Technologies parks in Azerbaijan: ICT benefits expanded

 

The Tax Code, the Migration Code and the Law "On Social Insurance" of the Republic of Azerbaijan have been amended and a number of concessions and exemptions have been established for residents of the technology parks in Azerbaijan.

 

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.

 

According to the amendment made to the Tax Code, the concessions and exemptions provided for technology park residents will also apply to individuals who have received a technology park registration certificate and operate outside the technology park as a legal entity or individuals who carry out entrepreneurial activities without creating a legal entity.

 

According to the changes, persons who perform system integration, software preparation and development activities outside the technology park as a resident of the technology park are exempt from paying personal income tax, profit tax of legal entities, property tax for their property in the industrial and technology park, and 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.

 

Besides that, income tax is collected from the monthly incomes of the individuals obtained from employment at taxpayers who perform system integration, software preparation and development activities outside the technology park as a resident of the technology park in the following manner:

• In the period of 3 years from January 1, 2023, if the monthly income is up to 8,000 manats, 0 percent, 5 percent of the amount exceeding 8,000 manats;
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• 5 percent of monthly income for 7 years from January 1, 2026.

 

According to the amendments made to the Law of the Republic of Azerbaijan "on Social Insurance", a resident of the technology park (including persons who carry out system integration, software development, and development activities), foreigners, and non-citizens involved in the purposes of that activity by its contractor or a subcontractor who has entered into a direct contract with the contractor, are covered by compulsory state social insurance for 10 years from January 1, 2023.

 

Per this Law, for 10 years from January 1, 2023, the mandatory state social insurance fee for a resident of the technology park (including persons who carry out system integration, software development and development activities), its contractor  or a subcontractor who has entered into a direct contract with the contractor, as well as individuals recruited by these persons for the purposes of that activity (except for foreigners and stateless persons) is paid on the basis of four times the amount of the minimum monthly salary, or from the income obtained from employment in accordance with Articles 14.3 and 14.4 of Law "On Social Insurance", depending on one's choice.

 

The changes came into force on January 1, 2023. For registering as resident of technologies parks in Azerbaijan, or clarification of tax and social contribution concessions and benefits, please contact us.