Situated between Asia and Europe and bordered by significant countries such as Russia, Turkey, Armenia, and Georgia, with access to the Caspian Sea, Azerbaijan is a democratic republic with a rich history, culture, and abundant natural resources like petroleum and gas. Recognized as one of the world's oldest states, Azerbaijan has experienced rapid development, establishing itself as a country with substantial potential and a robust economy that attracts global investors seeking lucrative industries.

Here are some key details about starting a business in Azerbaijan:

Types of Companies

Limited liability company
Joint stock company
Closed stock company
General or limited partnership

Company Options for Foreign Investors

Sole proprietorships
Partnerships (general or limited)
Private and public companies
Subsidiaries and branch offices

Steps for Company Formation

Choose and reserve the company name.
Draft statutory documents.
File documents with the local Trade Register.
Register for taxation, VAT, and social security.
Apply for necessary business licenses.

Documents Needed

Articles of association
Company name and address details
Notarized lease contract (if applicable)
Bank contract details
VAT certificate

Azerbaijan offers various legal entities for foreign investors, including sole proprietorships, partnerships, limited liability companies, joint stock companies, and closed joint stock companies. The choice of entity depends on the nature and size of the business.

The credit rating for Azerbaijan is favorable, with agencies like Standard & Poor's, Moody's, and Fitch providing positive assessments, indicating a strong fiscal position and external balance.

Foreign direct investments (FDIs) in Azerbaijan have been substantial, with an influx of USD 1.5 billion in 2019. The country ranks 34th in the World Bank's Doing Business Report.

Overall, Azerbaijan's growing economy, strategic location, and business-friendly environment make it an attractive destination for foreign investors seeking diverse opportunities.

In sectors showing significant growth prospects, opportunities abound in agriculture, tourism, the petroleum industry, energy, and manufacturing. Entrepreneurs looking to establish their ventures in Azerbaijan can opt for various business entities such as limited liability companies (LLC), joint stock companies, or closed joint stock companies. The process of forming a company in Azerbaijan is straightforward and can be comprehensively navigated with assistance from our specialists in company incorporation. They stand ready to provide guidance, recommendations, and support throughout the document drafting process for company registration.

Types of companies in Azerbaijan

For international entrepreneurs seeking to initiate operations in Azerbaijan, a range of legal entities is available:

Sole proprietorships, ideal for small-scale endeavors managed by a single individual.
Partnerships, which may be general or limited, and are well-suited for small business activities.
Private and public companies, recognized as the most prevalent business structures in Azerbaijan.
Subsidiaries and branch offices, regarded as the optimal means for establishing foreign company operations in Azerbaijan.

It is advisable to carefully select the business structure before commencing the incorporation process. Our experts in company formation in Azerbaijan are available to aid international entrepreneurs looking to establish businesses in the region and guide them in choosing the most suitable business form.

The sole proprietorship in Azerbaijan

The sole trader or proprietorship stands as the most basic non-corporate legal structure available to those embarking on a business venture in Azerbaijan. Its primary features include:

It can be established by a single entrepreneur.
It is not bound by any mandatory share capital prerequisites.
The individual creating it assumes responsibility for the business obligations without any restrictions on personal assets.
It is suited for particular activities, typically associated with crafts or professional services like accounting and consulting.

Non-citizens from abroad intending to initiate a business in Azerbaijan within this legal framework must initially secure a residence permit.

Partnerships in Azerbaijan:

The partnership represents another non-corporate legal structure suitable for conducting small-scale operations in Azerbaijan. Two types of partnerships are available: the general and the limited partnership. Both necessitate a minimum of two participants known as partners.

In a general partnership, both participants share equal rights and responsibilities in the business. In a limited partnership, there must be at least one general partner and several limited partners. Notably, limited partners possess specific rights and obligations tied to the business's activities.

Setting up a partnership in Azerbaijan doesn't entail share capital requirements; instead, its establishment relies on a partnership deed. While the partnership structure is less commonly chosen by local business starters, foreign investors can benefit from partnering with local entrepreneurs, facilitating a quicker understanding of the local market.

Limited liability company in Azerbaijan

Entrepreneurs looking to commence business operations in Azerbaijan often favor the limited liability company (LLC). This business structure can be established by a single individual and proves well-suited for small to medium-sized enterprises, eliminating the necessity for a minimum share capital. It is important to highlight that shares within an Azerbaijani limited liability company cannot be freely transferred.

