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By Decrees of the President of the Republic of Azerbaijan dated October 22, 2026, legislative amendments have been approved to accelerate the development of the digital economy, support technological entrepreneurship, attract international digital talent to the country, and expand opportunities for innovative products to participate in public procurement. The amendments cover technology park residency, tax and social insurance incentives, startup financing, the legal status of digital nomads, and mechanisms for procuring innovative products.

 

Scope of Technology Park Residency Expanded

 

Amendments to the “Model Regulations on Technology Parks” establish a legal framework enabling freelancers and digital nomads to operate as technology park residents. Freelancers are individuals who independently provide paid services or perform work under civil-law contracts without employing hired workers. Digital nomads are foreign nationals or stateless persons who work remotely in foreign countries using information and communication technologies and earn income exclusively from foreign sources.

 

In addition to software development and systems integration, eligible areas of activity for residency include artificial intelligence, cybersecurity, robotics, cloud technologies, gaming technologies, and other high-tech fields. Opportunities are also being created for individuals with promising business ideas but limited experience in the relevant fields to operate as technology park residents. Furthermore, the amendments provide for faster expert evaluations, clearer regulation of technology park infrastructure and property relations, and the electronic processing of registration procedures through “mygov business”. These changes will take effect on January 1, 2027.

 

Tax and Social Insurance Incentives for Technology Park Residents Expanded

 

Starting January 1, 2027, the duration of tax incentives applicable to income and profits derived from eligible activities, dividends paid from such activities, and property and land used in those activities will be extended to 20 years for technology park residents who obtain residency certificates and meet the established criteria. The incentives will also apply to residents operating outside technology parks. A 0% income tax rate is envisaged for a period of 20 years on employment income earned by employees engaged in eligible activities at resident companies.

 

For new residents, the period during which the existing option for calculating social insurance contributions for employees engaged in eligible activities may be exercised will also be extended from 10 to 20 years. Residents classified as large enterprises will be eligible for tax incentives subject to conditions relating to export performance and the receipt of export revenues in accounts held in Azerbaijan.

 

To stimulate research and development activities, certain operating expenses incurred in developing innovative products will be deductible from taxable income at a multiplier of 2.5, while a multiplier of 2 will apply to depreciation rates for equipment used in these activities and accounted for separately. Relevant tax exemptions will also apply to the export of equipment incorporating software, innovative products, or know-how developed by a resident.

 

Expanded Startup Financing and Access to Digital Services

 

To encourage investment in startups, a portion of investments made by accredited investors will be deductible from taxable income, subject to certain conditions. In addition, 10-year tax incentives are proposed for income derived from crowdfunding and venture capital investments, as well as income granted to employees of technology park residents under equity and share participation plans.

 

Tax and VAT incentives will apply for a period of 20 years to payments made by startups and technology park residents to non-residents for cloud, platform, software, and API services obtained for their business activities. A 20-year income tax exemption is also envisaged for income earned by highly skilled migrants from foreign sources under employment contracts with non-residents abroad.

 

Legal Framework Established for Digital Nomads and Highly Skilled Migrants

 

Amendments to the Migration Code introduce a legal definition of digital nomads. This status covers foreign nationals and stateless persons who work remotely in digital technologies, artificial intelligence, cybersecurity, and innovation and earn income from foreign sources. Business visas, as well as mechanisms for obtaining temporary and permanent residence permits under certain conditions, are envisaged for these individuals. To obtain a residence permit, applicants must be registered for tax purposes and operate as technology park residents. Requirements regarding stable income from foreign sources are also established.

 

Provisions concerning mandatory state social insurance coverage for digital nomads and highly skilled migrants working in fields related to digital technologies are also clarified.

 

New Mechanisms Introduced for Public Procurement of Innovative Products

 

New mechanisms are envisaged to expand opportunities for innovative products developed by startups and residents of industrial and technology parks to participate in public procurement. A separate procurement procedure will apply to the purchase of such products valued at up to AZN 100,000, provided that price quotations are obtained from at least three suppliers. For procurements with an estimated value of up to AZN 250,000, a 20% procurement preference will apply when evaluating bids for innovative products. This preference does not constitute an automatic reduction in the contract price but rather an adjustment applied during bid evaluation.

 

A pilot implementation mechanism is also envisaged for the development and testing of innovative products under real operating conditions when their technical specifications cannot be precisely determined in advance. Each pilot implementation contract concluded with a supplier may cover an amount of up to AZN 1 million and a period of up to 12 months. The contracts will establish conditions relating to interim results, milestone-based payments, data protection, security, and intellectual property rights.

 

At the same time, an amendment to the Law “On the Regulation of Inspections in the Field of Entrepreneurship and the Protection of Entrepreneurs' Interests” provides for prohibiting inspecting authorities from visiting an entrepreneur's business premises to conduct inspection activities within the scope of an inspection that has been suspended, for the duration of that suspension.

 

It should be noted that the legislative amendments were developed as part of the implementation of the “Action Plan for Accelerating Digital Development in the Republic of Azerbaijan for 2026–2028”, approved by Order No. 953 of the President of the Republic of Azerbaijan dated February 27, 2026. The amendments are aimed at promoting technological entrepreneurship, developing innovative products, attracting investment, and enhancing the competitiveness of Azerbaijan's digital economy.