The Transport Corridor Exempt from Tax and Tariff
The North-South corridor is one of the main transportation routes which pass through the territory of Azerbaijan. This route connects the northern Europe with India and the countries of the Persian Gulf. Today it takes 45 to 60 days for the goods to reach those destinations. The North-South corridor across Azerbaijan will bring down that time-cost of a delivery to 14-20 days. Yet, there is another, not less important corridor, which passes through Azerbaijan – and that is, the South-West route. The geographic trajectory of this route is India – the Persian Gulf – Iran – Azerbaijan – Georgia – Black Sea – Europe. However, today 94% of shipment of all goods to those markets takes place through the Suez channel, the Mediterranean, and Baltic Seas. In comparison to this, the South-West route stands out as a more attractive choice for the transportation of those goods due to a two-fold cut in the cost of time and many- fold decrease in shipment prices.
At the moment the construction of a railway bridge between Azerbaijan and Iran, as well as an 8-kilometer long section of a railroad towards the border with Iran are nearing the end. The construction of a railroad between Iran’s two towns Astara and Rasht must be finished in order to allow for a full operation of the North-South route. However, notwithstanding these remaining parts of a railroad infrastructure, the movement of goods along the North-South still possible today. Goods from all over Iran as well as India can reach Rasht by a railroad and from there on to Astara, a town in Azerbaijan, by trucks. Despite the change of mode of transportation from a railroad to trucks and back to a rail freight forwarding again, this route remains more attractive in comparison to oceanic shipments in terms of the duration of a delivery of goods.
Until the very recent, a road tax and tariffs, levied on truck drivers at their entry to Azerbaijan, were a serious impediment to an intensive use of this route. That had a significant impact on a final cost of transportation. The recent presidential decree by the Head of the State Ilham Aliyev on the annulment of that tax and tariff showed a changing perspective and consequently will enable to increase a flow of cargo through Azerbaijan.
The decree produced an exemption for truck drivers, whose vehicles are registered abroad, from a road tax for the duration of 3 years. A new regulation approved by the Government applies to all foreign-owned road transportation vehicles, which transport goods into Azerbaijan and back from Azerbaijan on a precondition that those goods in transit will be put on a rail freight forwarding across Azerbaijan.
With such an undoing of duties, trucks can now freely enter the territory of Azerbaijan and unload their goods at the railway point for a further transportation to the points of destination by railways. This will help to substantially decrease the cost of transportation of goods through both the North-South and the South-West routes.