Criteria for SME cluster companies approved

The Ministry of Taxes of the Republic of Azerbaijan approves criteria for SME cluster companies on May 8, 2019.

The criteria identify SME cluster company as commercial legal entity that concludes business deals with at least mutually unrelated 10 micro, small and medium businesses within the SME cluster project and supplies 50% of the cost of raw materials and materials produced by cluster participants being local producers.

SME cluster company includes an enterprise that renders hospitality and accommodation services (hotel, motel, camping, etc.), creates new competitive products not produced in Azerbaijan and creates products with more than 50% of consumption covered by imports.

The minimum amount of investment for the project implemented by a SME cluster company in Baku is set at AZN5 million (excluding suburban areas of Baku), AZN3 million in Baku's suburbs and Absheron district and AZN2.5 million in Sumgait and Ganja respectively. Investment for projects implemented in other cities and regions of Azerbaijan ranges from AZN0.5 million to AZN1.5 million.

SME cluster company is a new term introduced to the Tax Code of Azerbaijan together with some other amendments that entered into force January 1, 2019. According to the Tax Code, members of SME clusters are for seven years exempt from income and corporate taxes from the part of their income directed for capital expenditure. SME cluster companies are aslo exempt from paying income, land, property and equipment import taxes for seven years.

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