BAKU, Azerbaijan, November 14. 300 million manat ($176 million) risk has emerged for Azerbaijan's budget revenues from customs.
The Chamber of Accounts' opinion on the draft law "On the state budget of the Republic of Azerbaijan for 2027" noted that in 2027, state budget revenues of nearly 6.87 billion manat ($4.04 billion) are projected through the State Customs Committee (SCC). However, previous year's execution figures, actual results for the current year, and the possibility that imports will fall short of the projected level pose a risk that this forecast may not be fully met.
According to the document, 2027 revenues through the SCC are projected to exceed the actual 2025 figure by 498.1 million manat ($293 million), or 7.8%, and the 2026 forecast by 6 million manat ($3.5 million), or 0.1%.
One of the key assumptions underlying next year's revenue projections is that imports will reach 32.2 billion manat ($18.9 billion). At the same time, exemptions and concessions applied to imported goods are expected to reduce budget revenues.
According to the assessment of the Chamber of Accounts, the ratio of revenues to be collected via the State Customs Committee in 2027 to the volume of imports will be 0.6 percentage points higher than the actual figure for 2025, and 0.3 percentage points lower than the forecast for 2026.
Risks to customs revenue execution
The opinion emphasizes that in 2025, amid imports totaling $18.1 billion against the projected $18.4 billion, the state budget revenue target of 6.6 billion manat ($3.88 billion) through the SCC wasn’t fully met. Actual revenues amounted to nearly 6.37 billion manat ($3.75 billion), falling short of the forecast by 230.1 million manat ($135.4 million), or 3.5%.
In 2026, imports are projected at $18.7 billion. Actual imports in the first nine months of this year amounted to $13.2 billion. During the same period, 4.97 billion manat ($2.93 billion) was transferred to the state budget through the SCC, against the projected 4.98 billion manat ($2.93 billion). Thus, revenues fell short of the forecast by 10.7 million manat ($6.3 million), or 0.2%.
According to the chamber's estimates, given that imports are expected to fall below the projected level this year, revenues through the SCC are expected to reach 6.6 billion manat ($3.88 billion). This is 300 million manat ($176.5 million), or 4.3%, below the approved forecast.
The document noted that, despite this, the practice of determining the forecast for the SCC revenues for the coming year, based on a cumulative, year-over-year increasing total, has been continued.
The Chamber of Accounts pointed out that the persistence of uncertainties in the international economic environment, particularly shifts in economic behavior among key trading partners, could impact import volumes. Under these conditions, threats to the uninterrupted movement of goods within trade and supply chains could reduce foreign trade turnover and, consequently, hinder the full realization of projected customs revenues.
VAT on imported goods projected at 4.7 billion manat ($2.76 billion)
In 2027, revenues from value-added tax (VAT) on imported goods are projected at 4.7 billion manat ($2.76 billion). This is 50 million manat ($29.4 million), or 1.1%, below the 2026 forecast, but 377.7 million manat ($222.2 million), or 8.7%, above the actual 2025 figure.
According to the opinion, the increase compared with the actual 2025 figure is mainly due to the higher import volume projected for next year. Specifically, imports are expected to reach $19 billion in 2027, up $900 million, or 5%, from the actual 2025 figure.
Meanwhile, the projected decline in VAT on imports compared with the 2026 forecast was attributed to the impact of the lower share of VAT-taxable turnover in total imports in 2025 on the forecast for the following year.
At the same time, the 2027 draft state budget envisages a decline in VAT revenues on imported goods in some categories and an increase in others.
In particular, VAT revenues from entities operating in the non-oil and gas sector, in which 51% or more of shares or ownership interests are directly or indirectly state-owned, are projected to decrease by 80 million manat ($47.1 million), or 40%. Revenues from other resident and non-resident legal entities are expected to decline by 45 million manat ($26.5 million), or 1.2%.
Conversely, VAT revenues from goods imported by individuals are expected to increase by 10 million manat ($5.9 million), or 1.7%. Revenues from budgetary organizations, public legal entities established on behalf of the state, and other entities financed by state-owned funds are projected to rise by 5 million manat ($2.9 million), or 5.9%.
Excise revenues on imports to reach 240 million manat ($141.2 million)
In 2027, state budget revenues from excise taxes on imported goods are projected at 240 million manat ($141.2 million). This is 6 million manat ($3.5 million), or 2.6%, above the 2026 forecast and 7.3 million manat ($4.3 million), or 3.1%, higher than actual revenues in 2025.
According to the Chamber of Accounts' opinion, amendments to legal acts providing for the inclusion of sweetened mineral and carbonated drinks, as well as chips, on the list of excisable goods have contributed to the increase in revenues from this source.
Nevertheless, the forecasts for excise revenues across individual product groups envisage both increases and decreases.
Excise revenues from petroleum products are expected to increase by 6 million manat ($3.5 million), or 31.6%; those from other alcoholic beverages by 4 million manat ($2.4 million), or 8%; and those from other products by 6.8 million manat ($4 million), or 17.5%.
On the other hand, excise revenues from potable alcohol are projected to decrease by 3.7 million manat ($2.2 million), or 31.6%; those from beer and other beer-based beverages by 2.1 million manat ($1.2 million), or 20%; and those from tobacco products and their substitutes by 2 million manat ($1.2 million), or 10%.
A decline of 2 million manat ($1.2 million), or 2.6%, is also expected in excise revenues from passenger cars, motorcycles subject to state registration, and buses, while revenues from energy drinks are projected to fall by 1 million manat ($588,000), or 16.7%.
Customs duty revenues to increase
In 2027, customs duty revenues are projected at nearly 1.87 billion manat ($1.1 billion). This is 49 million manat ($28.8 million), or 2.7%, above the 2026 forecast and 96.2 million manat ($56.6 million), or 5.4%, higher than actual revenues in 2025.
According to the chamber, the increase in customs duty revenues will be driven mainly by higher import duties paid by legal entities.
Thus, import duties paid by individuals are projected to decrease by 34 million manat ($20 million), or 13.1%, while those paid by legal entities are expected to increase by 93 million manat ($54.7 million), or 7.2%.
The increase in revenues from this source is also justified by the projected import volume of $19 billion next year.
Road tax revenues to reach 61 million manat ($35.9 million)
In 2027, state budget revenues from road tax are projected at 61 million manat ($35.9 million). This is 1 million manat ($588,000), or 1.7%, above the 2026 forecast and 17 million manat ($10 million), or 38.6%, higher than actual revenues in 2025.
The opinion noted that the main reason for the increase compared with the actual 2025 figure is the higher tax rate applied per liter.
At the same time, road tax revenues from imported fuel are projected to decrease by 3.5 million manat ($2.1 million), or 12.5%. This decline will mainly result from a decrease of 2.6 million manat ($1.5 million), or 83.7%, in revenues from diesel fuel; 900,000 manat ($529,000), or 3.4%, from motor gasoline; and 100,000 manat ($58,800), or 100%, from liquefied gas.
Conversely, road tax revenues paid by owners or drivers of motor vehicles registered in foreign countries entering Azerbaijan or transiting through its territory are projected to increase by 4.5 million manat ($2.65 million), or 14.1%.
The opinion of the Chamber of Accounts highlighted that actual execution figures from previous years, results from the first nine months of the current year, and the possibility that import volumes may fail to reach projected levels create a risk that budget revenues collected via the SCC will not be fully realized in 2027. In this regard, when forecasting customs revenues, it's essential to consider not only import volumes but also the impact of changes in the international trade environment and the effects of various concession mechanisms.
