Tax and social insurance benefits for technopark residents in Azerbaijan are being extended up to 20 years, new tax incentives are being created for investors investing in startups, and additional opportunities are being provided for the participation of innovative products in public procurement.
“Elchi” reports, citing the Agency for Innovation and Digital Development (AIRIA) under the Ministry of Digital Development and Transport, that this is reflected in the legislative changes approved by decrees signed by President Ilham Aliyev on October 22, 2026. Amendments have been made to the Tax and Migration Codes, as well as to the laws on “Social Insurance”, “Customs Tariff”, “Licenses and Permits”, and “Public Procurement”.
The changes aim to accelerate the development of the digital economy, support technological entrepreneurship, attract foreign digital specialists to Azerbaijan, and promote the commercialization of innovative products.
According to the new rules, from January 1, 2027, the duration of tax benefits applied to income and profit obtained from relevant activities by technopark residents meeting certain criteria, dividends paid, and property and land used will be extended to **20** years. The benefits will also apply to residents operating outside the technopark.
Furthermore, the application of a **0**% income tax rate for a period of **20** years is envisaged for the labor income of employees working in the relevant fields of activity of residents. For new residents, the duration of the existing option for calculating social insurance contributions for employees involved in such activities is also increased from **10** years to **20** years.
To stimulate research and development activities, it is envisaged that certain operating expenses directed towards the preparation of innovative products will be deducted from taxable income with a multiplier of **2.5**, and a multiplier of **2** will be applied to depreciation norms for equipment used in these works and accounted for separately.
Tax benefits are also established for accredited investors investing in startups. Under certain conditions, a portion of the invested capital will be deducted from taxable income, and a **10**-year tax benefit will be applied to income from crowdfunding and venture capital investments, as well as income provided to technopark residents’ employees within the framework of share and stock participation plans.
At the same time, tax and VAT benefits will be applied for a period of **20** years on payments for cloud, platform, software, and API services obtained from foreign companies for the activities of startups and technopark residents.
The changes also create a legal framework for digital nomads to operate in Azerbaijan. Foreigners and stateless persons who earn income from foreign sources and work remotely using digital technologies will be able to become technopark residents under certain conditions and benefit from mechanisms envisaged for business visit visas, temporary and permanent residence permits.
A **20**-year income tax exemption is also envisaged for income earned from foreign sources by highly qualified migrants based on employment contracts with non-residents abroad.
New mechanisms are also being created to expand the participation of innovative products in public procurement. For the purchase of innovative products with a value of up to **100 thousand** manats, a separate procurement procedure will be applied, provided that price offers are obtained from at least three suppliers. For procurements with an estimated value of up to **250 thousand** manats, a **20**% procurement discount will be taken into account when evaluating offers for innovative products.
In addition, a pilot application mechanism will be implemented for the development and real-world testing of innovative products whose technical specifications cannot be precisely determined in advance. Within this framework, the amount of the contract concluded with each supplier can be up to **1 million** manats, and the duration can be up to **12** months.
It should be noted that the changes were prepared within the framework of the implementation of the “Action Plan for Accelerating Digital Development in the Republic of Azerbaijan for 2026–2028” approved by the President on February 27, 2026.