Joint stock company in Azerbaijan:

Investors can direct their attention to joint stock companies, available entities for larger businesses in Azerbaijan. This body can be incorporated by one or several persons and shares can be transferred freely and traded on the public market. The stockholders of a joint stock company in Azerbaijan are responsible for the level of their contributions regarding the firm’s commitments and also debts. A board of directors and a supervisory council must be established when starting a business in Azerbaijan and a joint stock company is registered.

Closed joint stock company in Azerbaijan:

The subsidiary and the branch for foreign companies operating in Azerbaijan:

Foreign corporations looking to establish a presence in Azerbaijan can opt for either a branch office or a subsidiary, each offering distinct advantages.A subsidiary is treated akin to a local company, often taking the form of a private limited liability company. It possesses the flexibility to engage in activities similar to the parent company, in addition to those aligning well with the Azerbaijani market.

Conversely, a branch office is confined to undertaking activities mirroring those of the parent company, functioning essentially as a satellite business. This characteristic makes it a preferred choice, particularly for financial companies operating in Azerbaijan. For comprehensive details on initiating a business in Azerbaijan as a foreign entity, you can depend on the expertise of our local representatives.

Company formation steps in Azerbaijan

Similar to the process in any other nation, establishing a company in Azerbaijan involves a straightforward sequence of steps:

Selecting and reserving the company name, adhering to specific requirements.
Drafting the company's statutory documents (excluding this step for sole traders).
Submitting the documents to the local office of the Trade Register in Azerbaijan.
Registering for taxation, VAT, and social security contributions with the relevant authorities.
Applying for the requisite business licenses based on the planned activities.

For those looking to initiate a business in Azerbaijan, the incorporation of the chosen legal entity is made uncomplicated with the assistance of our specialists, who can prepare all necessary documents.

Documents for starting a business in Azerbaijan:

When commencing a business in Azerbaijan, an investor needs to compile the following documents and fulfill specific requirements:

Articles of association
Information regarding the company's name and business address
A notarized lease contract, if applicable
A bank contract containing details about the account
VAT certificate

The company registration certificate in Azerbaijan can typically be issued within one week. Subsequently, applications for special licenses and permits must be submitted before initiating any activities. A company seal is a requisite element for various contracts and agreements to ensure their reliability and legality. It's essential to note that if you intend to establish a company in Azerbaijan from abroad, appointing a representative with power of attorney is necessary before proceeding with the documentation for registration.

Types of legal entities that can be established in this country:

the joint venture
the entirely owned local subsidiary
the representative office of a foreign parent company

In Azerbaijan, certain steps must be undertaken prior to initiating a company

Establish a legal address and secure official confirmation of the lease;
Notarize the company documents;
Fulfill the requirement of acquiring the minimum capital.

In accordance with local laws, the company's permanent office address is acknowledged as its location. Subsequently, information about this location is recorded in the Unified State Register of Companies.

The director of a legal entity in Azerbaijan may be either a local resident or a foreign individual.

Should a legal entity aim to employ foreign professionals; it is required to obtain authorization for their employment in the country.

A work permit in Azerbaijan can typically be granted within approximately 20 days, and a corresponding state fee must be paid.

Note: Following the establishment of a company, a few months after the company registration in Azerbaijan, it is necessary to contact the Fiscal Administration authorities to report the profits generated by the entity.

Types of companies	Limited liability company Joint stock company Closed stock company General or limited partnership
Minimum share capital for IBC	No minimum share capital
Minimum number of shareholders for IBC	1
Time frame for the incorporation (approx.)	3 days
Corporate tax rate	20%
Dividend tax rate	10%
VAT rate	18%
Number of double taxation treaties (approx.)	53
Do you supply a registered address?	Yes
Local director required	No
Annual meeting required	Yes
Redomiciliation permitted	No
Electronic signature	No
Is accounting/annual return required?	Yes
Foreign-ownership allowed	Yes
Any tax exemptions available?	– for small and medium enterprise members and companies; – for startups classified as a micro or small enterprises.
Tax incentives	– small and medium enterprise members and companies enjoy several tax exemptions for seven years; – startups classified as a micro or small enterprise are exempt from certain taxes for three years.

Updated on Wednesday , December , 27th , 2023