Israeli media claims Azerbaijan offers tax breaks to tech firms from Israel for relocation

Azerbaijan is offering tax incentives to Israeli tech companies willing to relocate to the country, according to Israeli media reports.

The initiative, led by Azerbaijan’s Innovation and Digital Development Agency (IDDA), offers full exemptions from corporate tax, property tax, land tax and dividend tax for up to 10 years.

Additionally, employees of relocating Israeli companies can benefit from a 0% personal income tax rate on monthly salaries of up to $4,700.

Relocation program aims to diversify Azerbaijan’s oil-dependent economy

Pasha Aliyev, Vice President of IDDA, said in an interview with Israeli media outlet Globes: “Our young, multilingual population and advanced infrastructure make Azerbaijan an ideal destination for tech companies looking to grow and innovate in the Asian market.”

He further noted that Azerbaijan’s goal is to develop a strong technology ecosystem and attract scale-up companies that can hire local talent.

The program does not require relocating Israel companies to hire a certain percentage of local employees, but Azerbaijan is investing in the education of its young population.

IDDA is funding IT courses for over 3,000 students, with plans to increase scholarships to 5,000 next year, aiming to create a workforce ready to join international companies.

IDDA program seeks to establish strong tech ecosystem

Azerbaijan’s efforts to develop its tech sector align with its strategy to reduce reliance on oil and strengthen trade ties with Israel.

“We are focused on attracting scale-up companies to Azerbaijan, which will create a critical mass of local talent,” Aliyev said.

Also in the Israeli report, it states that Israeli companies that will benefit Azerbaijan’s offer will help companies to establish ties in Türkiye as well. Baku’s relationship with Ankara is based on the idea of ​​”one nation, two countries.”

Therefore, Israeli companies that aspire to broad activity in Türkiye, when relations between Israel and Türkiye are at an unprecedented low in this period, will be able to “benefit” from the depth of the relations between the countries.

Türkiye’s trade ban with Israel

Trade between Türkiye and Israel, which came to a halt following the Gaza attack, remains banned – including shipments from Turkish ports. However, reports suggest that some Turkish companies are circumventing the ban by routing goods to Israel through Greece and Romania.

According to data from the Turkish Statistical Institute, trade between Türkiye and Israel in 2023 amounted to $6.8 billion, with Turkish exports constituting 76% of the total trade volume.

While Türkiye’s trade embargo strictly prevents any commercial activities that could strengthen Israel’s military capabilities, concerns have been raised about potential breaches in non-military sectors.

According to information obtained by Türkiye Today, Israeli companies have reportedly been pressuring Turkish counterparts to use routes through countries like Greece and Romania to circumvent the embargo.

Meanwhile, speaking to Turkish publication Sozcu, opposition Good Party (IYI Party) lawmaker Turhan Comez highlighted these issues, stating that ships leaving Türkiye might be altering their routes or rerouting shipments through Greek and Romanian ports to reach Israel.

Comez also emphasized that the government’s trade ban is being undermined by these alternative routes, raising serious suspicions.

Background of trade ban

Türkiye had imposed export restrictions on Israel at the direct command of President Recep Tayyip Erdogan in May.

The Ministry of Trade officially took action. To date, Israel has not implemented any of the resolutions adopted by the United Nations Security Council (UNSC), the U.N. General Assembly, the U.N. Human Rights Council and the International Court of Justice (ICJ).

These resolutions obliged Israel to reach a ceasefire and allow the uninterrupted provision of all essential humanitarian assistance, including medical supplies and health care, to Palestinians in the Gaza Strip. 

Türkiye has announced that it will follow the implementation of these resolutions. In this regard, Türkiye has decided to restrict exports of certain product groups to Israel as of April 9, 2024.