BAKU, Azerbaijan, Mar.29
By Sadraddin Aghjayev – Trend:
The exemption of start-up projects from taxes in Azerbaijan will give impetus to the development of the country's non-oil sector and eliminate its dependence on the import of certain goods, the local expert on economic and legal issues Vusala Ahmadova told Trend on Mar.29.
Ahmadova said that in accordance with the decision of the Cabinet of Ministers on the definition of startup criteria, legal entities or individuals who meet them and receive a special certificate will be exempt from taxes based on the Tax Code.
The expert noted that this will contribute to the promotion of local production of innovative products and services.
“Enterprises without sufficient risk capital often conduct the transfer of innovations (trade agreements, know-how). The low level of investment prevents small and medium-sized enterprises from introducing innovations, without which it’s impossible to create high added value,” she further said. “Thus, a business can be incentivized for the making of products with high added value in the country, leading to GDP growth and, as a result, the elimination of the foreign trade deficit."
The current tax incentives apply only to non-cash payments.
Besides, according to the expert, these tax incentives can be considered as a step to attract foreign start-up projects to Azerbaijan.
“In this context, it’s important to take comprehensive measures. As the world experience shows, Estonia is considered a ‘paradise of startups’ because the only thing that is needed to open and operate a company in this country is to have an electronic resident card. In any case, Azerbaijan needs to take active steps in the field of information technologies,” Ahmadova pointed out.
"It’s important to introduce a liberal tax system in Azerbaijan. For example, one of Estonia’s characteristic features is zero corporate income tax and the ability to fully declare taxes online. In this country, income tax is paid monthly and there is no need to file income tax returns annually,” she added. “The corporate tax rate is 20 percent and is subject to dividends. This tax is paid by the resident legal entity making the distribution. No special tax is imposed on dividends in Estonia. An entrepreneur is not considered a taxpayer if his taxable supplies (excluding imports) don’t exceed 40,000 euro in one calendar year.”
Earlier, the Cabinet of Ministers of Azerbaijan approved the criteria for determining a start-up and the rules for maintaining a register of innovative projects open to the public and issuing a start-up certificate.
According to the criteria, legal entities or individuals that meet them and receive a special certificate should be exempt from taxes based on the Tax Code. Holders of such certificates should be exempt from paying income tax on income from innovative activities from the moment they receive a startup certificate. Legal entities that are subjects of micro or small businesses, as well as individuals operating as individual entrepreneurs should be exempt from income tax for 3 years.
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