Azerbaijan's Milli Majlis has adopted amendments to the Tax and Migration Codes, as well as the laws "On Social Insurance", "On Customs Tariff", "On Licenses and Permits" and "On Public Procurement", which were returned to parliament with the president's objections. The document was put up for discussion at the first session of the parliament's autumn sitting.
According to the document, from January 1, 2027, for a period of 10 years, 100% of income from the sale of a taxpayer's shares or stocks will be exempt from income and profit tax for a period of 3 years, if these shares or stocks belong to a legal entity that is a micro or small business entity that has received a "Startup Certificate" or a certificate of registration in a technopark and does not carry out other activities.
Under current legislation, income from innovative activities of startups that are micro or small business entities and operate as individual entrepreneurs is exempt from income and profit tax for three years from the date of receiving the "Startup Certificate". This period is being increased from three to seven years.
The exemption from income and profit tax will also apply to income of individuals from the sale of securities received as a result of investing through a crowdfunding platform in persons that have received a "Startup Certificate" or a certificate of registration in an industrial or technological park — for a period of 10 years from January 1, 2027; dividends paid to individuals on the above-mentioned shares (stocks), except for shares (stocks) of residents of technological parks — for a period of 10 years from January 1, 2027; payments to non-residents that do not have a permanent establishment in the Republic of Azerbaijan for services of cloud computing, infrastructure, platforms and software, as well as services of application programming interfaces (API), received by taxpayers that have a "Startup Certificate" or a certificate of registration in a technopark, directly to support their own activities and not related to royalties — for a period of 20 years from January 1, 2027; dividends paid to participants (shareholders, unit holders) of venture funds from profits received by these funds from investments in micro and small business entities that have a "Startup Certificate" or a certificate of registration in an industrial or technological park — for a period of 10 years from January 1, 2027.
The draft also provides that from January 1, 2027, for 10 years, the amounts of investments by accredited investors in the acquisition of shares or stakes in resident legal entities that have a "Startup Certificate" or a certificate of registration of an industrial or technological park will be deducted from the taxable aggregate income of an individual entrepreneur, subject to established conditions.
In particular, the amount of such a deduction must not exceed 50% of the taxable aggregate income of the individual entrepreneur for the relevant reporting year after deducting expenses. The investor must not be a related party to the founders or heads of the executive body of the company attracting investment, and the acquired stake or shares must be continuously owned by them for at least three years.
After discussion, the document was put to a vote and adopted in the first reading.