The space of competitive human capital and modern innovations has been identifieed as one of the five main directions of "Azerbaijan 2030: National Priorities for Socio-Economic Development". At the same time, the development of the sphere of information and communication technologies (ICT) is designated as a separate goal in the " Socio-Economic Development Strategy for 2022‒2026 ".
In order to develop the ICT sector, support and stimulate the activities of legal and natural persons in this field, promote the digital development in the country, ensure the attractiveness of foreign investments and attract highly qualified specialists and personnel, amendments have been made to the Tax Code and the Law "On Social Insurance", which come into force on January 1, 2023.
According to the amendments made in the Tax Code, persons who perform system integration, software preparation and development activities outside the technology park as a resident of the technology park, are exempted from VAT on income (profit), property and land taxes, dividends, importation of machinery, technological equipment and facilities for 10 years starting from the reporting year of their registration. Tax incentives for the mentioned persons are applied to their activities both in and outside the technopark.
Income tax on monthly income from hired labor of natural persons working for persons engaged in system integration, development and software development will be charged in the amount of 0 percent for monthly income up to 8000 manats for 3 years from 01.01.2023, 5 percent for incomes over 8000 manats and 5 percent of monthly income for 7 years from 01.01.2026.
According to the change in the Law "On Social Insurance", foreigners and stateless persons involved in the implementation of this activity by a resident of the technology park (including persons who carry out system integration, software preparation and development activities), its contractor and a subcontractor who have entered into a direct contract with the contractor are exempted from paying the mandatory state social insurance fee for a period of 10 years from January 1, 2023. Except for foreigners and stateless persons, the compulsory state social insurance fee has been determined to be paid in the amount of four times the minimum monthly salary or on the income obtained from hired work in the manner specified in the Law in force (Articles 14.3 and 14.4) for the residents of the technology park (including persons who carry out system integration, software preparation and development activities), its contractor and subcontractors who have entered into a direct contract with the contractor, as well as the natural persons involved by these persons for the purposes of that activity for a period of 10 years from January 1, 2023.
In this regard, the insured persons provide the insurer with written information about their choice before January 15 of each year, and this choice does not change until the end of the calendar year. In case the insured fails to provide written information about his choice in the specified period for the next calendar year, the insurer applies the option of that insured person in the previous year.
The adopted amendments will bring revival to the ICT sector in the medium-term perspective, as a result, it will give a serious impetus to the development of entrepreneurship, will turn Azerbaijan into the center of the region in this field, as well as make its economic environment attractive compared to other countries in the field of ICT, and support the increase of innovativeness and quality of ICT products.
