Azernews.Az

By Nigar Orujova

Azerbaijan is keen on changing its approach to attraction of local and foreign investments in a bid to fight the negative consequences of the low oil prices.

Economy Minister Shahin Mustafayev, addressing the meeting of the Parliamentary Committee on Economic Policy on January 19, said so far privileges were applied in a private manner and in exceptional cases to promote investments.

However, with the approval of amendments proposed to the Tax Code, businessmen in Azerbaijan will be given a document of the investment incentives. Under this document, half of the revenue of an individual entrepreneur, profits of legal entity will be exempted from income tax for seven years.

“The bill presented to the Parliament involves the use of incentives for investment projects that meet three main criteria – volume of investment, activity area and development of the country’s regions,” the minister said.

First, the benefits will cover imports of the manufacturing equipment and facilities, brought into the country by legal entities and individual entrepreneurs. These goods will be exempted from import duty and VAT for seven years.

Entrepreneurs will also be exempted from property tax and land tax for a period of seven years from the date of receipt of the document.

Mustafayev further said that amendments will also be made to the Customs Code of the country.

“Exemption from customs duties can cover the import of equipment in the framework of the investment promotion, as well as the import of equipment by residents represented in industrial parks as businesses entities.

“We believe that it is very important step, both in terms of promotion of investment, and reduction of the costs of entrepreneurs. This also will be an important tool to attract investors,” the minister said.

To promote local investment, Azerbaijan will give preference to domestic products during public procurement.

In case of high quality production, even if the tender bid cost exceeds the price offered by the customer within the framework of the tender by 20 percent, the preference will be given to local producer, in accordance with these amendments, the minister said.

“These proposals have been prepared within the framework of promoting domestic production,” he said. “Previously, it was recommended to give preference to domestic production even if the tender bid cost exceeded the price offered by the customer within the framework of the tender by 15 percent, but it wasn’t mandatory.”

Attraction of foreign and local investments is one of the main priorities for the government, at a time when the country is promoting its non-oil sector.

Today, when Azerbaijan’s manat has been devalued and steps taken for easier business doing, investors may find attractive the business environment of the country.

Mercy Tembon, the World Bank's Regional Director for the South Caucasus, earlier told AzerNews that “greater flexibility should be given to manat to help investors position themselves in a constrained environment."

Azerbaijan has already narrowed a list of the licenses required for doing business in Azerbaijan to 37. The conditions for granting licenses were also simplified.

Moreover, licenses became perpetual. Furthermore, the fee for a license has been cut in half and the period for issuing licenses was reduced from 15 to 10 working days.

Last October, the head of state issued a decree on simplifying licensing procedures for entrepreneurship and encouraging business transparency. The number of inspections among entrepreneurs was also reduced for two years.

Moreover, changes to the Tax Code will simplify the tax system in construction, trade and catering this year. In addition, import, manufacture and sale of wheat, wheat flour and bread have been exempt from taxation for 2016.

In this situation, many foreign companies, especially from the region, are attracted by the opportunities Azerbaijan may give.

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Nigar Orujova is AzerNews’s staff journalist, follow her on Twitter: @o_nigar

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