Customs Payments
According to the Customs Code of the Republic of Azerbaijan, the following types of customs duties on imports and exports were determined.
Customs duties
Customs duties were mainly determined for imported and exported goods in the Republic of Azerbaijan. There are 3 types of customs duties: ad valorem, specific and combined. An ad valorem type of duty is a customs duty rate calculated as a percentage of the customs value of the commodity (e.g. if 10% duty is deducted from the commodity with the customs value amounting to 1000 manat, customs duty will be 100 manat). At present, ad valorem rates of goods are set at 7 degrees: 0, 0.5, 1, 3, 5, 10, 15. However, the work is currently going on to reduce the customs duty rates from 7 to 3 (0, 10, 15). Currently, import duties of the most imported goods are defined on ad valorem basis. Specific duties are determined not by the customs value of the goods, but by the weight of the goods in numbers (e.g. 1000kg 7 Dollars), The combined duties are assigned by determining both the ad valorem and the specific duties (for example, 5% + $ 15 per 1,000 kg). At present, there are no combinations of duties in commodity nomenclature.
The customs duties of goods are prepared as per the international system and reflected in commodity nomenclature (XIF AN) of foreign economic activity covering more than 10,000 items in accordance with the international system. In the commodity nomenclature called Harmonic System (HS), the customs duty of goods is determined based on the code given for that item. HIF AN code is 10 digits, which reflects the following (in the case of a particular product).
XXIF AN code Description of goods position Unit of measure Customs duty
2009 80 710 0 ----- cherry or cherry juice – 15
Here:
20 – group (processed products of vegetables, fruits, nuts or other parts of plants),
2009 – goods position (including fruit juices (including grape juice) and vegetable juice, with or without adding of sugar or other sweetening matter, not fermented and not containing alcohol)
1009 80 – half position (other vegetable or fruit juice),
1009 80 71 – lower half position
1009 80 71 00- name of goods (cherry or cherry juice)
Some goods are exempt from customs duties during imports, which are determined by the decision of the Cabinet of Ministers of the Republic of Azerbaijan no. 91 of 1998.
For most exported goods, Azerbaijan does not have export customs duties as in all countries of the world. However, export customs duties for black and non-ferrous scrap and metal wastes are intended to stimulate the country's use of raw materials throughout the country. These charges, which are defined as specific types, have been approved by the Cabinet of Ministers Resolution No. 80 of 2002, with a weight of 1000 kg black and non-ferrous metal is 5-7 USD. However, due to the Presidential Decree No. 457 of 2001 that prohibits export of ferrous and non-ferrous metal scrap and waste, the application of these duties is impossible.
Value Added Tax (VAT)
Value added tax (VAT) is levied on goods imported and exported to Azerbaijan. At present, the rate of VAT is 18%. The basis for the VAT deduction is the customs value of goods, customs duties, collections and other payments collection, i.e. 18% VAT of the total amount is deducted. For example, if the customs value of the goods amounted to 1000 manat is 10%, while the sum of 10 manat is collected, the VAT is calculated as follows.
VAT = (1000+100+10)x18/100=199.98AZN
Some products were released from VAT during import under the decision of the Cabinet of Ministers no.11 dated 2005 and Article 164 of the Tax Code.
Collections for customs clearance.
According to Decision 80 of the Cabinet of Ministers, while customs clearance of imported and exported goods (submission of the necessary documents for passing the goods in a certain mode from the border and review and permission of the customs authorities), collection in exchange for the customs authorities’ clearance services is implemented. The amount of collections is as follows:
|
Collections for customs clearance |
Amount |
|
Collections for customs clearance (import and export) |
|
|
If customs value is up to 1000 manat |
10 Manat |
|
If customs value is from 1000 manat up to 10000 Manat |
50 Manat |
|
If customs value is from 10001 manat up to 100000 Manat |
100 Manat |
|
If customs value is more than 100001 Manat |
275 Manat |
For each of the first customs declarations during customs clearance of the following:
First export of profit hydrocarbons through oil pipelines
Import of aircraft purchased with state guaranteed loans 275 manat
Passport and identity card forms
Export of equipment and supplies for the purpose of oil and gas activities.
