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Azerbaijan Unveils New Tax Incentives for Space Industry

Azerbaijan, which entered the space club with its first satellite in 2013, will support this sector of economy by exempting satellites and other spacecraft from the property taxes starting in 2016.

The proposal was reflected in the draft amendments to the Tax Code, which is being presented to the Parliament.

The natural resource-rich country realizes that in the current economy, it should count on non-oil sector and today, the information and communication technology sector is one of the top priorities for Azerbaijan.

Fiscal freedom is expected to create additional conditions for the further development of the young industry and turning the country into a competitive participant of the international telecommunications market.

Earlier, Minister of Taxes Fazil Mammadov noted at a meeting of the Parliamentary Committee on Economic Policy that orbiting a satellite has a special place among the achievements of Azerbaijan in the field of ICT.

"There is a high competition in this area in the world, therefore, Azerspace [first satellite of Azerbaijan] needs a certain time to provide sustainable competition," he said.

Tax incentives are used to enhance the competitiveness of companies in the production of spacecraft in many countries, the minister said, which is important considering that Azerbaijan is working to launch its second telecommunication satellite.

Azerbaijan's space agency Azercosmos is the first satellite operator in the Caucasus. As of now, the agency controls telecommunication satellite Azerspace-1, and low orbit satellite AzerSky. The company also plans to launch its second satellite in 2017. The construction of Azerspace-2 satellite has already started.

The country has its own satellite program and other countries of the region are able to use the resources of Azerspace-1.

Azerspace-1 provides its customers with highly reliable broadband and broadcast solutions in Europe, Africa, Middle East, the Caucasus and Central Asia. It is equipped with 36 transponders: 24 in C-band and 12 in Ku-band at 46° East longitude.

Azerspace broadcasts over 80 TV and radio channels, covering Eastern Europe, the Caucasus, Central Asia and North Africa. Some 80 percent of the satellite's resources are available for commercial purposes.

Baku is expecting to earn $500-600 million with the operation of the satellite, which will work in orbit for at least 15 years.

In addition, the first telecommunication satellite will be self-subsidized as of 2016.

Azerbaijan began operating the Azersky satellite on December 2014. The satellite was launched in June 2014 as part of strategic cooperation in the space industry between Azerbaijan and France.

This project has high profitability and the payback period of investment is 5-7 years.

The satellite is capable of shooting 6 million square kilometers of the surface of the Earth. The resolution of the images obtained will be 1.5 meters. The satellite will work in orbit for 12 years.

Azercosmos suggests using the satellite's capabilities for agriculture, surveying land, as well as in ensuring the safety of oil and gas pipelines.

In addition, to further develop the satellite program, Azercosmos is planning to buy a second low-orbit satellite which will have ultra-high resolution and will be used for photographing the terrain in emergency situations, for agriculture, to address environmental problems, mapping and others.

In the current economic situation, the formation of a constellation of satellites can be a costly affair. However, Azerbaijan needs to have at least four satellites to ensure the efficiency and stability of satellite communications services in the event of unforeseen circumstances and emergencies.

The future development of the satellite program will lead to a reduction of tariffs for telecommunication services, as well as significantly save costs from the rental of bandwidth from foreign satellites.

Source: AzerNews

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