What incentives are granted to residents of the technology park?

In recent years, both the number of technology parks and the scope of activities of their residents have expanded.
Therefore, it has become necessary to clarify a number of questions raised by taxpayers regarding the taxation of these residents.

Altay Jafarov has explained the topic using practical examples.

Let us assume that “AA” LLC is a resident of a technology park and has been granted a residency certificate dated October 1, 2025.
To define who qualifies as a resident of a technology park, we must refer to the relevant provision of the Tax Code.
According to Article 13.2.53 of the Tax Code, a resident of a technology park is a legal entity or an individual engaged in entrepreneurial activity without establishing a legal entity, who has obtained a registration certificate of a technology park in accordance with the procedure established by the competent executive authority and operates within or outside the technology park.

According to Article 106.1.13 of the Tax Code, the income derived by legal entities that are residents of industrial or technology parks established by an authority (institution) designated by the competent executive authority from their activities within such industrial or technology parks shall be exempt from profit tax for a period of 10 years, starting from the reporting year in which they are registered in accordance with the legislation.

From this provision, it follows that as a resident of the technology park, “AA” LLC shall be exempt from profit tax for 10 years — from October 1, 2025 to October 1, 2035 — on the income obtained from its activities in the technology park.

Value Added Tax (VAT) exemptions are regulated by Article 164 of the Tax Code.
That article specifies that only the following activities or transactions related to technology parks are exempt from VAT:

The import of machinery, technological equipment, and installations by the managing organization or operator of industrial or technology parks established by an authority (institution) designated by the competent executive authority, based on a confirmation document issued by the said authority, for the purpose of creating and constructing infrastructure and production areas of such parks, as well as conducting research and development activities.

These exemptions apply only to the managing organization and operator of the technology park. However, “AA” LLC is a resident, not a managing entity. Therefore, the VAT exemption under Article 164.1.15 does not apply to “AA” LLC.

Additionally, under Article 164.1.16 of the Tax Code, the import of machinery, technological equipment, and installations by legal entities that are residents of industrial or technology parks, or by individuals engaged in entrepreneurial activity without establishing a legal entity, based on a confirmation document issued by the competent executive authority — for the construction of production areas, research and experimental design work, or for production purposes — is exempt from VAT for a period of 10 years from the date of registration in the industrial or technology park.

Therefore, if “AA” LLC, as a resident of the technology park, imports any equipment, machinery, or installations for the establishment of its activities within the park, it will not pay VAT on such imports for a period of 10 years.
As a result, residents of technology parks are not granted any VAT exemptions concerning the supply of goods, works, or services. Consequently, “AA” LLC must apply 18% VAT on the goods and services it provides.

Furthermore, Articles 199.7 and 207.3 of the Tax Code set out additional provisions for residents of technology parks.
According to Article 199.7, legal entities that are residents of industrial or technology parks established by an authority (institution) designated by the competent executive authority, as well as individuals engaged in entrepreneurial activity without establishing a legal entity, are exempt from property tax for a period of 10 years, starting from the reporting year in which they are registered in the respective industrial or technology park.
This exemption also applies to persons who, as residents of a technology park, carry out system integration, software development, and software improvement activities outside the technology park.

Article 207.3 of the Tax Code states that legal entities and individuals engaged in entrepreneurial activity without establishing a legal entity that are residents of industrial or technology parks are exempt from land tax for a period of 10 years, starting from the reporting year in which they are registered, on the land used within the industrial or technology park.
This exemption is also extended to residents carrying out system integration, software development, and software improvement activities outside the technology park.

From the above articles, it is clear that a resident’s property located within the technology park is exempt from property tax, and the land used within the park is exempt from land tax.

With respect to dividends, the following provisions of the Tax Code apply:

Article 102.1.21-1: Dividends paid by persons engaged in system integration, software development, and software improvement activities as residents of a technology park are exempt from income tax for 10 years, starting from the reporting year in which the technology park registration certificate was obtained.

Article 106.1.13-1: Dividends paid by persons engaged in system integration, software development, and software improvement activities as residents of a technology park are exempt from profit tax for 10 years, starting from the reporting year in which the technology park registration certificate was obtained.

Additionally, specific provisions apply to employees of technology park residents.
According to Article 14.8 of the Law “On Social Insurance,” residents of technology parks (including those engaged in system integration, software development, and software improvement), their contractors, and subcontractors directly contracted by those contractors, must pay mandatory state social insurance (MSSI) contributions for the physical persons engaged under employment contracts (excluding foreigners and stateless persons) for a period of 10 years from January 1, 2023.
The contributions are to be calculated, at the choice of the payer, either based on four times the minimum monthly salary or on the actual income from employment, in accordance with Articles 14.3 and 14.4 of the same Law.

Thus, the law provides two options for MSSI payments for employees of technology park residents:

Calculation based on four times the minimum monthly salary (400 AZN × 4 = 1,600 AZN), where income exceeding 1,600 AZN is not subject to MSSI;
Calculation and withholding based on the actual monthly salary under the standard procedure.

In conclusion, the following points can be highlighted:

As a resident of the technology park, “AA” LLC is exempt from profit tax for 10 years — from October 1, 2025, to October 1, 2035 — on income derived from its activities within the technology park, as well as from system integration, software development, and improvement activities carried out outside the park.

As a resident of the technology park, “AA” LLC is exempt from property tax for 10 years — from October 1, 2025, to October 1, 2035 — on property located within the park, as well as property used for system integration, software development, and improvement activities conducted outside the park.

As a resident of the technology park, “AA” LLC is exempt from land tax for 10 years — from October 1, 2025, to October 1, 2035 — on land located within the park, as well as land used for system integration, software development, and improvement activities conducted outside the park.

As a resident of the technology park, “AA” LLC is exempt from dividend tax for 10 years — from October 1, 2025, to October 1, 2035 — on dividends paid from income generated both within the technology park and from system integration, software development, and improvement activities conducted outside the park.

If “AA” LLC, as a resident of the technology park, imports any equipment, machinery, or devices necessary to establish its operations within the park, it will be exempt from VAT on import for 10 years.

However, no VAT exemptions are granted for the supply of goods, works, or services to the resident of the technology park. Therefore, “AA” LLC must charge and pay 18% VAT on its supplied goods, works, and services.

Additionally, all tax incentives will apply to “AA” LLC only from October 1, 2025. For example, if the company’s income amounts to 50,000 AZN before October 1, 2025, and 100,000 AZN between October 1 and December 31, 2025, only the 100,000 AZN earned after October 1, 2025, will be exempt from profit tax — not the total 150,000 AZN.