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The role of tax incentives in the development of the industrial sector
The role of tax incentives in the development of the industrial sector
The industrial sector is one of the key pillars of the economy and makes a significant contribution to sustainable growth by supporting innovation. It encompasses areas such as production, infrastructure, and efficient use of resources, driving GDP growth through job creation, increased productivity, and technological advancement. At the same time, sustainable practices such as green production demonstrate progress in the industrial sector, helping align the economy with environmental goals. Particularly against the backdrop of geopolitical tensions, climate transitions, and post-pandemic recovery, the development of industry has become a focal point in recent international reports.
The Role of Industry in Achieving Sustainable Development Goals
The promotion of sustainable infrastructure, industrialization, and innovation is among the Sustainable Development Goals (SDGs) established by the United Nations. Promoting sustainable industrialization is one of the main engines of economic development. Economic growth, social progress, and climate action strongly depend on investments in infrastructure, sustainable industrial development, and technological advancement.
According to the organization’s report for 2025, in a rapidly changing global economic environment and amid rising inequality, sustainable development must include industrialization — which, on one hand, ensures equal opportunities for all, and on the other, is characterized by innovation and resilient infrastructure. Since 2015, significant progress has been achieved globally in infrastructure development, industrial growth, and innovation. Between 2015 and 2024, the global manufacturing value added per capita increased by 17.3%. The global manufacturing growth rate decreased from 7.4% in 2021 to 2.7% in 2022, but saw a recovery in 2024 with an annual growth of around 2.7%. In 2023, global maritime freight volume reached 11.6 billion metric tons, driven by the growing participation of developing countries. Meanwhile, 5G mobile broadband services now cover 51% of the world’s population.
Inclusive and sustainable industrialization, combined with innovation and infrastructure, supports dynamic and competitive economic forces, creating employment and income sources. Industrialization plays a key role in the application of new technologies, facilitation of international trade, and efficient use of resources. The development of new industrial sectors leads to improved living standards. If industries develop based on sustainability principles, this approach has a positive impact on the environment.
Since 2015, significant global progress has been achieved in infrastructure, industrial growth, and innovation.
Incentive Opportunities Accelerating Industrial Development
In Azerbaijan, the industrial sector — particularly the non-oil segment — has demonstrated the fastest growth. The increase in the share of the non-oil sector in the national economy is being achieved through industrialization. In this regard, a systematic policy is being pursued for the transformation of industry. Industrialization in Azerbaijan is defined not only as part of economic policy but also as a foundation for long-term sustainable development.
The new phase of industrialization in Azerbaijan is characterized not only by an increase in production but also by enhanced efficiency and competitiveness. The development of industrial zones, investment incentives, and improved infrastructure create ecosystems that contribute to innovation- and export-driven growth. To adapt to technological change, all countries are paying special attention to the implementation of new strategic solutions. In Azerbaijan, the industrial sector is supported by extensive tax benefits and incentives.
Residents of industrial parks enjoy exemptions from property tax, land tax, income and profit taxes, as well as value-added tax (VAT). Entrepreneurs actively utilize these opportunities. As a result of import VAT and customs exemptions implemented in the eight industrial parks managed by the Economic Zones Development Agency under the Ministry of Economy, residents have saved a total of 524.5 million AZN so far — including more than 19.5 million AZN during January–August of this year alone. To date, a total of 1,805 certificates have been issued to entrepreneurs operating in industrial parks, 210 of which were granted during the first eight months of this year.
The Industrial Sector in Azerbaijan is Supported by Broad Tax Benefits and Incentives
Tax incentives make industrial investments more attractive for both local and foreign investors. This, in turn, leads to the establishment of new industrial enterprises and the expansion of existing operations. As tax benefits are granted to the industrial sector, enterprises can employ more workers and increase their wage funds.
Industrial enterprises benefiting from tax incentives are able to use more local raw materials and resources in production, helping reduce dependency on imports. The incentives also encourage greater investment in new technologies, which strengthens market competition.
Ultimately, tax benefits serve as an effective tool to stimulate industrial development, accelerate economic growth, expand production, enhance social welfare, increase export potential, and ensure the resilience of the domestic market.
