In recent years, multifaceted reforms have been carried out to promote clustering in the field of entrepreneurship in our country. The criteria of the "SMB cluster company" approved by the Ministry of Economy and the tax benefits defined for clusters in the Tax Code can be mentioned in particular. Thus, in accordance with the relevant articles of the Tax Code, commercial legal entities that have received a SMB cluster company certificate are exempted from profit tax, land tax and property tax for 7 years, as well as from VAT on the import of machinery, technological equipment and equipment for production or processing purposes, based on the relevant certification document. The Tax Code also renders tax benefits for individual entrepreneurs and legal entities participating in the SMB cluster. These persons are exempted from income (profit) tax for 7 years on the part directed to capital expenditure of the income (profit) obtained on the goods (work, service) provided by them on the basis of the contract concluded with the SMB cluster company.

The mentioned stimulating mechanisms encourage the establishment of mutual economic relations between SMBs, their related activities, the production of competitive goods and services, which in turn facilitates the access of SMBs to markets.

The "Model Regulation on clusters of micro, small and medium enterprises" approved by the Decree of the President of the Republic of Azerbaijan dated December 15, 2022, is a continuation of the measures implemented in the direction of promoting clustering in our country, and is one of the main elements of the existing normative legal framework in this field. The document defines the organizational, legal and economic basis for the implementation of entrepreneurial activities in clusters of micro, small and medium business entitites and regulates the formation and liquidation procedures of an SMB cluster.

These clusters aim to promote competitive goods production  and service provision in the non-oil sector, enable favorable environment for SMBs in this area, strengthen coordination between them, increase the employment of the able-bodied population in the field of production, and enhance the country's suitability for local and foreign investments.

According to the regulation, SMB cluster - is a set of participants of an SMB cluster company and an SMB cluster established on the basis of location in the same or similar areas of economic activity, in a certain geographical region, shared labor force, a single market and services, connected, complemented to each other and operated jointly  by establishing mutual economic relations.

In order to create an SMB cluster, the SMB cluster company, which is a commercial legal entity, is required to conclude business contracts with at least 10 micro, small or medium business entities that are not mutually dependent on it and wish to become stakeholders of the SMB cluster. These persons are encouraged to apply to the Small and Medium Business Development Agency (KOBİA) and obtain the appropriate certificates in order to operate as an SMB cluster company and a stakeholders of the SMB cluster. For issuing certificates by KOBİA, applicants are required to meet the criteria of the SMB cluster.

For detailed information on the "Model Regulation on clusters of micro, small and medium enterprises", the criteria of the "SMB cluster company" and the benefits provided for the cluster in the Tax Code visit the following links:

https://president.az/az/articles/view/58212

https://e-qanun.az/framework/46948

https://e-qanun.az/framework/42728

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