The Republic of Azerbaijan’s Tax Code, Migration Code, and Law “On Social Insurance” have all been revised as of January 1, 2023, and several exemptions and concessions have been provided for residents of the country’s technology parks.

According to the amendments to the Tax Code of the Republic of Azerbaijan:

1.  IT business entities that operate outside of the technology park but engage in system integration, software design, and development activities will also be regarded as residents of the technology park if they have secured a certificate of registration there.

2.   Residents of the technology park who are engaged by taxpayers to perform system integration, software design, and development activities outside the technology park shall be subject to the following income tax:

  • 5% of monthly income for 7 years starting on January 1, 2026;
  • 0% on monthly income up to AZN 8,000;
  • 5% on the amount over AZN 8,000 for 3 years starting on January 1, 2023.

3.   A resident of a technology park who performs system integration, software preparation, and development outside the park is exempt from paying personal income tax, profit tax of legal entities, property tax for their property in the industrial and technology park, land tax for the land they use in the industrial and technology park, and withholding tax for dividends for a period of 10 years starting from the reporting year of their registration in the industrial and technology park in accordance with the legislation.

Along with the tax benefits indicated above, a number of social insurance advantages will also be available. Therefore, in accordance with the changes to the Republic of Azerbaijan’s “Social Insurance” Law:

 1.  Starting on 1 January 2023, technology park residents, their contractor, and a subcontractor hired by the contractor for these purposes will not be required to pay mandatory state social insurance contributions on behalf of foreigners and stateless people hired to perform system integration, software design, and development activities.

 2.  A resident of a technology park (including those performing system integration, software design, and development activities), its contractor, a subcontractor hired by the contractor, and individuals (other than foreign nationals and stateless persons) employed by these persons for the purposes of these activities will all be required to pay mandatory state social insurance contributions beginning on January 1, 2023, for a period of ten years, in accordance with their preferences.

According to the changes made to the Migration Code, the resident of the technology park (in relation to the legal entity, those who hold the position of its head and deputies) and specialists with experience in the field of information and communication technologies involved in labor activities in the territory of the Republic of Azerbaijan by that resident are not required to obtain a work permit.

This information is given to you for convenience only; it is not legal counsel. It is provided for our clients’ and other interested parties’ general information. This information may contain connections to sources other than the FNK website, and it should not be used in any particular circumstance without seeking proper legal counsel. For further information, please, contact us.

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