Azerbaijan Faces $176 Million Risk to 2027 Customs Revenue Target

A 300 Million Manat Warning for the Budget

Azerbaijan's Chamber of Accounts has warned that customs revenues could fall 300 million manat, about $176 million, short of the forecast in the draft 2027 state budget. The warning concerns a planned 6.868 billion manat in receipts through the State Customs Committee, built around an import forecast of $19 billion.

The Chamber's assessment draws on a missed collection target in 2025, imports and receipts during the first nine months of 2026, and the effects of tax exemptions and concessions. Its central concern is practical: if fewer goods enter Azerbaijan than the budget assumes, the government may collect less tax at the border.

The amount at risk is about 4.4% of the proposed customs revenue target. It matters beyond the customs service because the Ministry of Finance projects total state budget revenue of 39.234 billion manat and expenditure of 42.4 billion manat in 2027. Customs receipts would supply roughly 17.5% of that revenue, or about one manat in every six.

What Parliament Is Being Asked to Consider

The Chamber's Board, chaired by its head Vugar Gulmammadov, approved its conclusion on the draft law On the State Budget of the Republic of Azerbaijan for 2027 and decided to submit it to the Milli Majlis, Azerbaijan's parliament.

The review examines whether the draft budget and accompanying documents meet legislative requirements. It also assesses whether projected revenue, spending and the budget deficit are valid and complete. The draft has been submitted for discussion at parliament's Economic Policy, Industry and Entrepreneurship Committee.

The Board also approved a separate conclusion on the 2027 budget of the State Social Protection Fund for submission to parliament. No date was given for a final parliamentary vote on the state budget.

The draft budget figures put the gap between state revenue and expenditure at 3.166 billion manat. A customs shortfall would add pressure to that balance unless other revenue exceeded expectations or spending changed.

How Previous Collections Shape the Warning

The Chamber points to a recent pattern in which import values and customs collections have fallen below budget assumptions. Its assessment also challenges the continued practice of setting the next customs target by increasing the previous forecast, even when actual collections are expected to miss that forecast.

• 2025: Imports reached $18.1 billion against a forecast of $18.4 billion. Customs receipts were about 6.37 billion manat, missing the 6.6 billion manat target by 230.1 million manat, or 3.5%.
• January to September 2026: Imports totaled $13.2 billion. Customs transfers were about 4.97 billion manat, falling 10.7 million manat, or 0.2%, below the target for that period.
• Full year 2026: The Chamber estimated customs receipts of 6.6 billion manat, describing this as 300 million manat, or 4.3%, below the approved forecast.
• 2027 draft: Customs receipts are projected at 6.868 billion manat, supported by imports of $19 billion.

The small collection gap in the first nine months of 2026 sits alongside a larger warning for the full year. The Chamber expects imports to finish below the annual forecast of $18.7 billion, weakening the basis for customs revenue.

The figures also contain an unresolved difference in the 2026 benchmark. The draft's stated increase of 6 million manat to 6.868 billion manat implies a 2026 forecast of 6.862 billion manat, while the Chamber's projected shortfall of 300 million manat against receipts of 6.6 billion manat implies a benchmark of 6.9 billion manat. The reason for that difference was not explained.

Why the Import Assumption Matters

The $19 billion import forecast for 2027 is $900 million, or about 5%, above the actual 2025 figure and $300 million above the 2026 forecast. The budget therefore expects more goods by value to enter the country than in either comparison period.

Customs revenue depends on both the value of those goods and how they are taxed. A shipment covered by an exemption can add to the import total while generating less revenue than a shipment subject to the full applicable taxes. Changes in the mix of goods and importers can therefore change collections even when total imports rise.

The Chamber estimates that the ratio of customs receipts to import value in 2027 will be 0.6 percentage points above the actual 2025 ratio and 0.3 percentage points below the 2026 forecast. That ratio measures how much revenue is collected relative to the value of goods entering the country.

The Chamber identifies uncertainty in the international economy, changes in economic activity among Azerbaijan's main trading partners, and threats to trade and supply chains as risks. Disruptions that reduce or delay imports could also reduce the taxes collected from them.

VAT Provides Most of the Money

Value-added tax on imported goods is projected to bring in 4.7 billion manat in 2027. VAT is a tax on consumption that customs authorities collect when taxable goods enter the country. This category accounts for about 68.4% of the proposed 6.868 billion manat customs total.

The VAT target is 50 million manat, or 1.1%, below the 2026 forecast, despite the expectation of higher imports. The draft attributes the reduction to the smaller share of total imports subject to VAT in 2025 and the effect of that change on later forecasts.

Compared with actual 2025 collections, however, the VAT target is 377.7 million manat, or 8.7%, higher. The projected expansion in imports is the main explanation for that increase.

