Government Releases Imports of Wheat, Production and Sale of Flour and Bread from VAT

The Government of Azerbaijan releases from VAT the import and sale of wheat, production and sale of flour and bread from January 15 on. This step is aimed at lowering the price of flour and bread and was taken after a wave of popular protests held in the regions of Azerbaijan on January 12-13. This was reported by the Ministry of Industry and Economy.

The decision was made on behalf of President Ilham Aliyev "due to changes in the exchange rate of manat to strengthen the social protection of the population, mostly low-income families."

VAT exemption for grain and flour, as noted in the report, "significantly reduces the wholesale price of flour." Depending on the transport costs, the price of a 50 kg bag of flour is set at 21.5 manats (13.3 US dollars) to 22.5 manats ($ 14), and the retail price of the product is from 23 to 24 manats (14.3 - 14.6 dollars).

Based on these prices for flour, the cost of a 500-gram loaf of bread will be 0.3 manat (0.19 cents), and a 700-gram loaf - 0.4 manats (0.25 cents).

For people offering flour and bread at inflated prices, serious measures will be taken, according to the concluding message of the Ministry of Industry and Economics.

After the 48% devaluation of the manat on December 21, the price of a sack of flour has jumped from 17-18 to 26-27 manat. In the regions speculators inflated the price to 35-38 manat, which caused popular protests in Lenkoran, Siyazan, Fizuli, Agsu, Agjabedi and other areas.

The price of bread in several places rose by 0.05 and 0.10 manat, and where there was no rise in prices, the weight of loaves was reduced. Prosecutor General's Office in the evening on November 14 also reported arrests of officials who committed an artificial increase in the price of flour and bread.

In particular the Barda Ltd store manager Ilgar Hasanov and the chairman of Kur- Chorek Rovshan Hajiyev, abusing their official powers, allowed reducing the weight of bread produced from flour of the 1st and 2nd grades. Against them, on January 12 a criminal case was filed under Art. 308.1 (abuse of power) and 200.1 (consumer fraud or the production and sale of substandard products) of the Criminal Code. Hasanov and Hajiyev were detained as suspects. -06D--

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Azerbaijani authorities are taking steps to prevent the growth of prices for bread, which was provoked by repeated devaluation of the manat in December 2015. After the 47% devaluation of the manat  on 21 December  the prices for flour and bread increased by 20-30%. By the decree of President Ilham Aliyev on January 15,  the import of wheat, flour production, sales of flour and bread are exempted from VAD.

Ministry of Economy and Industry published a fixed price of grain, flour and bread. Price sacks of flour weighing 50 kg can cost no more than 22.5 manats, bread weighing 500g - 0.30 manat, 700gr - 0.40 manat. For the sale of products above the established price businessmen face criminal penalties.