Tax relief may boost Azerbaijan's agricultural productivity

As of this year, sales of feed and feed additives in Azerbaijan have been exempted from value-added tax (VAT) for another 3 years, Azernews reports.

The period of exemption from VAT applied to sales of feed and feed additives whose list is approved by the Cabinet of Ministers in Azerbaijan will continue until January 1, 2027.

It should be noted that the production and sale of agricultural products are tax-free, and explanations are given in separate articles in the Tax Code. However, the subsequent circulation of all agricultural products, i.e. supply, and trade, is not fully tax-free. However, from January 1, 2020, sales of feed and feed additives used in livestock and poultry farms were fully exempted from VAT. The list of those goods was approved by Decision No. 251 of the Cabinet of Ministers dated June 30, 2022. This list includes strong, coarse, and juicy fodder, vegetable and animal fodder, certain amino acids used in animal husbandry and poultry, as well as feed additives, minerals, vitamins and other substances included in the feed.

It should be noted that the exemption from VAT for the circulation of such products in all chains will of course have its effect on the development of animal husbandry. Tax relief is one of the main issues that can prevent the increase in the price of beef, mutton, and poultry produced in the country.

Because people who sell beef do not always buy that animal from farmers. Mostly, they get it from supply points. In this case, the seller sells both the trade markup and the value-added tax paid by him on the goods during the sale. As a result, VAT exemption for beef and other livestock and poultry products will naturally cause the final consumer to purchase that product at a lower cost.

Thus, the full exemption from VAT of sales of feed and feed additives used in livestock and poultry farms is one of the important reasons that can prevent the increase of prices in the agricultural sector in general.

The VAT rate in the country is 18%.