Benefits For Technological Parks' Residents Introduced

• Published date: 01 February 2023
• Subject Matter: Tax, Income Tax, Tax Authorities
• Law Firm: BM Morrison Partners LLC
• Author: Mr BM Morrison Partners

Effective 1 January 2023, the work permit exemptions and entitlement to temporary residence are available to:

• residents, including heads and deputies of resident entities of technological parks; and
• foreign experts in the field of information and communication technologies employed by such residents,

along with the following tax exemptions available (in ii-v below for the ten-year period from any accounting year in which the resident was so registered) to those persons with respect to revenues (gains) from system integration, software design and development, including related upgrade, maintenance, and training activities;

1. 0% tax for monthly incomes of employees in the amount up to AZN8,000 and 5% beyond that until 2026, and 5% rate for any monthly income for seven years starting 2026;
2. business profit tax exemption;
3. exemption from the 10% withholding tax on dividends;
4. property tax exemption;
5. land tax exemption; and
6. social tax exemption for non-nationals and opportunity to choose the social tax payment scheme by nationals employed by concerned residents, and their contractors.

TAX CODE AMENDMENTS EFFECTIVE 1 JANUARY 2023

By Law No 677-VIQD of the Republic of Azerbaijan, dated 9 December 2022, substantial amendments have been made to the Tax Code and became effective as of 1 January 2023. Some of those are cited below.

The definition of the tax havens has changed to mean the countries or territories:

• where the tax rate is equal to 75 percent or less of the Azerbaijani corporate income tax rate (20 percent); or
• which do not exchange information according to relevant standards within the framework of international agreements with the Republic of Azerbaijan; or
• where there is a law on confidentiality of information about financial information, or about companies that are given the opportunity to protect the secrecy of the actual owner of the property or the recipient of income (profit).

The profits of a controlled foreign corporation (the "CFC") will be taxed in Azerbaijan, if, among others, the corporate income tax actually paid by the CFC abroad equals to or is less than 75 percent of the Azerbaijani corporate income tax (20 percent).

The procedures of opening and closing bank accounts for taxpayers have been facilitated and terms have been shortened.

Accordingly, after the registration with the tax authority, taxpayers apply to banks, other credit organizations or the national operator of postal communication (persons conducting the bank operations) for...