DIGITAL FORMAT

The digitisation of customs processes is a global trend. Its objective is to streamline trade relations between countries and enhance the efficiency and transparency of related processes. The acceleration and simplification of customs procedures create more favourable conditions for entrepreneurs, particularly those actively engaged in foreign economic activities. At the annual Customs Business Forum, which is held at the end of the year, discussions centred on the transformations within Azerbaijan's customs system and the challenges faced by businesses.

New Projects

At the forum, three key projects were introduced: These include the "Digital Customs Value," the "Two-Tier Release System," and the "Advance Notification System." The "Digital Customs Value" is a new evaluation format that will be implemented starting in 2025. This initiative is designed to ensure the accurate determination of goods' value based on advanced international practices and digital technologies. The "Two-Tier Release System" is a tool designed to expedite the delivery of goods, reduce storage costs, and enhance the flexibility of business processes. The "Advance Notification System" is designed to expedite border crossings and organise logistics effectively, which is particularly important for carriers. All these projects are based on artificial intelligence and digital solutions. These initiatives are poised to streamline operations, reduce expenditures, and foster a more conducive business environment, ultimately enhancing the efficiency of customs procedures.

The advantages of digitisation are clearly demonstrated by the Automated Risk Analysis System (ARAS), launched in January 2024. As Shahin Baghirov, Chairman of the State Customs Committee (SCC), points out, ARAS has achieved a 58% reduction in average border crossing times, a 20% decrease in physical inspections, and a 15% reduction in cargo clearance times. The SCC has also developed special electronic notifications and a mechanism for releasing goods for compliant traders. These measures have led to a substantial reduction in the time entrepreneurs spend on customs clearance, thereby minimising transportation costs.

According to Baghirov, in 2023, customs duties, tariffs, and taxes constituted 18% of the state budget and 5.2% of the country's GDP, as well as 34% of non-oil and gas budget revenues. Customs revenues have increased by 12.4% compared to 2022, indicating the efficacy of the implemented reforms and digitisation efforts. It is noteworthy that a decade ago, customs revenues constituted less than 10% of budget income.

The digitisation of customs procedures is particularly significant amid rising cargo volumes transiting through Azerbaijan, linked in part to the geopolitical situation in the region. The complexities of logistics along traditional routes, such as the Trans-Siberian Railway or southern Russia, have made transit through Azerbaijan increasingly appealing for carriers. In this context, a stable political environment, investment in infrastructure, and the implementation of digital solutions have strengthened the country's status as a reliable transit partner.

As Shahmar Movsumov, Assistant to the President of Azerbaijan, has emphasised, transit traffic increased more than 2.5 times from 2019 to 2024. He further elaborated that this growth is directly linked to Azerbaijan's enhanced standing within major international transportation corridors. Significant progress has been observed within the Middle Corridor connecting China and Europe. Thanks to the digitisation process, transit times along this route have been reduced to 8-10 days," highlighted Movsumov. Overall, the implementation of electronic systems has significantly accelerated processes that previously took several days. He further emphasised that the electronic customs system has enabled swift cargo clearance, taking only a few hours, greatly enhancing the route's appeal for businesses.

To further solidify Azerbaijan's position in global logistics, collaboration between government agencies and the private sector is crucial. The Assistant to the President underscored the favourable conditions for local and foreign investors, highlighting the simplification of customs procedures, the implementation of electronic services, and the removal of bureaucratic barriers.

Incentive for Industrialisation

A key initiative for the future is the replacement of the short import declaration with a unified document. Natig Shirinov, the Deputy Chairman of the State Customs Committee (SCC), highlighted that under the current system, entrepreneurs must submit a short declaration at least an hour before crossing the border and then process a full import declaration once inside the country. The new measure will streamline and expedite import processes while reducing the administrative burden on businesses.

The "green corridor" system, which has been successfully implemented in Azerbaijan, allows trusted companies to undergo customs procedures more quickly with minimal inspections. Taleh Ziyadov, General Director of Baku International Sea Trade Port CJSC, believes this system is comparable to that in Türkiye. In Türkiye, entrepreneurs who attain authorised economic operator (AEO) status enjoy significant benefits but must strictly adhere to rules to avoid being placed on a blacklist. Mr. Ziyadov notes that a culture of transparency and accountability among businesses is already gaining momentum in Azerbaijan. The expansion of the green corridor system facilitates faster export-import operations and builds trust between businesses and customs authorities," asserts Ziyadov.

During the parliamentary discussions on the 2025 budget, fundamental directions for customs policy and tariffs were reassessed. Beginning in 2025, Azerbaijan's customs system will not only fulfil its fiscal function but also become an active tool for promoting industrialisation and developing public-private partnership projects.

Azer Amiraslanov, Chairman of the Committee on Economic Policy, Industry, and Entrepreneurship, has announced the introduction of targeted customs incentives in 2025 to support national industrial enterprises and initiatives under public-private partnerships. These measures aim to attract investments, develop local production, and accelerate technological progress.

Amiraslanov also noted that implementing electronic declarations, online customs services, and digital control and monitoring systems contributes to greater transparency, accountability, and efficiency within customs operations. These technologies enable rapid detection of illegal goods while enhancing the security of economic borders and streamlining interactions between businesses and government agencies.

Azerbaijan's advancement in digitising customs processes is noteworthy, as it has surpassed many of its regional counterparts. The republic is actively integrating its systems with international information exchange platforms, simplifying international trade, and increasing its competitiveness. To maintain this leadership, however, continued investment in IT infrastructure, refinement of regulatory frameworks, and strengthening cooperation with international organisations and trading partners is essential.