Azerbaijan will establish new requirements for large entrepreneurs to qualify for tax breaks. This is reflected in the draft law on amendments to the Tax Code discussed at today's plenary session of the Milli Majlis.
According to the draft law, income of individuals who are residents of industrial or technological parks established by a body (institution) designated by the relevant executive authority and who carry out entrepreneurial activity without creating a legal entity, from activity in the industrial and technological park, including outside the technological park (except income from employment), will be exempt from income tax in accordance with regulatory legal acts for 10 years for residents of industrial parks and 20 years for residents of technological parks from the date of obtaining a certificate of registration as a resident of an industrial or technological park, respectively. Dividends paid from income received by a resident of a technological park from this activity will be exempt from income tax for 20 years from the date of obtaining a certificate of registration as a resident of a technological park.
Income of legal entities that are residents of industrial or technological parks established by a body (institution) designated by the relevant executive authority, from activity in the industrial and technological park, including outside the technological park, will be exempt from profit tax for 10 years for residents of industrial parks and 20 years for residents of technological parks from the date of obtaining a certificate of registration as a resident of an industrial or technological park, respectively, in accordance with regulatory legal acts. Dividends paid from income received by a resident of a technological park from this activity will be exempt from profit tax for 20 years from the date of obtaining a certificate of registration as a resident of a technological park.
With respect to individuals (except foreigners and stateless persons) engaged for the purposes of this activity under an employment contract (agreement) concluded with a resident of a technological park belonging to the non-state sector, as well as with a resident of a technological park more than 51 percent of shares or stakes of which is not directly or indirectly owned by the state, its contractor and subcontractor that directly concluded an agreement with this contractor — from January 1, 2027, for 20 years, mandatory contributions to state social insurance will be paid at their choice in the amount of four times the minimum monthly wage or from income received from employment. This benefit will apply under certain conditions to residents of technological parks that are large business entities belonging to the non-state sector, as well as more than 51 percent of shares or stakes of which is not directly or indirectly owned by the state.
All the above benefits will apply to large business entities subject to the following conditions:
- if the share of export income in the total income of large business entities that are residents of a technological park for a calendar year is not lower than the established threshold. The minimum threshold for the share of export income in the total income of large business entities that are residents of a technological park will be approved by the body (institution) designated by the relevant executive authority;
- if, when exporting goods (works, services) by large business entities that are residents of a technological park, the income (funds) received from the relevant export operations are transferred to the taxpayer's bank and other payment accounts in the Republic of Azerbaijan.
After discussions, the draft law was put to a vote and adopted in a single reading.