AZE - TAX BENEFITS

Effective 1^st of January 2023 a new chapter has been adopted to the Tax Code “Features of the taxation applied in the liberated territories”.

This chapter regulates issues related to the tax exemptions granted to the residents of the territories liberated from occupation, and elements / transactions to which these exemptions are applied.

For the purposes of this chapter, the term "resident of the liberated territory" means the legal and physical persons who are registered as a taxpayer in the liberated territories and operates directly in those territories.

Tax exemptions defined in this chapter shall not be applied to the following types of activities:

1. Providing of financial services;
2. Cargo transportation services by vehicles;
3. Provision of goods, works and services (with the exception of resident contractors engaged in production activities within the de-occupied territory) at the expense of the state budget.

Exemptions:

• Residents of the demilitarized zone are exempt from profit (income), property, land and simplified taxes for the period of 10 years starting from January 1, 2023.
• Import of equipment / technological equipment and installations, as well as raw materials and materials imported by the residents of the territory liberated from occupation and registered for the purposes of VAT are exempted from VAT for 10 (ten) years from January 1st, 2023. The provisions of this article are applied on the basis of the confirmation document issued by the Government and determined by the relevant executive authority.
• Dividends of shareholders of legal entities - residents of the territory liberated from occupation are exempt from taxation for 10 years from January 1, 2023.