The Tax Code of the Republic of Azerbaijan

Article 106. Exemptions and privileges
106.1. The following shall be exempt from tax:
106.1.1. income of charitable organizations - except for the income from entrepreneurial activity
106.1.2. grants, membership fees and donations received by non-commercial organizations;
106.1.3. income of international, interstate and intergovernmental organizations - except for the income received from the entrepreneurial activity;
106.1.4. income of state power authorities, budget-funded organizations and local managing authorities (except for the income from entrepreneurial activity);
106.1.5. income of the Central Bank of the Republic of Azerbaijan, its structures, financial market supervisory body and State Oil Fund of the Republic of Azerbaijan (with exception of profits made from allocation of its funds), as well as the Fund of Deposit Insurance;
106.1.6. received insurance payments (with exception of amounts of losses connected with each insurance case);
106.1.7. income of special educational institutions, established for education of persons with poor health - except for income, gained as a result of business activity;
106.1.8. income from writing-off tax debts to the state budget in accordance with legislation of the Republic of Azerbaijan;
106.1.9. value of assets donated free of charge by the decision of a legal entity from its own balance or one of a resident subsidiaries under its full ownership to the balance of another entity in cases stipulated by the relevant executive authority;
106.1.10. value of the fixed assets donated free of charge by the decision of the relevant executive authority from the balance of one legal entity to the balance of another entity;
106.1.11. operations on the provision in any form of fixed assets, movable property and other assets, in accordance with the agreements on exploration, development and production sharing of oil and gas resources, export pipelines and other similar agreements to the party representing the Republic of Azerbaijan in the production sharing agreements;
106.1.12. part of the income of management companiesor operators ofindustrial ortechnological parks,established in accordance withthe decision ofthe relevant body of executivepower, whichtheyaimto build and maintaininfrastructure ofindustrial andtechnology parks;

106.1.13. income derivedfrom activities in theindustrial ortechnological parksby legal entities, being the residents, establishedin accordance withthe decision ofthe relevant bodyof executive power of industrial andtechnological parks-within 7years fromthe reporting yearof registration inthe industrial ortechnological park in accordance with the law;

106.1.14. income of legalentities involved in the productionof agricultural products(includingby industrial method), obtained from this activity-5-yearperiod beginning fromJanuary 1, 2014;

106.1.15. incomeof nurseries,nursery-kindergartens, kindergartens, specialkindergartensand orphanagesreceived fromthis activity-10-yearperiod beginning fromJanuary 1, 2014;

106.1.16. compensation payableto legal entitiesunder the Law of AzerbaijanRepublic "Onland acquisitionfor state needs".
106.1.16. 50 percent of profit earned after receiving investment promotion certificate by individual entreprenur – within 7 years
106.2. Income tax rate for production enterprises owned by public organizations of disabled people, or children with limited levels of health shall be reduced by 50 percent if not less than 50 percent of employees at such enterprises are disabled people, or persons under age of 18 with limited levels of health.
When establishing the right for the privilege the average number in the list of employees shall not include disable people or persons under age of 18 with limited levels of health who work on contract terms at two jobs, as contractors and other agreements civil legislation.
106.3. Enterprises on the territory of the Republic of Azerbaijan shall pay the profit tax at the following tax rate stipulated under Article 105.1 of this Code:
106.3.1. In cities Gandja, Sumgayit, Mingechevir and Ali Bayramli (including districts under the supervision of the above towns) В?” 80 percent;
106.3.2. In highland regions and Nakhichevan Autonomy Republic В?” 40 percent;
106.3.3. In other regions (with exception of Baku and Absheron region) В?” 60 percent.
106.4. Enterprises engaged in activities indicated in this Article should pay the profit tax at the following tax rate stipulated under Article 105.1 of this Code:
106.4.1. on tourist activities В?” 80 percent;
106.4.2. in activities engaging in craft production of copper, tin and pottery products, house appliances, gardening instruments, national music instruments, toys, souvenirs, house appliances made of reeds and cane, involved in embroidery of ceramics, hand carpet production, and production of house appliances from wood- 40 percent
106.5. Should enterprise be entitled for privileges stipulated under articles 106.2В?”106.4 of this Code, it shall be provided with one most favorable privilege.
106.6. Privileges stipulated under Articles 106.3 and 106.4 of this Code shall be provided to enterprises only when on territories where privileges are provided the taxpayer implements its activities with own production facilities, property and labor. Should enterprise with privileged activity be involved in any other additional activity it shall control types of activities for which privilege is or is not applied separately. Otherwise, no privilege is applied.
106.7. For persons registered for tax purposes in cities and districts indicated in articles 106.3.1, 106.3.2, 106.3.3 of this Code but engaged in activities in the city of Baku and Apsheron region tax rate shall be applied established for the city of Baku.
106.8. The list of highland regions is made by the relevant executive authority.