How to start a business in Azerbaijan

The Republic of Azerbaijan regularly implements systematic measures for the sustainable and rapid development of the economy. Since independence from Soviet Union in 1991, Azerbaijan implements numerous projects to encourage foreign investors and businessmen to invest here. Naturally, all these reforms have not been fruitless. So, during these years, many foreign investors made investments and started business activities in Azerbaijan. At present, both the oil sector and the non-oil sector are witnessing an increase in the share of foreign investments. The main reason for this is, of course, favorable environment for investment and business in Azerbaijan. According to “DOING BUSINESS” data, Azerbaijan ranks 34th among 190 countries in terms of ease of doing business.

This is good enough for a country that has just regained its economic freedom. It also gives reason to conclude that even better results will be achieved in the near term. And it is a result of the policy of sustainable economic development. But what is the essence of the business-friendly environment in question? What are the reasons why foreign investors turn to Azerbaijan to do business?

I. Why to start a business in Azerbaijan?

A. Favorable environment for foreign investors

Current economic, political, and legal conditions in Azerbaijan are very favorable for starting a business and new investments. The state’s foreign policy always serves to establish broad international relations and this is reflected in any field of activity. The main feature of Azerbaijan’s economic policy is openness to international trade and the state’s interest in this field. This means having a positive attitude towards foreign capital, as well as foreign workers.

B. Economic stability

A stable economic environment is one of the most important factors for foreigners starting business. A stable economic environment helps investors make decisions and forecasts, which in turn reduces business risks. One of the main goals set by Azerbaijan during the period of independence was the creation of a stable economic environment.

Today, we can confidently state that Azerbaijan has stable and dynamically developing economic indicators. This is one of the reasons that encourages foreigners to start business activities in Azerbaijan along with local people.

C. Legal stability

One of the main conditions for ensuring development in the economic sphere is the legal guarantee of these measures. Stable legislation means a favorable environment for the ones starting a business. Thus, investors can plan their future legal risks. An unstable legislative environment creates the possibility that unfavorable conditions. And it may arise in the future, even if current conditions are favorable for investment.

As the legislation of the Republic of Azerbaijan is stable, the protection of investors’ rights is one of its main priorities. Thus, according to Article 10 of the Law on “Protection of Foreign Investment”:

if the subsequent legislation of the Republic of Azerbaijan deteriorates the investment conditions, the legislation in force at the time of the foreign investment is applied within ten years.

II. Ease of starting a business in Azerbaijan

One of the main points that make Azerbaijan attractive to foreign investors is the ease of starting a business. Thus, Azerbaijan ranks 9th in the ranking of countries according to this criterion in “Doing Business” reports. Azerbaijan is irreplaceable for doing business because of the reasons listed below:

• convenience of the process;
• cost;
• time;
• minimum capital requirements for company registration.

 A. Ease of procedure

One of the main points when starting a business is the correct and timely execution of procedural actions. Somehow, the complexity of the company registration process hinders the activity of investors, which results in a waste of time. As foreign investors are not familiar with the legislation of the country, this process can be more complicated for them. Thus, the online registration process in Azerbaijan is one of the points that encourages foreign investors to start a business here.

B. Saving time

Company registration takes only three working days. Online registration takes 1-2 days. As a result, simple and accelerated procedures allow entrepreneurs to spend their time precisely on the development of their business.

C. Minimum Requirements when starting a business in Azerbaijan

One of the main issues when starting a business is capital. There is no minimum capital requirement to start a business in Azerbaijan. It is possible to start a business in Azerbaijan with any minimum funds, subject to the requirements of the legislation.

D. Simplicity of the licensing procedure

Another point that encourages business is the reduction of the number of types of business activities that require a license. Simplification of the process and the amount of fees create a favorable business environment for areas where licensing is required.

E. Tax Policy

A favorable tax policy is one of the main reasons for starting a business in Azerbaijan. So, many tax benefits are applied for business development. For example, producers of agricultural products were exempted from paying profit, income, VAT, simplified tax, and property tax.

In addition, the low interest rate of taxes creates favorable conditions for entrepreneurs. Due to favorable tax environment, Azerbaijan is ahead compared to other countries. It is not coincidence that every year thousands of foreign citizens decide to establish their business here.