The forecasts also show changes among types of importers. VAT receipts from businesses outside the oil and gas sector in which the state directly or indirectly owns at least 51% are projected to fall by 80 million manat, or 40%. Receipts from other resident and nonresident legal entities are expected to fall by 45 million manat, or 1.2%.

VAT collected on goods imported by individuals is projected to rise by 10 million manat, or 1.7%. Receipts from budgetary organizations, public legal entities established on behalf of the state and other entities financed by state funds are expected to increase by 5 million manat, or 5.9%.

Excise Changes Reach Drinks and Chips

Excise taxes on imported goods are forecast to generate 240 million manat in 2027, an increase of 6 million manat, or 2.6%, from the 2026 forecast. Compared with actual 2025 receipts, the increase is 7.3 million manat, or 3.1%.

Excise is a tax applied to selected products rather than to goods generally. Legal amendments adding sweetened mineral and carbonated drinks, as well as chips, to the list of excisable goods contribute to the projected increase. For importers handling those products, inclusion brings an additional tax obligation.

The product forecasts move in different directions. Excise receipts from petroleum products are expected to rise by 6 million manat, or 31.6%; receipts from the category of other alcoholic beverages by 4 million manat, or 8%; and those from other products by 6.8 million manat, or 17.5%.

Declines are projected for potable alcohol, down 3.7 million manat; beer and beverages based on beer, down 2.1 million manat; and tobacco products and substitutes, down 2 million manat. Excise receipts from passenger cars, motorcycles subject to state registration and buses are also expected to fall by 2 million manat, while those from energy drinks are forecast to decline by 1 million manat.

Companies Carry the Customs Duty Increase

Customs duties are projected at 1.867 billion manat in 2027, up 49 million manat, or 2.7%, from the 2026 forecast. The target is 96.2 million manat, or 5.4%, above actual receipts in 2025.

A customs duty is a charge on goods entering the country, separate from VAT and excise. The draft links the higher duty target to the projected growth in imports, with legal entities expected to provide the main increase. Legal entities include companies and other organizations recognized in law.

Duties paid by legal entities are forecast to rise by 93 million manat, or 7.2%, while duties paid by individuals are projected to fall by 34 million manat, or 13.1%. The budget therefore places greater weight on collections from organizations as receipts from individual importers decline.

Those two changes produce a net increase of 59 million manat, compared with the stated increase of 49 million manat for customs duties as a whole. The detailed figures do not explain the remaining 10 million manat difference.

Road Tax Rises as Fuel Receipts Fall

Road tax collected through customs is forecast at 61 million manat in 2027. That is 1 million manat, or 1.7%, above the 2026 forecast and 17 million manat, or 38.6%, above actual 2025 receipts.

The larger increase from 2025 is linked to higher road tax rates on motor gasoline and diesel fuel. A higher tax per liter can raise revenue even without an equivalent increase in the amount of fuel imported.

Against the 2026 forecast, however, road tax revenue from imported fuel is expected to fall by 3.5 million manat, or 12.5%. The largest projected reduction is 2.6 million manat from diesel fuel, followed by about 900,000 manat from motor gasoline and 100,000 manat from liquefied gas.

Payments by owners or drivers of vehicles registered abroad that enter or transit Azerbaijan are forecast to increase by 4.5 million manat, or 14.1%. That increase would more than offset the projected fall in fuel related receipts and produce the category's net gain of 1 million manat.

A Nearly Flat Target With Changing Components

The draft's four main revenue categories add up to 6.868 billion manat: 4.7 billion manat in VAT, 240 million manat in excise, 1.867 billion manat in customs duties and 61 million manat in road tax. A Ministry of Finance forecast puts the customs transfer total slightly lower, at 6.865 billion manat, an increase of 3 million manat from the approved 2026 forecast rather than the draft's increase of 6 million manat.

Both totals point to almost unchanged customs revenue compared with the 2026 forecast. Beneath that near stability, the draft expects lower VAT receipts to be offset by higher duties, excise and road tax. Its 6.868 billion manat target is also 498.1 million manat, or 7.8%, above actual 2025 collections.

The Chamber's recommendation is to base customs forecasts on expected import volumes, changes in international trade and the effects of exemptions and concessions. For the budget, the central issue is how much of the expected import activity will generate tax revenue, and whether that activity will reach the projected level.

Key Points

• The Chamber of Accounts warns of a possible 300 million manat, about $176 million, shortfall against the 2027 customs revenue forecast.
• The draft projects customs receipts of 6.868 billion manat and imports of $19 billion.
• Import VAT supplies about 68.4% of the customs target, making it the largest component.
• Higher customs duties, excise and road tax are expected to offset a decline in VAT compared with the 2026 forecast.
• The Chamber approved its budget assessment for submission to parliament, calling for forecasts that reflect imports, trade conditions and tax concessions.