The government will introduce new tax changes related to car imports into the country. According to the decision, starting next year, the excise tax on gasoline cars older than 7 years will be increased by 1.5 times, and for diesel engine cars by 2 times. At the same time, electric vehicles, which have so far enjoyed certain concessions, will be subject to VAT, and the abolition of existing tax concessions for hybrid cars is envisaged.
It is not excluded that these changes will have a significant impact on car prices, buyer demand, and the overall market dynamics. Will the decision also lead to price increases in the car market?
In a statement to Modern.az, lawyer and transport expert Arshad Huseynov noted that changes are usually made to the Tax Code at the end of each year, and these changes come into force from the following year.
“Significant changes are envisaged in the excise taxes to be applied to passenger cars with internal combustion engines starting next year. According to the currently effective rules, the excise tax on imported cars is calculated based on both the year of manufacture and the engine displacement. If the year of manufacture of a passenger car is more than 7 years, this indicator is calculated with a coefficient of 1.2 for gasoline engine cars, and with a coefficient of 1.5 for diesel engine cars.
For example, if the excise tax for a new gasoline engine car is 10,000 manats, this amount increases to 12,000 manats for an analogous car older than 7 years. For a diesel engine car, in the same case, the excise tax is 15,000 manats.”
According to the lawyer, these coefficients will be increased starting from January 1, 2026.
“Thus, according to the new changes, the excise tax for gasoline engine cars older than 7 years will be calculated with a coefficient of 1.5 instead of 1.2, and for diesel engine cars, the coefficient will be raised from 1.5 to 2 starting next year. As a result of this change, the excise tax on cars older than 7 years will increase by approximately 25-33 percent.
At the same time, the concessions applied to hybrid cars will also be suspended starting next year. This means that import duties for hybrid and older cars will increase from January 1, which will inevitably lead to a price increase in the car market.”
The expert also stated that the main purpose of these changes is to prevent the import of old cars into the country and to stimulate the import of newer and environmentally friendly cars:
“The government wants to curb the import of cars that have been in operation for more than 7 years into Azerbaijan. This is because these cars are already old both environmentally and technically. The new rules will encourage the import of more small-engine, fuel-efficient, environmentally friendly, electric, and hybrid cars.”
The expert also emphasized that these changes will affect the car market in several directions:
“Firstly, the overall import of cars into the country may decrease. Additionally, the share of hybrid cars will decrease, while the share of electric cars will relatively increase. Furthermore, an increase in interest in new, small-engine internal combustion cars is expected, along with an overall rise in prices.”
A. Huseynov emphasized that the increase in import duties directly affects the overall sales price of a car. According to him, this will also lead to an increase in prices for the buying and selling of second-hand cars.
Chairman of the Azerbaijan Automobile Dealers Association, Eyyub Aliyev, stated that currently, more than 86 percent of the passenger car fleet in the country consists of vehicles older than 10 years:
“This indicator pertains to 2022, and at that time, our country's car fleet was already considered outdated. Concessions granted to hybrid and electric cars have given a significant impetus to the renewal of this fleet. At the same time, work was also being done towards renewing taxi fleets. Furthermore, prohibitions were imposed on the import of cars older than 10 years into the country, and the utilization process began.”
E. Aliyev believes that increasing the excise tax rate for cars older than 7 years will also contribute to the rejuvenation of the fleet:
“If we want a safe and guaranteed car, it is more advisable to purchase it from official importers. As an association, we recommend this, but the choice, of course, rests with the citizens.”
According to him, new cars are currently imported into Azerbaijan mostly from China, Korea, and European countries, while second-hand cars are brought from Japan, Korea, and the USA:
“These rules are the same for all countries. That is, if the concessions granted to hybrid cars have ended, it does not matter whether the car was imported from Europe or Asia. What matters is the year of manufacture and the engine type.”
E. Aliyev finally added that a new phase in car imports will begin in 2026. The increased cost of old and hybrid cars will be accompanied by a price increase in the market, consequently increasing the share of electric and new-generation cars.
