Azerbaijan is preparing a new package of tax incentives aimed at stimulating the non-oil private sector, encouraging entrepreneurship, and increasing transparency across the economy.
As Report notes, the proposal was announced by Economy Minister Mikayil Jabbarov during a meeting of the Milli Majlis Committee on Economic Policy, Industry, and Entrepreneurship, where the 2026 state budget was under discussion.
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“Proposals have been developed for phased taxation in the non-oil sector while maintaining a low tax burden,” Jabbarov said. “This was not an easy topic – there were many different views – but the final document reflects a unified, coordinated approach.”
According to the minister, a draft amendment to the Tax Code has been submitted to parliament to create stronger investment incentives, expand entrepreneurship, and promote transparency in business operations.
Key measures under the reform package include:
Tax incentives for entrepreneurs in the Nakhchivan Autonomous Republic, similar to those already granted to companies operating in the liberated territories;
Support for local production of buses and trucks, aimed at strengthening Azerbaijan’s transport industry;
Reclassification of aquaculture as part of the agricultural sector, granting it full tax exemption;
Reduced tax rates for the food service sector to encourage cashless payments;
An increase in the VAT registration threshold from 200,000 to 400,000 manats.
Jabbarov also highlighted the success of previous tax reforms in formalizing employment and improving labor market transparency.
“Between January 1, 2019, and October 1, 2025, the number of formal labor contracts in the non-oil private sector rose by 471,000, surpassing 1 million,” the minister said.
“The share of officially registered workers increased from 38.5% to 54.1%, while the share of budget transfers to the State Social Protection Fund dropped from 35.6% in 2018 to 17.5% in 2024.”
Analysts say the new measures continue Baku’s long-term strategy of diversifying away from oil revenues, fostering innovation, and developing a competitive, transparent private economy.
