Azerbaijan was formerly a part of the USSR and gained independence in 1991. It is located in the South Caucasus region and is neighbored by Turkey, Armenia, Georgia, and Russia. Azerbaijan is known for its rich and ancient cultural heritage which is apparent in its music, architecture, and traditions.
Azerbaijan has a diverse economy that relies on oil & gas production, gold and minerals mining, agriculture, and tourism. Baku is the capital and the largest city of Azerbaijan. The country is home to a number of ethnicities such as Lezgins, Talysh, Avars, and others. Though the official language of the country is Azerbaijani, however, Russian and English are also commonly spoken.
Historical landmarks such as the Palace of Shirvanshahs, the Maiden Tower (from the Byzantine era), etc. are also located in Azerbaijan.
Type of business structures permissible in Azerbaijan
There are several business formats available to investors and companies to choose from in Azerbaijan. The selection is determined by factors such as the volume of investment, scope, nature of the business, etc.
The below table presents the legal business structures in Azerbaijan along with the paid-up capital requirements.
| S# | Type of business structure | Local name | Min. paid-up capital required |
| 1. | Sole proprietorship | Fərdi İşçi | No paid-up capital required |
| 2. | Partnership | Şirkət ortaqlığı | No paid-up capital required |
| 3. | Limited Liability Company (LLC) | Məhdud Məsuliyyətli | $600 |
| 4. | Joint Stock Company (JSC) | Birləşmiş Səhmdar Cəmiyyəti | $30,000 |
Sole Proprietary Company
A sole proprietary business is the simplest and easiest business operation undertaken by a single owner. In most cases, skilled people, freelancers, retailers, etc. take up this format as it gives them complete control over business decisions with very few regulations to worry about.
Partnership
A partnership company is more formal than a sole proprietary business. It requires two or more natural persons to form a partnership. Commonly, all partners contribute to the business; either with capital or their personal skills or time. A partnership may be general or limited, each having a different level of liability.
Limited Liability Company
An LLC is probably the most sorted business format; especially for small and medium business owners. It provides a legal cushion against debts, losses, etc. An LLC in Azerbaijan needs to comply with a number of regulations, and state and local laws; during and after registration. It is subject to taxes, VAT, and other fees too.
Joint Stock Company
A JSC is akin to a public limited company elsewhere. A JSC is the most complex business format often favored by large companies or big investors. A JSC is allowed to raise capital through the public by offering its shares. The JSC is listed on a stock exchange where the shares are traded. The company is bound to publish its financial statements and strategic decisions publicly on its website and the official gazette.
Cost of registering a company in Azerbaijan
The cost of registering and incorporating a company in Azerbaijan depends on the size, location, and nature of the business. Some government charges are consistent while other costs can change with the passage of time. It is important to be aware of the overall cost involved in the registration process prior to submitting documents.
Here are a few costs that investors must look out for:
Sole Proprietorship
The registration process for an individual entrepreneur in Azerbaijan is relatively simple and inexpensive. The cost of registration is around $30.
LLC
The cost of registering an LLC in Azerbaijan may range from $235 to $470, depending on the legal and professional fees involved.
JSC
The cost of registering a JSC in Azerbaijan may range between $880 and $1,765 approximately.
Note that the costs reflected above include legal fees, court fees, state charges, notarization of documents cost, lawyer fees, forms, and other similar costs.
Cost of running a business in Azerbaijan
Every business, regardless of its size and structure, will incur expenses during its operations. These expenses are referred to as operational expenditures and are a major part of the budgeting process.
Here are a few expenses, companies are most likely to incur:
Taxation
Azerbaijan has a flat corporate tax rate of 20%, which may affect the overall cost of doing business for companies operating in the country. Additionally, there are other taxes and fees that companies may need to pay, such as value-added tax (VAT), social security contributions, and property taxes.
Labor costs
The cost of labor in Azerbaijan may vary depending on the type of industry and the level of skill of the workforce. The minimum wage in Azerbaijan is currently $147 per month.
Real estate and office space
The cost of renting or purchasing real estate and office space in Azerbaijan may vary depending on the location and the size of the property. Baku, the capital of the country, is by far the most expensive city to own or rent a commercial space; approximately ranging between $10 to $24 per sq. ft per month.
Utilities and other expenses
Companies may need to pay for utilities such as electricity, water, and internet services, as well as other expenses such as transportation, insurance, and legal and accounting fees.
Advantages of registering a company in Azerbaijan
There are several strategic and commercial benefits of operating from Azerbaijan. Some major advantages are discussed here.
Strategic location
Azerbaijan is strategically located at the crossroads of Europe and Asia, which makes it an ideal location for businesses looking to expand their reach and access new markets.
Favorable business environment
Azerbaijan has implemented several reforms in recent years to improve its business environment, including simplifying business registration procedures and reducing bureaucracy. These policies are a big relief to foreign investors as they can implement their vision in a shorter timeframe.
Tax incentives
Azerbaijan offers several tax incentives for businesses, including a flat corporate tax rate of 20% and exemptions or reduced rates for certain industries. The country also has double tax treaties with many countries, thus saving the companies from paying taxes in their own countries.
Access to natural resources
Azerbaijan is rich in natural resources, including oil, gas, and minerals, which may present opportunities for businesses operating in these industries.
Skilled workforce
Azerbaijan has a well-educated and skilled workforce, with a high percentage of the population holding university degrees.
Infrastructure development
Azerbaijan has made significant investments in infrastructure development, including transportation, telecommunications, and energy, which may benefit businesses operating in these sectors.
Access to international markets
Azerbaijan has established several international trade agreements and partnerships, which may provide businesses with access to new markets and opportunities for growth.
