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Strengthening Bonds: Turkiye, Azerbaijan forge ahead in economic cooperation

20 April 2024 08:30 (UTC+04:00)
Strengthening Bonds: Turkiye, Azerbaijan forge ahead in economic cooperation
Ulviyya Shahin
Ulviyya Shahin
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The recent decision to abolish the double taxation agreement between Azerbaijan and Turkiye marks a significant milestone in the bilateral economic relations between the two countries. This move, announced after a meeting of the International Relations and Inter-Parliamentary Relations Committee, reflects a commitment to fostering greater cooperation and facilitating trade and investment between Azerbaijan and Turkiye.

Double taxation agreements are crucial for promoting cross-border economic activities by preventing individuals and businesses from being taxed on the same income by both countries. The agreement between Azerbaijan and Turkiye on the elimination of double taxation and prevention of tax evasion with respect to income taxes was a vital framework governing tax matters between the two nations.

Let's discuss key points regarding recent decision to abolish the double taxation agreement between the two countries:

Economic Impact: The abolition of the double taxation agreement is expected to have a positive impact on businesses and individuals engaged in cross-border economic activities between Azerbaijan and Turkiye. By eliminating the risk of double taxation, the agreement removes a significant barrier to trade and investment, thereby promoting economic growth and bilateral cooperation.

Legal Framework: The decision to abolish the double taxation agreement reflects the commitment of both Azerbaijan and Turkiye to strengthening their legal framework for economic cooperation. By approving the draft law on the elimination of double taxation, both governments signal their intent to provide a conducive environment for businesses and investors to operate across borders.

Sectoral Cooperation: In addition to the taxation agreement, the meeting also discussed other areas of cooperation, including veterinary medicine. The approval of the draft law on cooperation in the field of veterinary medicine underscores the diverse range of sectors in which Azerbaijan and Turkiye are seeking to collaborate. This holistic approach to bilateral relations bodes well for the long-term economic partnership between the two countries.

Implications: The abolition of the double taxation agreement between Azerbaijan and Turkiye opens up new opportunities for businesses and investors from both countries. It streamlines tax procedures, reduces administrative burdens, and enhances the attractiveness of cross-border transactions. Furthermore, the decision reflects a broader trend of deepening economic integration and cooperation within the region.

The decision to abolish the double taxation agreement between Azerbaijan and Turkiye represents a significant step forward in strengthening bilateral economic ties. By eliminating barriers to trade and investment, both countries are poised to benefit from enhanced economic cooperation and closer integration. Moving forward, it will be essential for Azerbaijan and Turkiye to continue working together to leverage their respective strengths and capitalize on the opportunities presented by this landmark decision.

The economic partnership between Turkiye and Azerbaijan stands as a testament to the enduring bonds between the two nations, marked by mutual collaboration, shared interests, and sustained growth. With a GDP of 54.6 billion USD and a growth rate of 5.6%, Azerbaijan's economy reflects a dynamic landscape ripe for investment and trade. Let's delve into the key indicators and highlights of the economic relations between Turkiye and Azerbaijan.

Economic Indicators

GDP Composition: Azerbaijan's GDP is diversified, with the industrial sector accounting for a significant portion at 51.7%, followed by services at 42.1%, and agriculture at 6.2%. This balanced composition indicates a robust economy with multiple avenues for growth and development.

Trade Partners: Turkiye ranks among Azerbaijan's crucial trade partners, alongside Russia, Italy, and the People's Republic of China. This strategic alignment underscores Turkiye's pivotal role in Azerbaijan's economic landscape.
Foreign Currency Reserve: Azerbaijan boasts a substantial foreign currency reserve of 53.2 billion USD, reflecting its economic stability and resilience in the global market.

Trade Dynamics

Export and Import: Azerbaijan's export portfolio comprises petroleum and derivatives, natural gas, and food products, while imports primarily consist of machinery, food products, and vehicles. Turkiye, on the other hand, exports machinery, mechanical devices, aerial vehicles, and electrical machines to Azerbaijan, while importing cotton, textiles, and mineral fuels.

Trade Volume: In 2021, the trade volume between Turkiye and Azerbaijan reached 5.02 billion USD, with exports totaling 2.34 billion USD and imports amounting to 2.68 billion USD. Despite a trade deficit of 340 million USD, the overall volume signifies the depth of economic engagement between the two nations.

Investment and Tourism:

Investment Flows: Turkiye has made significant investments in Azerbaijan, amounting to 12 billion USD between 2002 and 2020, underscoring Turkiye's confidence in Azerbaijan's economic potential. Conversely, Azerbaijan has reciprocated with investments totaling 19.5 billion USD in Turkiye during the same period, reflecting a mutually beneficial partnership.

Tourism: Azerbaijan's thriving tourism sector contributes to cultural exchange and economic growth, with 470,618 Azerbaijani tourists visiting Türkiye in 2021. This influx of visitors strengthens people-to-people ties and fosters greater understanding between the two nations.

Path Forward:

As Turkiye and Azerbaijan continue to deepen their economic ties, there are ample opportunities for further collaboration and expansion. By leveraging their respective strengths and fostering innovation, both nations can unlock new avenues for trade, investment, and prosperity. Additionally, initiatives aimed at enhancing infrastructure, promoting entrepreneurship, and facilitating cross-border partnerships will play a pivotal role in shaping the future of Turkiye-Azerbaijan economic relations.

In conclusion, the economic relations between Turkiye and Azerbaijan exemplify a strong bond built on mutual respect, trust, and shared aspirations for progress. With a solid foundation in place, both nations are poised to chart a path towards sustained economic growth and prosperity for their people.

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