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MAIN SUPPORT TOOLS FOR ECONOMIC GROWTH AND ENTREPRENEURSHIP

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MAIN SUPPORT TOOLS FOR ECONOMIC GROWTH AND ENTREPRENEURSHIP

Total: 2.5 billion manat, 3% of GDP

According to the Order of the President of the Republic of Azerbaijan Ilham Aliyev “On a number of measures to reduce the negative impact of the coronavirus (COVID-19) pandemic and, consequently, sharp fluctuations in world energy and stock markets on the economy of the Republic of Azerbaijan, macroeconomic stability, employment and entrepreneurship,” programs have been developed to provide state support to various sectors of the economy, including entrepreneurship.

The essence of these documents was reported to the President of the Republic of Azerbaijan Mr. Ilham Aliyev on March 31, 2020. The Ministry of Economy presents a base document to the public which contains the main directions of these programs., scope, main support tools for economic growth and entrepreneurship.

TABLE OF CONTENTS

  1. Financial support program for payment of salaries of 304,000 hired employees working in areas affected by the pandemic (in order not to reduce work places).
  2. Financial support program for 292,000 individual (micro) entrepreneurs operating in areas affected by the pandemic (in order to protect work places).
  3. Tax discounts, privileges and strikes program for entrepreneurship subjects operating in the areas affected by the pandemic.
  4. Credit-guarantee support program on new bank loans to entrepreneurship subjects operating in areas affected by the pandemic (0.5 billion manat).
  5. Credit-guarantee support program on the existing loan portfolio of entrepreneurship subjects operating in the areas affected by the pandemic (1.0 billion manat).
  6. Social package for support of financial situation of the population.
  7. Tuition support program for students who are member of families belonging to socially vulnerable groups.
  8. Financial support program for mortgage and credit guarantee mechanism.
  9. Support program to utility payments for electricity consumption of the population.
  10. Support program for vital passenger transport activities fields.
  1. Financial support program for the payment of salaries of 304,000 hired employees working in the areas affected by the pandemic (in order not to reduce work places):
Activity field Number of employees, thousand people
Total: 304.6
Industry 78.8
Trade 106.4
Service 87
Transport 7.8
Other 24.6

Note: 20 areas of activity in these sectors are considered.

  1. Financial support program for 292,000 individual (micro) entrepreneurs operating in areas affected by the pandemic (in order to protect work places):
Distribution Number of taxpayers Number of employees, thousand people
Individual entrepreneurs 248.5 53.7
Other micro entrepreneurs 43.9 3.3
TOTAL 292.4 57.0
  1. Tax discounts, privileges and strikes program for entrepreneurship subjects operating in the areas affected by the pandemic:
  • Provision of simplified tax exemptions to micro-enterprises in an appropriate period.
  • Exemptions from property and land taxes for appropriate period.
  • Exemptions from taxpayers’ profit (income) tax in the relevant amount and period.
  • Reduction of simplified tax for persons who engaged in catering activities, and exemption from profit (income) tax for payers of profit (income) tax.
  • Exemption of some taxpayers from VAT for appropriate period.
  • Exemption from current tax payments for the relevant period for the activity areas for which benefits will be given;
  • Extension of the deadline for payment of profit (income) tax according to the results of 2019.
  • Extension of the deadline for submission of tax returns, as well as the deadline for payment of taxes.
  • Periodic exemption from VAT of some products necessary for food and medical needs of the population (exemption from VAT on import and sale of some products).
  • Exemption from VAT of raw materials and materials related to the production of food, medicine and other necessary products in order to regulate the population’s demand for food, medicine and other necessary products in a short time and more flexibly.
  • Withdrawal of donations made by individuals and legal entities to the Coronavirus Support Fund from profit for profit (income) tax purposes.
  • Withholding of VAT at zero (0) rate for the provision of free services provided by the taxpayer related to prevention of the epidemic.
  1. Credit-guarantee support program on new bank loans to entrepreneurship subjects operating in areas affected by the pandemic (0.5 billion manat):
  • Giving state guarantee for 60% of new loans out of 500 million manat.
  • Maximum interest rate on loans not more than 15%, loan term up to 3 years.
  • Subsidizing half of the interest on guaranteed loans (7,5% of 15%) on the behalf of state budget.
  • Allocation of additional funds to the Entrepreneurship Development Fund.
  1. Credit-guarantee support program on the existing loan portfolio of entrepreneurship subjects operating in the areas affected by the pandemic (1.0 billion manat):
  • Subsidization of 10% interest rate item for the first year on existing bank loans in the amount of 1 billion manat without state guarantee (regardless of the term and interest rate of loans)
  • Allocation of special funds for this purpose.
  • Implementation of subsidies through the Entrepreneurship Development Fund.
  1. Social package for support of financial situation of the population:
  • Allocation of funds for social assistance (unemployment benefits, social assistance, etc.)
  1. Tuition support program for students who are member of families belonging to socially vulnerable groups:
  • Allocation of special funds
  1. Financial support program for mortgage and credit guarantee mechanism:
  • Allocation of additional funds
  1. Support program to utility payments for electricity consumption of the population:
  • Increasement of preferential electricity use limit in volume of 100 kWh for the population.
  1. Support program for vital passenger transport activities fields:  
  • Allocation of special funds
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