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 supply to Israeli startups that select to relocate to Azerbaijan, “Globes” can completely reveal.

The choice by a rustic with a Shiite Muslim majority to make such a transfer in the course of the present struggle, regardless of the wave of anti-Israel sentiment, is outstanding and shocking. The transfer follows the launching of a tech park at the moment below development in Baku though the incentives being provided by the Azari authorities can be found for Israeli tech firms that arrange anyplace within the nation. Sources have instructed “Globes” that a number of Israeli tech firms are already in talks over relocation to Azerbaijan.

Above and past the incentives listed above, firm workers pays 0% private earnings tax on month-to-month salaries as much as $4,700. To be able to qualify for these incentives, firms will need to have been working for at the very least one yr or have ten or extra full time workers, or annual income of at the very least 200,000 manat (NIS 430,000).

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

Azerbaijan is striving to turn into the know-how hub of the Euro-Asian area, and a gateway to the Turkic nations. Baku’s relationship with Ankara relies on the thought of “one nation, two nations.” Subsequently, firms that search broad operations in Turkey, when relations between Israel and Turkey are at an unprecedented low, will have the ability 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 Improvement Company of Azerbaijan (IDDA), with the principle purpose of diversifying the financial 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 nations, which have been working more durable in recent times to diversify their economies and “wean” off fossil fuels. The UAE, for instance, launched a program final yr during which personal firms have been required to make use of 6% native staff in 2024 and 10% by 2026. Azerbaijan, however, doesn’t oblige the businesses that relocate to make use of a sure proportion of native staff.

Nonetheless, 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 attainable, in order that they are going to be a part of the overseas firms. Subsequent yr, the variety of scholarships for locals is anticipated to develop to five,000.

IDDA regional VP mushy touchdown Pasha Aliyev, who’s answerable for relocating startups in Azerbaijan, speaks fluent Hebrew. He tells “Globes” that the initiative to draw Israeli firms 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 totally different cultures, creates a dynamic and progressive workforce. As well as, our superior infrastructure permits firms relocating to the nation to settle and combine rapidly of their new dwelling. This mixture makes Azerbaijan an excellent location for tech firms in search of progress 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 techniques to Azerbaijan. Within the first half of 2024, in line with the Baku Customs Bureau, there was a 55% bounce 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 stream via the BTC (Baku-Tbilisi-Ceyhan) pipeline – the place it’s loaded onto tankers within the Turkish port metropolis of Ceyhan sure for Haifa. The primary motive for the dearth 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 take care of IAI for 2 OptSat500 satellites, which can exchange 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 financial system and its commerce relations with Israel. “We’re targeted on scale-up firms that can come to Azerbaijan, recruit native folks – and create a essential 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 nations too.”

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

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