On May 22, 2019, the Decree of the Board of the Ministry of Taxes of Azerbaijan Republic on the approval of the criterion for the "SMB Cluster Company" came into force. According to the decree, taxpayers should meet the following criteria to act as "SMB cluster company":
It was defined in the Decree that the activity of the “SMB Cluster Company" should be based on one of these directions: producing new competitive products that have not been produced in the Republic of Azerbaijan, producing a product that more than 50 percent of the consumption is paid on import, hosting and accommodation services (hotel, motel, camping, etc.).
At the same time, a number of requirements for the SMB Cluster Company have been defined in the Decree. These requirements are:
It is approved with the certificate of the Agency in accordance with the Ministry of Taxes if "SMB cluster company" meets the above-mentioned criteria.
It should be noted that there are some privileges in the legislation for "KMB Cluster Company". Thus, “SMB Cluster Company” is exempt from: the corporate tax for its profit; VAT for importation of equipment, technological equipment and facilities for production or processing purposes on the basis of the relevant confirming document; property tax for property; land tax for land used in SMB Cluster activities, within 7 years from the date of registration in the SMB Cluster Register. Besides that, the part of the profit from the goods (works, services) provided by the legal entity, that is a participant of the SMB cluster, on the basis of the contract concluded with the KOB cluster company, which is directed to capital expenditure is exempt from corporate tax, and the part of the income from the goods (works, services) provided by the individual entrepreneur, who is a participant of the SMB cluster, on the basis of the contract concluded with the KOB cluster company, which is directed to capital expenditure is exempt from income tax for the same period of time.