The industrial sector is one of the key pillars of the economy and makes a significant contribution to sustainable growth by supporting innovation. It encompasses areas such as production, infrastructure, and efficient use of resources, driving GDP growth through job creation, increased productivity, and technological advancement. At the same time, sustainable practices such as green production demonstrate progress in the industrial sector, helping align the economy with environmental goals. Particularly against the backdrop of geopolitical tensions, climate transitions, and post-pandemic recovery, the development of industry has become a focal point in recent international reports.
The Role of Industry in Achieving Sustainable Development Goals
The promotion of sustainable infrastructure, industrialization, and innovation is among the Sustainable Development Goals (SDGs) established by the United Nations. Promoting sustainable industrialization is one of the main engines of economic development. Economic growth, social progress, and climate action strongly depend on investments in infrastructure, sustainable industrial development, and technological advancement.
According to the organization’s report for 2025, in a rapidly changing global economic environment and amid rising inequality, sustainable development must include industrialization — which, on one hand, ensures equal opportunities for all, and on the other, is characterized by innovation and resilient infrastructure. Since 2015, significant progress has been achieved globally in infrastructure development, industrial growth, and innovation. Between 2015 and 2024, the global manufacturing value added per capita increased by 17.3%. The global manufacturing growth rate decreased from 7.4% in 2021 to 2.7% in 2022, but saw a recovery in 2024 with an annual growth of around 2.7%. In 2023, global maritime freight volume reached 11.6 billion metric tons, driven by the growing participation of developing countries. Meanwhile, 5G mobile broadband services now cover 51% of the world’s population.
Inclusive and sustainable industrialization, combined with innovation and infrastructure, supports dynamic and competitive economic forces, creating employment and income sources. Industrialization plays a key role in the application of new technologies, facilitation of international trade, and efficient use of resources. The development of new industrial sectors leads to improved living standards. If industries develop based on sustainability principles, this approach has a positive impact on the environment.
Since 2015, significant global progress has been achieved in infrastructure, industrial growth, and innovation.
Incentive Opportunities Accelerating Industrial Development
In Azerbaijan, the industrial sector — particularly the non-oil segment — has demonstrated the fastest growth. The increase in the share of the non-oil sector in the national economy is being achieved through industrialization. In this regard, a systematic policy is being pursued for the transformation of industry. Industrialization in Azerbaijan is defined not only as part of economic policy but also as a foundation for long-term sustainable development.
The new phase of industrialization in Azerbaijan is characterized not only by an increase in production but also by enhanced efficiency and competitiveness. The development of industrial zones, investment incentives, and improved infrastructure create ecosystems that contribute to innovation- and export-driven growth. To adapt to technological change, all countries are paying special attention to the implementation of new strategic solutions. In Azerbaijan, the industrial sector is supported by extensive tax benefits and incentives.
Residents of industrial parks enjoy exemptions from property tax, land tax, income and profit taxes, as well as value-added tax (VAT). Entrepreneurs actively utilize these opportunities. As a result of import VAT and customs exemptions implemented in the eight industrial parks managed by the Economic Zones Development Agency under the Ministry of Economy, residents have saved a total of 524.5 million AZN so far — including more than 19.5 million AZN during January–August of this year alone. To date, a total of 1,805 certificates have been issued to entrepreneurs operating in industrial parks, 210 of which were granted during the first eight months of this year.
The Industrial Sector in Azerbaijan is Supported by Broad Tax Benefits and Incentives
Tax incentives make industrial investments more attractive for both local and foreign investors. This, in turn, leads to the establishment of new industrial enterprises and the expansion of existing operations. As tax benefits are granted to the industrial sector, enterprises can employ more workers and increase their wage funds.
Industrial enterprises benefiting from tax incentives are able to use more local raw materials and resources in production, helping reduce dependency on imports. The incentives also encourage greater investment in new technologies, which strengthens market competition.
Ultimately, tax benefits serve as an effective tool to stimulate industrial development, accelerate economic growth, expand production, enhance social welfare, increase export potential, and ensure the resilience of the domestic market.