Beginning January 1, 2026, Azerbaijan will cancel all tax incentives for hybrid and plug-in hybrid vehicles, according to the 2026 state budget package submitted to the Milli Majlis.
Under the new fiscal framework, only fully electric vehicles (EVs) will remain exempt from value-added tax (VAT) on both import and sale. The VAT exemption for EVs will be valid for one year, starting January 2026.
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The government also plans to revise excise-tax coefficients applied to imported vehicles that are over seven years old, aligning the rates with the country’s environmental and fiscal policy goals.
The changes mark a clear shift in Azerbaijan’s automotive taxation strategy – from incentivizing partial electrification toward promoting a fully electric vehicle market and reducing imports of older, high-emission cars.
