Azerbaijan tax breaks tempt Israeli tech corporations to relocate

Full exemptions from company tax, buy tax, actual property taxes and dividends for ten years are among the many incentives on provide to Israeli startups that select to relocate to Azerbaijan, “Globes” can solely reveal.

The choice by a rustic with a Shiite Muslim majority to make such a transfer in the course of the present battle, regardless of the wave of anti-Israel sentiment, is outstanding and stunning. The transfer follows the launching of a tech park presently below building in Baku though the incentives being supplied by the Azari authorities can be found for Israeli tech corporations that arrange wherever within the nation. Sources have advised “Globes” that a number of Israeli tech corporations are already in talks over relocation to Azerbaijan.

Above and past the incentives listed above, firm staff pays 0% private revenue tax on month-to-month salaries as much as $4,700. With a purpose to qualify for these incentives, corporations should have been working for at the least one yr or have ten or extra full time staff, or annual income of at the least 200,000 manat (NIS 430,000).

As a part of this system, help is supplied for immigration to the nation, which incorporates exemptions from work permits, help in issuing residence permits and arranging logistical points reminiscent of discovering workplaces and lodging.

Azerbaijan is striving to turn out to be the know-how hub of the Euro-Asian area, and a gateway to the Turkic international locations. Baku’s relationship with Ankara relies on the thought of “one nation, two international locations.” Subsequently, corporations that search broad operations in Turkey, when relations between Israel and Turkey are at an unprecedented low, will be capable to profit from the depth of the relations between Turkey and Azerbaijan.

Time to be weaned from oil

This system is led by the Innovation and Digital Growth Company of Azerbaijan (IDDA), with the primary purpose of diversifying the economic system. The oil and fuel sector accounted for 47.8% of Azerbaijan’s GDP, 52.7% of budgetary sources and 92.5% of exports in 2022. Baku, they is conscious that the world is weaning itself from oil, and preparations are required to scale back dependence on the black gold.

Azerbaijan attracts inspiration from the Gulf international locations, which have been working tougher lately to diversify their economies and “wean” off fossil fuels. The UAE, for instance, launched a program final yr during which non-public corporations had been required to make use of 6% native employees in 2024 and 10% by 2026. Azerbaijan, alternatively, doesn’t oblige the businesses that relocate to make use of a sure share of native employees.

Nevertheless, IDDA is already working to coach related personnel, and funds scholarships for greater than 3,000 college students for IT programs. The purpose is to coach as many juniors as potential, in order that they are going to be a part of the overseas corporations. Subsequent yr, the variety of scholarships for locals is predicted to develop to five,000.

IDDA regional VP tender touchdown Pasha Aliyev, who’s accountable for relocating startups in Azerbaijan, speaks fluent Hebrew. He tells “Globes” that the initiative to draw Israeli corporations is a part of a broader effort to construct a robust tech ecosystem in Azerbaijan. He says, “Our younger and multilingual inhabitants, mixed with quite a lot of completely different cultures, creates a dynamic and progressive workforce. As well as, our superior infrastructure permits corporations relocating to the nation to settle and combine shortly of their new dwelling. This mix makes Azerbaijan a perfect location for tech corporations on the lookout for development and innovation within the Asian market.”

Flourishing relations with Israel

Israel-Azerbaijan relations has flourished since 1992 primarily based on the sale of Azerbaijani oil to Israel and superior know-how Israeli weapons programs to Azerbaijan. Within the first half of 2024, in response to the Baku Customs Bureau, there was a 55% soar within the import of oil to Israel from Azerbaijan, amounting to $989 million. As revealed in Globes, regardless of the commerce embargo imposed by Turkish President Recep Tayyip Erdogan on Israel, Azerbaijani oil continues to circulate via the BTC (Baku-Tbilisi-Ceyhan) pipeline – the place it’s loaded onto tankers within the Turkish port metropolis of Ceyhan certain for Haifa. The primary motive for the shortage of harm to the oil provide is the shut relationship of Azerbaijan President Ilham Aliyev and Erdogan.

Within the different path, Azerbaijan is a significant buyer of Israel’s protection industries. It has procured, amongst different issues, Spike anti-tank missiles from Rafael, Hermes UAVs from Elbit, and Israel Aerospace Industries (IAI) Harop loitering munitions. Final October with the Azarcosmos company signed a cope with IAI for 2 OptSat500 satellites, which is able to change the Azarsky satellite tv for pc manufactured by Airbus, with which communication was misplaced in April 2023.

Thus the event of the tech sector in Azerbaijan will diversify each its economic system and its commerce relations with Israel. “We’re centered on scale-up corporations that may come to Azerbaijan, recruit native individuals – and create a crucial mass,” Aliyev explains. “We’re in common contact with our bodies in Israel, such because the Export Institute, and handle common communications with related our bodies in different international locations too.”

Printed by Globes, Israel enterprise information – en.globes.co.il – on September 5, 2024.

© Copyright of Globes Writer Itonut (1983) Ltd., 2024.