Published January 2026, Pg. 57-64
Section: Economy, management and law
UOT: 338.121.338.332
DOI: 10.37474/0365-8554/2026-01-57-64
The impact of taxes calculated during the production and sale of petroleum products produced in the Republic of Azerbaijan on the profitability and competitiveness of an enterprise
A.O. Ganbarov - Azerbaijan State University of Economics
According to the tax legislation of the Republic of Azerbaijan, petroleum products produced in the territory of the Republic of Azerbaijan are excisable goods, and excise rates are set by the Cabinet of Ministers (CM). In addition, road tax on gasoline, diesel fuel and liquefied gas is calculated and paid to the budget during the production of petroleum products. If the calculated and paid excise taxes on excisable goods produced in the Republic of Azerbaijan are taken into account for the calculation of VAT upon presentation of the goods, they are not taken into account in either income or expenses from the point of view of calculating profit tax. However, for the buyer of excisable goods, excise taxes are applied to the cost of the goods, and when these goods are used in financial and economic activities – to expenses deducted from income. On the other hand, although wholesale and retail prices for some petroleum products within the republic are regulated by the state, selling prices for other petroleum products are not regulated in this way. For this reason, when selling petroleum products, the prices of which are not regulated by the state, market prices are applied, which leads to the sale of products each time at different prices and the calculation of different amounts of excise tax, income tax and VAT.
Of course, market prices change depending on the amount of production and the supply and demand factor. When market prices change, an increase in taxes leads to an increase in the company’s revenue and, accordingly, profit, while a decrease in taxes leads to a decrease in revenue and profit. As production increases, especially as a result of reconstruction and modernization of petroleum product production facilities, sales volume may increase or decrease depending on the supply and demand factor. This may lead to a decrease in profit or loss in the event of a decrease. On the other hand, taxes can lead to a decrease in net profit, as well as a decrease in the profitability and competitiveness of the enterprise, since they are paid in the same proportion in the case of low profit and loss in the case of decreased sales.
The main factors for successful management of financial and economic activities of oil and gas enterprises in market conditions are the optimal use of available financial and material resources and the implementation of a balanced investment policy.
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