F. Stable Currency

Fundamentally, currency stability preserves the integrity and purchasing power of the money. As we know inflation can affect the real value of people’s money balances. However, when prices are stable, people can hold money for transactions and other purposes without having to worry about the inflation.

As we know Azerbaijan national currency is manat. Manat is one of the stable currencies. It means that you are guaranteed from the risks related to currency in Azerbaijan. And there is much less risk of inflation affecting your business.

III. How to start a business in Azerbaijan

 A. Defining of The Place and Name of Your Company Before Registration

Sometimes people think that company registration is the most important step to start a business. But before that, there are some points that you should pay attention to. The two main points here are place (location) and name of your business.

First of all, you should be careful when choosing the name of your company. So, pre-existing names cannot be used. For this, you need to check whether a company with that name exists on this website.

Also, you should be careful about the place you will own or lease for business activities. The location you choose is one of the main factors that make your business successful. The demand for your products or services of the population living in that location should be taken into account.

For this, you should contact local professionals who have more information.

B. Company Registration

Company registration in Azerbaijan is an easy and quick procedure. For this, it is enough to go through the necessary stages, collect the documents and submit them to the relevant institutions. First, let’s take a look at what documents you need for company registration. The following documents are required to register a company in Azerbaijan:

• Application form;
• Founding documents; (this includes: the charter of a company, founding decision on the establishment of a legal entity and the appointment of a legal representative)
• Information about the shareholders; (identity documents, passports). When the founders are foreign company, the parent company’s constituent documents, charter, extract from the register are required.
• In case the legal representative is not also the founder (director) of the company, his notarized consent
• Receipt about the payment of state registration fee and charter capital.

As you can see, the lack of required documents and the reasonable amount of the state fee prove once again how convenient company registration is in Azerbaijan.

However, you should be attentive while preparing these documents, especially the constituent documents of the company. The key to successfully completing the registration process is to follow the application rules and submit the correct documents. In this regard, we offer you our professional services in the field of company registration.

C. Obtaining licenses if required

If you are engaged in entrepreneurial activity in Azerbaijan, one of the main points is to pay attention to the type of activity you choose. So, according to the national legislation, it is important to obtain a license for certain categories of activities.

Even though this process is quick and easy, it is better to seek for professional help to get a license. So, this insures you from additional time loss. Licenses are issued for an indefinite period, and the fees for this are much lower and reasonable compared to other countries.

D. Starting a business Activity

After passing through the relevant stages listed above, the company registration is completed. After that, you also need to complete some necessary stages. Therefore, it is necessary to take the following steps:

• Obtaining an ASAN Signature (Digital Signature) for the director of a company;
• Obtaining a seal for the company;
• Opening a bank account for the company;
• Sending the appropriate notification for the registration of the employment contract of the director.

Although all these procedures are separate, all of them are very simple. You can take advantage of the services of our professional lawyers to make these stages even easier.

After passing all the mentioned legal stages, you can easily start your business activity in Azerbaijan.

IV. General points to consider before starting a business

There are some fundamental points to keep in mind when you start a business anywhere.

First of all, you should have a proper plan before starting your business. In addition, you need to make a clear decision about the area of activity that you want to engage in. You should also have detailed knowledge about this area.

After defining the area of entrepreneurship, you need to determine the resources you will need in this area. When we say resources, it includes finance, manpower, the place where you will run your business, etc.

The analysis of the current market is also one of the important points. You should analyze the competition in the market in your field in advance (the price of work or services, the demand of customers, etc.)

Another issue is related to finance. When you start a business, you need to take into account your personal capital and external funds.

To discuss all these points and analyze the current situation, our company offers consulting services for people engaged in entrepreneurial activities in Azerbaijan. You can contact us to make a proper plan before starting the business.

Finally, let’s add that as ACON, we have provided services to numerous businessmen regarding to start business activities in Azerbaijan. If you also need legal support for starting a business in Azerbaijan, we would be glad to provide you with our services.

See also:

1. ACON Law Firm, Company Registration in Azerbaijan – Points to pay attention: https://acon.az/company-registration/
2. ACON Law Firm, Registration of Branch and Subsidiary Company of Foreign Company: https://acon.az/registration-of-branch-of-foreign-company-and-subsidiary-company/