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Ministry: Abolishment of VAT exemption on imports of grain, flour and meslin not to lead to higher prices

Business Materials 13 July 2011 11:12
The Azerbaijani Cabinet of Ministers' decision to abolish exemptions from VAT of imported grain, meslin (a mixture of wheat and rye), and wheat and rye flour will not cause a rise in prices for these products, Agriculture Ministry's Plant Products Production and Processing Department Chief Sabir Veliyev told Trend.
Ministry: Abolishment of VAT exemption on imports of grain, flour and meslin not to lead to higher prices

Azerbaijan, Baku, July 13 / Trend A.Akhundov /

The Azerbaijani Cabinet of Ministers' decision to abolish exemptions from VAT of imported grain, meslin (a mixture of wheat and rye), and wheat and rye flour will not cause a rise in prices for these products, Agriculture Ministry's Plant Products Production and Processing Department Chief Sabir Veliyev told Trend.

The Cabinet has chosen to abolish exemptions from VAT of imported grain, meslin (a mixture of wheat and rye), and wheat and rye flour starting July 10.

These exemptions were introduced on Dec.3, 2010, and were supposed to be enforced until Aug.1, 2011. The VAT rate in Azerbaijan is 18 percent.

"The decision on VAT exemptions on imports of these products in 2010 was linked with the need to import grain to meet domestic demand, because of the natural disasters which caused a low yield in 2010", Veliyev said.

He said the country produced 2.1 million tons of grain and imported 1.4 million tons in 2010. Of this amount, 1 million tons of grain was not used, and remained for 2011.
"The deficit in cereals is not observed this year; we have last year's reserves. As of April, 330,000 tons of grain were imported, but now the figure will be about 500,000. The production volumes are also projected to increase", Veliyev said.

The decision to abolish the VAT was seen as unnecessary under the circumstances. "Naturally, there is not threat to rising prices," he added.

Today Azerbaijan imports grain from Russia and Kazakhstan.

Azerbaijan is expected to produce 2.5 million tons of grain in Azerbaijan, which is 500,000 tons more than last year, the Minister of Agriculture Ismet Abasov told journalists earlier.
"We forecast production of 2.5 million tons of grain, assuming favorable weather conditions - 1.7 million of which will be food grain," he said. Barley is planned to yield 800,000 tons in 2011.

Last year the country harvested more than 2.000 million tons of grain, which is 33 percent less than in 2009. Some 20.7 quintals of grain were harvested from each hectare of land, on average.
Abasov said today the country's demand in grain crops is 3-3.2 million tons.

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