Customs clearance of goods under the customs regime of transit 30 Manat
Collections for customs clearance (out-of-work and out-of-office period) Double
customs collection
For every additional sheet of customs declarations 10 manat
For any additional transit cargo declarations 10 manat
For giving certificate for the registration of vehicles 20 Manat
Goods and means of transport shall not be involved in customs clearance collection when crossing the customs border of the Republic of Azerbaijan in the following cases:
Material assistance received as a grant under the grant agreement (decision);
Humanitarian aid;
Technical assistance;
Goods and means of transport for personal use of official and their staff members of diplomatic missions located in the territory of the Republic of Azerbaijan;
Mutual electricity transmission;
Goods of physical persons equivalent to a total value of $ 1,000 or with a weight less than 50 kg, which are not for production and commercial purposes;
Goods equivalent to a total value of $ 200 or with a weight not more than 20 kg in international postal submissions not intended for production and commercial purposes;
non-resident natural persons (in case of corresponding notes in the ID document about living for more than two calendar years in the foreign country) in case of their passing through the Republic of Azerbaijan for permanently living purposes), with domestic goods necessary for the family equivalent to the value of $ 20,000, they should inform the customs authorities about it and when bringing (taking) accompanied or non-accompanied baggage;
when temporarily bringing (handling) of personal belongings to comply with customs regulations for the satisfaction of essential needs;
when crossing the customs border of the Azerbaijan Republic with the goods acquired on the basis of acquired inheritance right (except for the goods which bringing and taking are prohibited).
In most cases, the invoice value of the goods is taken as the customs value of the goods in Azerbaijan.
Customs assessment
The customs value of the goods is determined for the purpose of deducting customs duties on imported and exported goods. Because the customs value of the goods is determined by including all costs incurred before the goods are transported, insurance, storage, in other words, until it reaches its buyer, in addition to the invoice value specified in the agreement concluded between the importer and the exporter. For example, if the invoice value is 10,000 AZN at the time of the importation of the goods, the customs value may be 11,000 AZN, and the duties are deducted from this amount. According to the legislation, the goods holder shows the customs authorities the customs value of the goods by filling the declaration. However, if there is no information confirming the validity of the customs value of the goods declared by the declarant, or if there is a base for incorrectness of the documents submitted by the declarant, then the border customs authority consistently applies the methods for determining the customs value based on the data it has (including information about the price of identical and similar goods) and carries out customs appraisal for determining the customs value of the declared goods.
The customs value of the exported goods is the same as the invoiced value that is paid or payable indicated in the signed purchase and sale agreement. Because the cost of the invoice is taken as customs value, since export costs has not yet been incurred, and in most cases, the export duty is not deducted from the goods. However, the fact that other costs (commissions, brokers, packaging, etc. costs) are taken into account at the actual cost during export is reflected in the legislation.
According to the Law of the Republic of Azerbaijan on Customs Tariff, customs value of goods is determined by one of the following methods:
Transaction price method.
Under the transaction price method, the customs value of the goods is determined on the basis of the transaction price actually paid or payable when those goods are sold for export. However, the following is also included in the price agreed between the buyer and the seller:
Transportation costs
Loading, unloading and storage costs
Insurance costs
Costs incurred by the recipient
Revenue from resale
Packaging costs, etc.
This method is the most widely used method in the world and in Azerbaijan. However, when it is not possible to apply this method, other methods are consistently applied.
The method of transaction value of the same goods.
When the transaction value of the same goods is used, the goods; the transaction price of the same goods shall be taken as the basis for determining the customs value. The same goods are understood as the evaluated goods of equal value in all respects, including:
according to physical characteristics;
quality and market reputation;
The transaction price of the same goods is taken as the basis in order to determine the customs value in the case those goods are:
a) sold to the Republic of Azerbaijan for export;
b) brought the same or at the same time as the evaluated imported goods;
v) sold at the same commercial level and approximately in the same amount as the goods being valued.
This method cannot be applied in the following cases:
if the assessed and comparable commodities are not produced in the same country;
if those goods are manufactured not by the same manufacturer but by the other person;
if the projects, designs, sketches, drawings of the goods are prepared in the Republic of Azerbaijan.
The method of transaction price of the same goods.
Similar goods are understood to mean commodities that have similar characteristics and constituent materials that are commercially viable, with the same features that are not identical to all their features, although giving them the opportunity to implement the same functions as the evaluated goods. Similarity of goods is determined by their quality, trademark and market reputation.
Value deduction method.
