Azerbaijan

Why trade or invest in Azerbaijan?

The official language is Azerbaijani. However, Russian is also still widely used and most people in Baku are bilingual. English is also quite widely spoken and understood in Baku.

As of October 2014, Azerbaijan holds the highest foreign investment per capita among the CIS.  The convenient location of Azerbaijan on the crossroad of major international traffic arteries, such as the Silk Road and the South-North corridor, highlights the strategic importance of transportation sector for the country’s economy.  Oil remains the most prominent product of Azerbaijan's economy with cotton, natural gas and agriculture products contributing to its economic growth over the last five years.

Azerbaijan has the largest agricultural basin in the region. About 54,9 percent of Azerbaijan is agricultural lands.  The GDP growth rates observed in Azerbaijan during last years made the country one of the fastest growing economies in the world.  The government aims to further develop the economy through diversification of the economy.

Azerbaijan’s GDP is generated by:

• industry (58.3%)
• services (36 %)
• agriculture (5.7 %)

The EU is Azerbaijan's main trading partner, accounting for around 42.4% of Azerbaijan's total trade.  The EU continues to be Azerbaijan's biggest export and import market with respective 48.3 % and 27.7% share in total Azerbaijan's exports and imports.  EU imports from Azerbaijan chiefly consist of mineral fuels, machinery and transport equipment, chemicals and food and live animals.  EU exports to Azerbaijan are dominated by machinery and transport equipment, miscellaneous manufactured articles, manufactured goods and chemicals

Taxes and payments affecting foreign investors operating under the statutory regime include:

• corporate profit tax
• personal income tax
• Value Added Tax (VAT)
• withholding tax

VAT is charged at 18%. It is imposed on all companies involved in commercial activities and foreign companies importing goods and services into Azerbaijan.

Some particularities of the Azerbaijani legal system you should know

Branches and representative offices of foreign commercial legal entities should register with the Ministry of Taxes. Branches and representative offices of foreign non-commercial legal entities should register with the Ministry of Justice.  There are a number of company legal entities that a foreign company may choose from. They include:

• Joint Stock Company (JSC) which can be open or closed type
• Limited Liability Company
• partnership (general and limited) which are regulated by the Civil Code of Azerbaijan

Shares in JSCs must be registered with the State Securities Committee.  Azerbaijani law is based on a civil (continental) law system.  Foreign investment is regulated by a number of international treaties and agreements, and domestic legislation. The main laws are:

• Law on Protection of Foreign Investment (the Foreign Investment Law)
• Law on Investment Activity
• Privatization Law
• Second Privatization Program
• Law on Banks

International treaties prevail over local law (except for the Constitution and acts adopted by referendum) regulating the same issue.  Azerbaijan acceded to the New York Convention on the enforcement of foreign arbitral awards in 1999. Azerbaijan also passed a law on international arbitration.

Whom we work for

A-Law Azerbaijan desk has been providing legal support to clients in different areas, such as real estate issues, corporate and civil (family) law, traffic law, migration law, liability law and debts recovery (bankruptcy, administrative fines).  Furthermore A-Law expert lawyers have been providing legal support to Azerbaijani firms establishing or acquiring (M&A) companies in Europe, Latin America and Africa.

An in-depth approach of the different legal aspects of cross border cooperation and trade, commercial agency, distribution and franchising of a wide variety of products exported from or imported into Azerbaijan, have been assessed through A-Law dedicated team.