Azerbaijan ratifies bill on “Special economic zones”

The Azerbaijani government is taking concrete measures to create a competitive economy under the global financial crisis conditions, Permanent Parliamentary Commission on Economy Policy Chairman Ziya Samadzade said. Moreover, Samadzade regards necessary effectively to use all opportunities to improve investment climate in the country.

"Azerbaijan's geographic state opens great opportunities to create special economic zones (SEZ)," Samadzade said. "This law regulates legal and economic relations to form and manage the SEZ, as well as specify rules of entrepreneurs' activities in these zones."

Besides, he believes forming these zones will not solve all problems.

"Under the global financial crisis conditions, it is necessary to use all opportunities, including forming the SEZ to provide dynamic and stable economic development," Samadzade said.

According to the law draft, the functions of the governments in the creation of special economic zones are limited only in two directions - creation of acceptable regime and corresponding infrastructure. Special tax and customs policy is pursued in the special economic zones, created in the limited territory.

[Tax regime depends on the territory, condition of infrastructure and potential of zones, sphere of activity. Privileges can be applied to profit tax, VAT, income tax, and in particular, property tax.]

Residents, who carry out entrepreneurship activity, will pay taxes in the size of two percent of turnover (profits, obtained from the presented goods and the services). The residents will pay VAT on the zero rate, and the will be exempt from other taxes and customs duties. Customs payments for the excise goods produced in Azerbaijan for SEZ will be paid out in accordance with the Azerbaijan legislation. Oil and gas, tobacco and alcoholic drinks production is forbidden in the economic zones.

Azerbaijan occupies an important position in the Caspian region and in Caucasus, and therefore there is a large potential for the creation of such zones in the country.

The law draft envisages creation of the production, infrastructural, innovation, mixed zones, free trading zones. For the flexibility of system, the document indicates the possibility of establishing other SEZs. The project on construction of a new international commercial port in Alat is added to infrastructural SEZ.

The special economic zones in Azerbaijan are envisaged to be established for at least 20-25 years. The period of the operation of each economic zone will be described in the regulations, which will be adopted separately. Operator for the economic zones will be selected on the competitive basis.

The need for the establishment of the periods of operation of SEZ is connected with the plans of the Government of Azerbaijan on integration into the European Union, which established deadline until 2017 due to Poland's entrance to the EU. Europe firstly established special economic zones, but now it will move away from this so that there would be same conditions in all European Countries. While entrance to the EU, Azerbaijan will also ask for certain privilege period for the operation of SEZ, the Ministry of Economic Development said.

/Trend Capital/