Azerbaijan switches oil and gas extraction taxes to volume-based fixed rates

BAKU, Azerbaijan, January 1. Mineral extraction
and excise taxes in Azerbaijan’s oil and gas sector will be
calculated as fixed amounts based on production volume, rather than
as a%age of wholesale prices, Trend reports.

This issue has been reflected in the law on amendments to the
Tax Code, approved by the President of the Republic of Azerbaijan,
Ilham Aliyev.

Under the new system, the mineral extraction tax for crude oil
is set at 12 manat per ton, while natural gas and condensate will
be taxed at 15 manat per thousand cubic meters. The tax for ore
minerals, including all types of metals, will continue to be
calculated as 3% of their wholesale price.

Previously, taxes based on the value of extracted minerals
created uncertainty for producers due to market price fluctuations,
complicating revenue forecasting and reducing operational
efficiency. The new volume-based approach aims to stabilize state
budget revenue forecasts and incentivize efficient production.

Excise and mining taxes on other domestic goods, excluding oil
and gas products, will continue to be determined based on quantity
rather than value, with mining taxes contributing to production
costs and excise taxes affecting selling prices.

Previously, the mineral extraction tax was determined as
follows, depending on the type of minerals extracted from the
earth, by applying it to their wholesale price:

These amendments came into effect on January 1, 2026.