How to Use Managed Identity with the Azure or AzureAD Provider in Terraform Cloud – HashiCorp Help Center

Background

It is possible to authenticate using managed identity with the azurerm or azuread provider.
Microsoft supports authenticating with managed identity on these Azure resources.
By default, the Terraform Cloud Workspaces execute Terraform remotely on HashiCorp-controlled infrastructure.
It is only possible to use managed identity when you have control of the resource executing Terraform, and this resource is supported by Microsoft.

Configure your Workspace to use the Agent.
Follow the Azure resource-specific documentation for enabling managed identity. It is also possible to manage this with Terraform. Common examples:
- Azure Virtual Machine / azurerm_linux_virtual_machine identity
- Azure Container Instances / azurerm_container_group identity
Ensure that the managed identity is associated with a role and subscription that will be used to run Terraform. Example with azurerm_role_assignment.
Finally, follow the steps in the provider documentation to configure the provider to use managed identity in your Workspace. For the azuread provider this looks like:

provider "azuread" {
  use_msi   = true
  tenant_id = "72f988bf-xxxx-xxxx-xxxx-xxxxxxxxxxxx"
}