Tax incentives and tax expenditures in Azerbaijan

This study aims to comprehensively examine the existing tax incentives in Azerbaijan and the legal and fiscal aspects of the tax expenditures arising from these incentives. Tax incentives represent an important fiscal policy instrument used by the state to promote economic development by offering tax exemptions, deductions, and reductions in specific regions or sectors. The revenue losses resulting from such practices, which do not appear directly in the public budget, are referred to as tax expenditures. In this context, the Tax Code of Azerbaijan and other relevant legal regulations have been analyzed in detail, with particular focus on the implementation areas such as investment promotion certificates, free economic zones, andpublic-private partnership projects. Utilizing a qualitative research method, legal documents, official records, and academic sources were examined to assess the structural characteristics of tax incentives and their impact on the national budget. The findings indicate that while tax incentives have the potential to contribute to the country's economy, a more robust fiscal transparency system is necessary for the effective monitoring of tax expenditures. Keywords: Tax incentives, Tax expenditures, Public finance, Tax law, Tax code