|                                                                                                                                                                          |  | CUSTOMS IN AZERBAIJAN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        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|**BISNISHome PageSearchBISNISEmbassyReportsCountryReportsIndustryReportsCustomsCornerPublicationsSourcesof FinanceLeadsand EventsExchangeRatesState ExportsOtherSources** |  | August - September 1998by William H. HenryKey legislation regulating customs rates and procedures for goods imported into Azerbaijan came
into force in 1997. A presidential decree enacted a new customs code on June 10, 1997. Less than
one month later, on July 1, 1997, Government Decree No. 62, "Customs Duty Rates on Export
and
Import Transactions" became effective.  Some of the most important provisions of these
regulations
are summarized below.Goods Imported for Processing and Reexport
Azerbaijan's 1997 customs code establishes procedures for goods which are imported into
Azerbaijan for processing and subsequent export.  Under the new code, import duties and value
added tax  (VAT) are payable upon import of the goods.  If the goods are processed and exported
from the customs territory of Azerbaijan, all import duties and VAT paid on import are to be
refunded from the budget upon export.The new code requires companies that desire to import products for processing and reexport to
obtain a license from the Customs Committee.  There is no formal procedure specified for making
an application for such a license. Legislation does state, however, that the Customs Committee is
allowed to determine the time period for the processing of goods, based upon an "economically
reasonable" time   not to exceed two years   for reprocessing and arranging  to export the final
products.  The Customs Committee is also allowed to determine the minimum expected output
given
the products imported.Temporary Imports
Goods brought in under the temporary import regime should be reexported from Azerbaijan
within deadlines specified by the customs authorities (the law allows for the import of goods
under
this regime for up to two years).  However, in practice, customs authorities provide for the
duration
of a temporary import for up to one year with the possibility of getting a further prolongation of
the
import period for an extra year.It should also be noted that goods and equipment imported under a temporary import regime
should be reexported from Azerbaijan without any change in their substantive nature (with the
exception of changes and losses resulting from natural transportation, storage, and use).If a company decides to sell goods or equipment brought in under the temporary regime, the
company must notify customs authorities and pay all import taxes due prior to the sale of the
goods. 
Failure to notify Azerbaijani customs authorities will result in penalties totaling 3 percent per day
of
delay of payment and financial sanctions amounting to 100 - 200 percent of the declared customs
value of the goods. An administrative fine totaling two monthly salaries of the representative of
the
company and the company's chief accountant may also be applied.Bonded Warehouses and Customs Storage Facilities
Although the customs code provides for regulations on the establishment and operation of bonded
and customs
warehouses, in practice only ordinary customs warehouses can be operated. A license from the
Cabinet of Ministers
of the Azerbaijan Republic is required to establish a customs warehouse; licenses are granted only
to Azerbaijani legal
entities and Azerbaijani persons. Goods and equipment maintained in customs warehouses and not
released are
exempt from import duties and taxes for up to three years.  If the goods or equipment are released
from the customs
warehouse, all import duties and taxes become payable unless another exemption applies.Import Duties and Customs Fees
The July 1997 decree on customs established new rates of import duties which vary from no duty 
to 15 percent of the declared customs value.  In addition, the decree established that a VAT is
payable
upon import at a rate of 20 percent. The VAT payable is equal to the declared customs value plus
the
value of import duties multiplied by 20 percent.Regardless of country of origin, no import duty is imposed on a number of goods, including:
assets imported into
Azerbaijan by a foreign investor as a contribution to a joint venture's charter fund, or for
establishment of a 100
percent foreign-owned enterprise; temporary imports; goods in transit; and property of expatriate
staff, if only for
personal needs.All customs service payments are to be paid in Azeri Manats at the exchange rate set by the Azeri
National Bank on the day of the submission of customs declaration. Decree No. 62 also
establishes
a number of customs service fees and instructions, including the following:-     For movable property and goods imported to Azerbaijan as a contribution to the charter fund
of
a business: 0.25 percent of the customs value;-     Any goods imported or exported for which payment is  made in hard currency: 0.15 percent
of
the customs value (not less than US$5);-     Consignment transactions, irrespective of the destination country, including CIS: 0.25 percent
of the customs value.This copyright article is provided courtesy of the U.S. - Azerbaijan Chamber of Commerce
(USACC), website: www.usacc.com; tel: 202/857-8069; fax: 202/775-4188.For more information on doing business in Azerbaijan, see BISNIS OnLine at
www.iep.doc.gov/bisnis/country/caucasus.htm.William R. Henry is with Ernst & Young L.L.P.This report is provided courtesy of the Business Information Service for the Newly
Independent States (BISNIS)