Determination of customs value by means of the method of value deduction is applied when the assessed identical or similar goods are valued and sold at the territory of the Republic of Azerbaijan without altering their original condition. In order to determine the customs value of the goods with the method of value deduction, the value of those goods unit shall be taken as the basis. This is for the fact that the largest cumulative amount of the same or similar goods with the imported goods estimated at the same date or nearly at the same date compared to the price of the assessed goods brought to the territory of the Republic of Azerbaijan is sold to the transaction participant that has no relation with the seller.
Value Collection Method.
This methodology is based on the price calculated by collecting the goods as follows:
the costs of the materials used in the manufacture of imported goods, the costs of the production and other processing of those goods or their value;
transport, insurance costs and values and others up to the point of loading;
the amount of profit and total expenses equal to the total earnings and total costs incurred during the sale of goods of the same class or type compared to the goods produced and assessed by producers in the country of export for the purpose of export to the Republic of Azerbaijan.
Reserve method.
Where it is not possible to apply the aforementioned methods, the customs value of the goods is determined by using the other methods in accordance with the WTO Agreement on the QATT Agreement, which is also called the Reserve Method.
Determination of origin country of goods
It is necessary to determine which country the goods belong to for applying various stimulants and remedies to the imported-exported goods. For this purpose, the country of origin of goods is designated. For example, if customs duties are not imposed on Azerbaijan goods during export under the bilateral agreement on goods in Russia, then the Russian customs authorities should have evidence that the imported goods belong to Azerbaijan. In this case, the origin country of goods taken to Russia in Azerbaijan is determined and a certificate of origin is issued so that the customs authorities of Russia obtain the evidence they want and do not apply customs duties on goods.
Generally, the determination of the origin country of the goods is made for the following purposes:
To apply the following tariff preferences on goods To apply the following restrictions on goods:
exempt from import duty application of quotas
or application of concessions application of tariff quotas
of goods as per the application of prohibitions
bilateral and multilateral application of protective measures
contracts; antidumping and protection duties
Import to the developed etc.
countries within the framework of
GSP and GSP + programs
Under the law, the origin of the goods is considered to be the country that the product is either completely manufactured in that country or subjected to sufficient reprocessing on the basis of certain criteria. Goods that are fully manufactured in one country are:
The following in its territory or inland waters, or in the continental shelf and at the sea
minerals (if the country has the exclusive right to exploit this sea-buck);
cultivated and harvested planting products in its area;
the animals born and fed there;
products obtained from feeding animals in that country;
hunting, fishing and marine products manufactured there;
offshore marine products hunted and manufactured in the world ocean by vessels of that country or the ships owned for lease (freight);
recyclable raw materials and waste resulting from production and other operations in that country;
high-tech products purchased in open space through space vessels owned or leased by that country;
State Control Service of the Consumer Market is implemented on the basis of the principles noted the activity on submission of certificate of origin of goods in Azerbaijan and determination of origin country.
If two or more countries are involved in the production of the goods, the country of origin of goods is determined according to the criteria of sufficient processing. The criteria for sufficient processing of goods in a particular country are:
change of commodity position (classification code of goods) at any first four digits in Commodity nomenclature as a result of processing;
production and implementation of technological operations that are sufficient or inadequate to account for the certain country of origin of the goods;
ad valorem payment rule 1 - change in the value of the goods due to the value of the used materials or the added value of the price of the sent goods due to its reaching to the limit defined as per the interest rate.
Thus, goods brought to Azerbaijan, imported and processed here will then be considered of Azerbaijani origin, either when there is a change at the first 4 digits of the commodity nomenclature of those goods (for example, when the new tomato product is brought, if its commodity position is 07 02, the commodity position of the tomato juice prepared from it should be 20 02, so it means a change of the origin of the goods), or the value more than 50% to be added to the existing value of goods at the time of their delivery as a result of their processing (for example, as a result of the brought raw materials processing amounted to 1000 manat, its value should rise to 1550 manat).
A certificate of origin shall be issued for the goods originated in the country of origin, whereby the customs authorities shall apply the appropriate import duty and other measures on the basis of this certificate. We do not repeat here about the procedure how to obtain the certificate of origin as the information about it is already given in the relevant section.
At present, the value of the item added is determined 50% +1 as the ad valorem share. That is, when such a value is added on goods, it is considered to be of Azerbaijani origin.
