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What tax incentives are available to residents of Nakhchivan?
A company engaged in the production of glass containers sells the glass containers it produces not only in the Nakhchivan Autonomous Republic, where it operates, but also in other regions of the country, and exports them abroad. Are the tax incentives provided for by the Tax Code applicable to a company that is a resident of the Nakhchivan Autonomous Republic?
The State Tax Service under the Ministry of Economy has stated that, according to amendments made to the Tax Code effective from January 1, 2026, the tax incentives for profit (income), property, land and simplified taxes provided for the territories liberated from occupation under Chapter XIX of the Tax Code (VAT exemption on imports applies under different conditions) also apply to the Nakhchivan Autonomous Republic. The tax exemptions provided for in Articles 227.1 and 227.3 of the Tax Code apply to residents of the Nakhchivan Autonomous Republic for a period of 10 years starting from January 1, 2026.
A resident of the Nakhchivan Autonomous Republic means a legal entity or individual registered for tax purposes in the Nakhchivan Autonomous Republic, or registered for tax purposes centrally and directly carrying out activities within the territory of the Nakhchivan Autonomous Republic.
At the same time, pursuant to Article 227.4.1 of the Tax Code, the tax exemption for manufacturing activities, including processing and extraction, applies to taxpayers registered for tax purposes in the territory of the Nakhchivan Autonomous Republic and carrying out such activities in that territory. The tax exemption provided for in this article applies to income derived from the sale of goods manufactured, processed or extracted within the Nakhchivan Autonomous Republic, whether sold within or outside the territory, as well as from the export of such goods outside the Republic of Azerbaijan.
Accordingly, where an enterprise engaged in manufacturing activities in the Nakhchivan Autonomous Republic sells the goods it produces through its own business entities, including in other cities and regions outside the territory, and exports them outside the Republic of Azerbaijan, the tax incentives provided for in Chapter XIX of the Tax Code apply. However, if manufacturing activities are carried out not only in the Nakhchivan Autonomous Republic but also in other regions and cities, the relevant tax incentives do not apply to that person.
It was additionally stated that, pursuant to Article 14-1.1-1 of the Law of the Republic of Azerbaijan “On Social Insurance”, mandatory state social insurance contributions paid by insurers that are residents of the Nakhchivan Autonomous Republic, belong to the non-state sector and directly operate in manufacturing, including processing and extraction (excluding the oil and gas sector), in accordance with the classification of economic activities approved by the relevant authority (institution), are subsidized from the state budget in accordance with Articles 14.3 and 14.4 of the Law.
Legal basis: Articles 226.4, 227.1 and 227.4.1 of the Tax Code; Article 14-1.1-1 of the Law “On Social Insurance”.
A company engaged in the production of glass containers sells the glass containers it produces not only in the Nakhchivan Autonomous Republic, where it operates, but also in other regions of the country, and exports them abroad. Are the tax incentives provided for by the Tax Code applicable to a company that is a resident of the Nakhchivan Autonomous Republic?
The State Tax Service under the Ministry of Economy has stated that, according to amendments made to the Tax Code effective from January 1, 2026, the tax incentives for profit (income), property, land and simplified taxes provided for the territories liberated from occupation under Chapter XIX of the Tax Code (VAT exemption on imports applies under different conditions) also apply to the Nakhchivan Autonomous Republic. The tax exemptions provided for in Articles 227.1 and 227.3 of the Tax Code apply to residents of the Nakhchivan Autonomous Republic for a period of 10 years starting from January 1, 2026.
A resident of the Nakhchivan Autonomous Republic means a legal entity or individual registered for tax purposes in the Nakhchivan Autonomous Republic, or registered for tax purposes centrally and directly carrying out activities within the territory of the Nakhchivan Autonomous Republic.
At the same time, pursuant to Article 227.4.1 of the Tax Code, the tax exemption for manufacturing activities, including processing and extraction, applies to taxpayers registered for tax purposes in the territory of the Nakhchivan Autonomous Republic and carrying out such activities in that territory. The tax exemption provided for in this article applies to income derived from the sale of goods manufactured, processed or extracted within the Nakhchivan Autonomous Republic, whether sold within or outside the territory, as well as from the export of such goods outside the Republic of Azerbaijan.
Accordingly, where an enterprise engaged in manufacturing activities in the Nakhchivan Autonomous Republic sells the goods it produces through its own business entities, including in other cities and regions outside the territory, and exports them outside the Republic of Azerbaijan, the tax incentives provided for in Chapter XIX of the Tax Code apply. However, if manufacturing activities are carried out not only in the Nakhchivan Autonomous Republic but also in other regions and cities, the relevant tax incentives do not apply to that person.
It was additionally stated that, pursuant to Article 14-1.1-1 of the Law of the Republic of Azerbaijan “On Social Insurance”, mandatory state social insurance contributions paid by insurers that are residents of the Nakhchivan Autonomous Republic, belong to the non-state sector and directly operate in manufacturing, including processing and extraction (excluding the oil and gas sector), in accordance with the classification of economic activities approved by the relevant authority (institution), are subsidized from the state budget in accordance with Articles 14.3 and 14.4 of the Law.
Legal basis: Articles 226.4, 227.1 and 227.4.1 of the Tax Code; Article 14-1.1-1 of the Law “On Social Insurance”.