Azerbaijan invites Israeli high-tech companies and exempts them from taxes

Azerbaijan is trying to diversify its economy and stop relying on oil, and is offering Israeli high-tech companies to relocate in exchange for generous tax breaks. This is reported by the Israeli publication Globes, citing its sources in companies that are considering relocation.

In particular, Azerbaijan is offering full exemption from corporate tax, property tax, land tax and dividend tax for 10 years.

These are just a fraction of some of the incentives Azerbaijan has begun offering selected Israeli startups.

The move is linked to the launch of a technology park built in Baku, but from the Azerbaijani government's point of view, companies can be relocated anywhere in the country. Globes has learnt that a number of Israeli high-tech companies are already negotiating the move.

In addition to the tax benefits mentioned above, company employees will be able to receive a zero income tax rate on monthly salaries up to $4,700. In order to receive the benefits, the company must submit activity data for the last year, or prove an annual turnover of AZN 200,000.

The program provides support for immigration to the country, which includes assistance with residence permits and household problems solving.

"Azerbaijan aspires to become the technological "father" of the Eurasian region, so the transition to it can benefit companies as a gateway to Turkic countries. Baku's relations with Ankara are based on the idea of ‘one nation, two countries". Therefore, companies seeking to operate in Turkey will be able to capitalize on the situation, the publication writes.

The program is led by the Innovation and Digital Development Agency of Azerbaijan (IDDAA), whose main goal is to diversify the economy. The oil and gas sector accounted for 47.8% of Azerbaijan's GDP, 52.7% of budget sources and 92.5% of exports in 2022. Baku realisez that the world is weaning itself off oil and therefore preparations are needed to reduce dependence on oil and gas.

 Azerbaijan draws inspiration from the Gulf countries, which have been working hard in recent years to diversify their economies and "liberate" themselves from oil.

IDDAA is already working to train the relevant manpower and is awarding scholarships to more than 3,000 students for Internet technology courses. Next year, the number of scholarships for locals is expected to rise to 5,000.

Pasha Aliyev, IDDAA's vice president for supporting startups relocating to the country, speaks fluent Hebrew. Speaking to "Globes", he said the initiative to attract Israeli companies is part of a broader effort to build a strong tech ecosystem in Azerbaijan. "Our young and multilingual population, combined with the diversity of cultures, creates a dynamic and innovative workforce. Furthermore, our infrastructure allows companies moving into the country to quickly settle in and integrate into their new environment. This combination makes Azerbaijan an ideal location for technology companies seeking growth and innovation in the Asian market,” Aliyev notes.