Due to the abolition of VAT exemptions applied to hybrid and electric vehicles starting from January 1, 2026, there has been a massive influx of vehicles into the country in November-December of this year. Businesspeople have increased their orders to benefit from the tax exemption for the last time.
However, official car dealerships and businesspeople importing vehicles into the country have stated that in recent days they have received warnings from official bodies regarding the mandatory sale of vehicles within 2025. Furthermore, it was also stated that if vehicles remain unsold until 2026, VAT would have to be paid at the time of sale.
Modern.az sent an inquiry to the **State Tax Service** under the Ministry of Economy of the Republic of Azerbaijan to clarify the matter.
In response to our website's inquiry regarding the VAT exemption applied to the import and sale of electric motor vehicles, the State Tax Service stated that, according to tax legislation, the application of VAT is determined by the date the taxable transaction occurs, i.e., the date the vehicle is sold.
“In this regard, VAT must be applied to the sale of electric and hybrid vehicles imported in 2025 but sold in 2026, in accordance with the current legislation.
Additionally, according to the amendments to be made to the Tax Code, the VAT exemption applied to the import and sale of electric motor vehicles will be abolished starting from January 1, 2026. At the same time, the VAT exemption for hybrid vehicles, which ends on January 1, 2026, will also not be extended,” states the official information from the STS.
According to information from the agency, VAT is a consumption tax and is effectively paid by the final consumer. For this reason, no additional tax burden arises for entrepreneurs and taxpayers engaged in car sales. The VAT amount is included in the sale price of the vehicle, collected from the buyer, and paid to the state budget in the prescribed manner.
Finally, the STS stated that the application of VAT on sales transactions carried out after 2026 is fully compliant with legislative requirements and is not considered a retroactive tax application.
