20-Year Tax Break for Technology Park Residents: Freelancers Can Also Become Residents

A series of legislative amendments concerning technology professionals and startups have been approved by decrees signed by President Ilham Aliyev on October 22, 2026. The goal is to accelerate the development of the digital economy, support technology entrepreneurship, attract foreign digital talent to the country, and expand innovative products’ access to public procurement.

In short, tax breaks for technology park residents will be extended to 20 years, while freelancers and digital nomads will be able to become residents. A 0% income tax rate will also apply for 20 years to the employment income of people working for residents. The amendments also cover incentives for startup investors and the rules for government procurement of innovative products.

Freelancers and digital nomads will be able to become technology park residents

The new rules create a legal framework for freelancers and digital nomads to become technology park residents. A freelancer is defined as a person who independently provides paid services or performs work under a civil-law contract without employing workers. Digital nomads are foreign nationals and stateless persons who work remotely in foreign countries using information and communication technologies and earn income exclusively from foreign sources.

Resident status is not limited to those working in software. The list includes systems integration, artificial intelligence, cybersecurity, robotics, cloud and gaming technologies, as well as other high-tech fields.

People with successful business ideas will also be able to become residents even if they have limited experience. The procedures are also changing: expert assessments will be accelerated, and technology park infrastructure and property relations will be regulated more clearly. Registration will be conducted electronically through “mygov biznes”. These amendments take effect on January 1, 2027.

Tax breaks will last 20 years

Beginning January 1, 2027, technology park residents that receive a residency certificate and meet the criteria will be eligible for tax breaks lasting 20 years. The breaks apply to income and profits from the relevant activities, dividends paid from those activities, and taxes levied on the property and land used.

Being located within a technology park is not required to receive the breaks. Residents operating outside technology parks will also be able to benefit from these incentives. The amendments also apply to employees. A 0% income tax rate will apply for 20 years to the employment income of people working for residents in the relevant activities. For new residents, the period during which the existing option can be used when calculating social insurance contributions for those employees will be extended from 10 years to 20 years.

A separate condition applies to residents classified as large businesses. They will be able to benefit from the incentives based on their export performance and the transfer of export revenues into accounts in Azerbaijan.

There is also a change for those spending money on research and innovation. Certain operating expenses incurred in developing innovative products will be deductible from taxable income using a factor of 2.5. A factor of 2 will apply to depreciation of equipment used for this work and accounted for separately.

The relevant tax exemptions will also apply to exports of software, innovative products, or equipment integrating know-how created by a resident.

Startup investors will also receive tax breaks

To attract more investment to startups, accredited investors will be allowed, subject to certain conditions, to deduct part of their investments from taxable income.

A 10-year tax break is also proposed for income from crowdfunding and venture capital investments, as well as income granted to technology park residents’ employees under equity and stock plans.

Startups and technology park residents will receive 20-year tax and VAT breaks on payments for cloud, platform, software, and API services purchased from non-residents, meaning companies abroad, for their operations.

Income that highly skilled migrants working under employment contracts with non-residents abroad earn from foreign sources will also be exempt from income tax for 20 years.

New legal status for digital nomads

The concept of a “digital nomad” is being added to the Migration Code. This status will apply to foreign nationals and stateless persons who work remotely in digital technologies, artificial intelligence, cybersecurity, and innovation and earn their income from foreign sources.

They will be eligible for a business visa and, subject to certain conditions, temporary and permanent residence permits. To obtain a residence permit, a person must register for tax purposes and operate as a technology park resident. Requirements concerning stable income from abroad will also be established.

The rules governing the inclusion of digital nomads and highly skilled migrants working in digital technologies in mandatory state social insurance are also being clarified.

How will the government purchase products from startups?

New mechanisms are being created to increase the participation of innovative products from startups and residents of industrial and technology parks in public procurement.

Innovative products valued at up to 100,000 manats will be purchased under a separate procedure. Price quotes must be obtained from at least three suppliers.

For procurements with an estimated value of up to 250,000 manats, bids for innovative products will receive a 20% procurement preference during evaluation. This does not mean that the contract price will automatically be reduced by 20%. The preference is only an adjustment taken into account when bids are evaluated.

A pilot implementation mechanism is also being created for innovative products whose technical specifications cannot be precisely determined in advance. Such products can be developed and tested under real-world operating conditions. A pilot contract with each supplier will cover an amount of up to 1 million manats and a period of up to 12 months. The contracts will specify terms concerning interim results, phased payments, data protection, security, and intellectual property rights.

Another change for entrepreneurs concerns inspections. Under the amendment, while an inspection is suspended, the inspecting authority will not be allowed to visit the entrepreneur’s place of business and conduct an inspection as part of that inspection.

The amendments were prepared as part of implementing the “Action Plan for 2026–2028 on Accelerating Digital Development in the Republic of Azerbaijan,” approved by Presidential Order No. 953 dated February 27, 2026. The goal is to develop technology entrepreneurship, support the creation of innovative products and the attraction of investment, and make Azerbaijan’s digital economy more competitive.