Information and Communications Technology (ICT) 

Information technology and e-commerce are growing areas in Azerbaijan. ITC is reported to be the second largest sector of Azerbaijan’s economy, behind only oil and gas sector. Azerbaijani government has been taking measures to further develop the ITC sector by adopting new regulations and creating the infrastructure (See, in particular, our summary of special economic zones and technoparks). On February 7, 2013 Azerbaijan launched its first satellite. This underlines the significance of ITC sector in Azerbaijan’s economy. 

In 2005 Azerbaijan adopted the Law On Telecommunications (the Telecom Law)10. The Telecom Law sets out rather general principles, based on which companies, individuals and government agencies may have access to and use telecommunication resources. The Telecom Law requires licensing of a telecommunication activity, and obtaining a quality certificates for telecommunication products. The law lists certain types of telecommunication services, such as cellular and wireless telephone services, Internet service, TV and radio broadcasting etc. 

Subsequently, several laws and regulations were adopted to govern specific areas of ITC. In particular, the Azerbaijani Law On Television and Radio Broadcasting11 regulates TV and radio broadcasting, as the name suggests. 

Azerbaijani Regulations on Special Economic Zones and Azerbaijan’s High Tech Park 

In 2009 Azerbaijani government adopted the Law On Special Economic Zones15 (SEZ Law). The SEZ Law provides for tax and other benefits to companies operating in special economic zones (SEZ). In 2013 Azerbaijani tax regulations were amended to provide additional tax benefits to entities (as well as sole proprietors) operating in technoparks. 

While special zones can be created for any type of technology driven business, one of the main purposes of this law is to further develop ICT sector by creating technology parks. In November 2012 the President of Azerbaijan issued decree16 (the “HTP Decree”) on creation of high technologies parks (the “Hightech Park”). The Hightech Park will be located at Pirallahi district, which is near Baku, the capital city of Azerbaijan, and will cover around 50 ha of area. More information about the Hightech Park can be found on its website 

SEZ Management Structure 

Under the SEZ Law, an SEZ must have its administration – the local agency of the Azerbaijani Ministry of Economy (ME). The administration allocates land, registers businesses in the SEZ and performs other administrative duties. The day-to-day management of the SEZ, however, is vested with the operator – a private person. The ME should select the operator on competitive basis. 

The Presidential Decree implementing the SEZ Law designates the ME as the principal government agency charged with implementing the policy relating to SEZs. The Hightech Park, however, grew out of the project implemented by the Azerbaijani Ministry of Communications and High Technologies (MCHT). The MCHT, therefore, is the principal agency charged with overseeing Hightech Park. In particular, the HTP Decree created the High Technologies Park limited liability company to manage the Hightech Park. The MCIT appoints the executive management and the members of the company’s supervisory council. The ME is also involved in implementing the Hightech Park project. 

Persons wishing to operate in the SEZ must apply for the SEZ residency. After a resident is registered with the SEZ administration, the administration issues a registration certificate. This certificate confirms the persson’s residency. Residents would also need to enter into memorandum of understanding or similar document with the operator. 

Physical persons and companies, as well as branch or representative offices of those companies may become SEZ residents. The SEZ Law does not set out any limitations as to the resident’s or its shareholder’s nationality. Therefore, as a general rule, foreign persons may become 100 percent owner of an SEZ resident-company or they may establish their branch or representative offices. In fact, the Hightech Park project and SEZ related regulations of Azerbaijan aim to attract foreign investment. Only companies with 100 percent state ownership may not be an SEZ resident. 


The Azerbaijani Tax Code, which is effective from September 1, 2001 (Tax Code), provides for 7 year exemption from income (profit) tax to residents of “industry and technology parks” – i.e., residents of techno parks do not pay income (profit) tax within 7 years (calculation of the 7 year period is discussed in the next paragraph). The Tax Code exempts during the 7 year period from value added tax import of technology and equipment a resident intends to use in the technology park. The Tax Code also provides for an exemption of a technology park resident’s property from property tax – the property must be located in the technology park in order for the property tax exemption to apply. 

As a general rule the 7 year period is calculated from the time18 the person becomes a resident. Subsequent amendments to the Tax Code intended to partly attach the 7 year period to the “taxable property” and “investment project” rather than the resident. The term taxable object is defined in the Tax Code to mean essentially any asset subject to tax, such as profit, property etc. Those amendments provide that if a resident sells its taxable property, a new resident is entitled to the outstanding period of exemption relating to such taxable object. If the resident decides to make a significant investment and launch a new project, for that project it can benefit from the full 7 year exemption. 

Section 18.2 of the SEZ Law provides that the SEZ residents pay tax on their gross profit (currently, includes also capital gains) at a reduced rate of 0.5 percent on quarterly basis. It is not yet clear how this provision will apply in practice. 

Under the SEZ Law, among others, the SEZ residents’ following import and export is not subject to custom duties or taxes (these exemptions do not apply to products subject to excise tax, such as tobacco and alcohol): 

* import products into SEZ from outside Azerbaijan, 

* re-export of products outside Azerbaijan 

* export outside Azerbaijan those products, which the resident produces in the SEZ. 

The SEZ Law and its implementing regulations provide for a simplified customs formalities relating to SEZ’s residents’ customs operations. For such purposes, the government intends to establish customs points in the SEZ. 

Electronic Commerce 

Azerbaijan’s Law On Electronic Commerce (E-commerce Law), largely based on the EU E-commerce Directive20, is the main law that governs electronic commerce in Azerbaijan. When discussing electronic commerce in Azerbaijan one would also need to take into account the Azerbaijani Law On Electronic Signature and Electronic Document21 (E-signature Law). 

The term “electronic commerce” means a commerce using electronic medium of exchange. Most electronic commerce occurs over Internet. The E-commerce Law requires sellers of products and services to disclose certain information. They must, in particular, disclose their name, registration, tax identification number, and if they are in a licensed business, the number of their license etc. A seller must provide further information about itself and its products (or services) when entering into an electronic agreement. The E-commerce Law also regulates issues of responsibility of an intermediary – typically, the provider of trading platform to sellers and buyers. Intermediaries may act as “mere conduits”, or provide “caching” (store information and transmissions temporarily) or “hosting” (store information for some time) services, and the intermediary’s liability depends on the type of services provided. An intermediary is generally not liable for content, products and services sold over their platform, unless they interfere with the seller’s transmission of information, or alter the seller’s information22. 

Important issues arise with respect to enforceability of electronic agreements, such as “click-through” agreements, and in particular, whether electronic agreements must be signed with certified electronic signatures. The general rule is that electronic agreements must be signed with certified signatures if Azerbaijani law requires those agreements to be in writing. There are many types of agreements that need not be in writing. For instance, there is no general requirement that parties to a mere sale and purchase of, say, cloths make their agreement in writing. If parties to such agreement enter into electronic agreement, they do not need to use certified signatures to make sure their electronic agreement is valid and enforceable. While in the event of dispute there may be questions of proof (e.g., whether a person did in fact sign the agreement or not), this does not, in and of itself, require that e-signatures be certified. A “certified electronic signature” means a digital signature (typically, a set of numbers) certified by an independent third party – in Azerbaijan, the government founded Certification Center. 

Some agreements, however, do need to be signed by certified signatures. The MCIT has established the Certification Center. The Center issues electronic signatures (as part of public-private key infrastructure) to individuals and legal persons.