Tax incentives may assist start-up businesses in Azerbaijan

It will be possible to implement special projects to enable families participating in the new programme of targeted social assistance (TSA) self-help, to get tax incentives when creating a business in the future, deputy chief of staff of the Ministry of Labour and Social Protection of Azerbaijan Elnur Kelentarli told journalists.

"The ministry will seek to provide support entrepreneurs involved in these projects," Mr Kelentarli said. He added that the self-help project is aimed at directing funds for the development of business by families receiving TSA.

"For example, if the family is receiving TSA to the sum of 150 manat, then it directs 80-90 manat of these funds to purchase food. But if we just give a one off payment of two thousand manat per year, it will allow these families to open their businesses, "he said.

Kelentarli noted that monitoring shows that 60 per cent of TSA is directed to purchase food.
An annual or semi-annual amount of targeted assistance for a business project will be allocated to the families at once depending on the value of the purchased goods, or materials in the frame of the project.

Similar pilot work was done in Masalli, Ismayilli and Guba during the 2011 and the project will cover all areas of the republic from 2012.

The decision to implement this form of assistance to socially vulnerable people was taken in 2010 after reviewing the situation with targeting social assistance over the past four years.

This analysis revealed a need for low-income groups in the active involvement of social security programs.

A new programme offering social assistance which will contribute towards creating conditions for self-sufficiency for the poor in the future, by eliminating the factors influencing the poverty of families, is currently underway with the World Bank. A similar practice was successful in five Russian regions. Azerbaijani experts became acquainted with this practice.

Azerbaijan switched to a system of TSA in 2006. Its size is defined as the difference between 'need criteria', which is 75 manat, and the amount of income per family member.

The need criterion in Azerbaijan increased by 15.4 percent, up to 75 manat since 2011, and in 2012 this figure will be 84 manat.