the goods, excise tax will also be levied on them.
Article 28.4 of the Customs Code states that the rules for the placement of goods under the re-export customs procedure will be determined by the relevant executive authority.