BAKU, Azerbaijan, September 1. New tax and customs benefits are planned for startup and technology park residents in Azerbaijan, Head of the Legal Department of the Innovation and Digital Development Agency (IDDA), Sabina Humbatzade, said during her speech on the topic "Development of the digital and innovation ecosystem in Azerbaijan: new legislative opportunities" organized within the framework of the educational session "Digital skills for the media", Trend's correspondent reports from the event.
According to her, individuals and legal entities operating in certain areas, including individual entrepreneurs, will be exempted from income and profit taxes, as well as dividends.
"The main condition for the application of these exemptions is that when products are exported and sold abroad, payments must be made through bank and payment accounts in Azerbaijan," Humbatzade noted.
She pointed out that tax breaks are also provided for property and land used by entities operating in the relevant areas.
The department chief also said that changes are also being made to the legislation regarding the duration of tax audits.
"In practice, one of the main difficulties we observe when talking to residents and startups is related to the duration of mobile tax audits. In most cases, residents of the technology park and startups are micro, small, and medium-sized businesses. The fact that mobile tax audits last for months has a negative impact on their activities," she emphasized.
According to Humbatzade, with the new changes, the duration of mobile tax inspections of technology park residents and startups cannot exceed 90 business days.
She added that concessions are also envisaged regarding the freezing of funds in the bank accounts of startups and technology park residents with tax debts.
"If their tax debt is up to 50,000 manat ($29,410), then the freezing of bank accounts will not be applied. The goal is to enable these entities to continue and develop their businesses by using the funds in their accounts effectively," the official explained.
Humbatzade also spoke about changes related to scientific research and technological projects.
"When startups, technology park residents, and scientific institutions are ordered to form an innovative product, the expenses incurred in this direction are multiplied by a factor of 1.5 and included in the object of taxation," he noted.
According to him, the fact that a research and development (R&D) project results in technological failure won't prevent the costs incurred from being considered justified.
"Even if an R&D project fails technologically, it is considered a justified cost from a tax perspective," Humbatzade stressed.
She further noted that concessions are also envisaged in the field of technology transfer.
"Fifty percent of the income from the sale or use of proprietary intangible assets, including software and know-how, is exempt from tax," the head of the department said.
Humbatzade also announced concessions related to cloud services.
"One of the main infrastructures used by startups and residents of the technology park is cloud services. Payments for cloud computing services purchased from abroad will not be subject to tax at source. In addition, these services will also be exempt from VAT," she pointed out.
Touching upon import concessions, the head of the department said that products, supporting components and devices imported by entities in connection with their activities will be exempted from customs duties and VAT for a period of 10 years.
She noted that certain concessions are also envisaged to support personnel training.
"Certain funds may be allocated from the wage fund for the improvement of professional qualifications and professional development of employees of individual entrepreneurs and companies. These funds will be taken into account as an expense deducted from income, provided that they do not exceed 3 percent of the wage fund," Humbatzade said.
The official added that in order to ensure legal certainty, the legislation also establishes the concepts of 'digital traveler' and 'freelancer'.
"Digital traveler refers to foreign citizens who work remotely through information and communication technologies and operate in the fields of digitalization, innovation, cybersecurity, and artificial intelligence," she clarified.
According to her, according to the amendments to the Migration Code, digital travelers will be able to obtain a business visa for a period of three years.
"The main condition is that they must have a stable income from a foreign country for six months. The amount of this income must not be less than 13 times the minimum wage in Azerbaijan," Humbatzade noted.
She added that income tax won't be applied to digital travelers and no limits will be imposed on transfers to their bank accounts. In addition, it's planned to apply discounts related to social insurance payments.
