Doing Business in Azerbaijan2018

2018

IJAN

AZERBA

I DOING BUSINESS

DOING BUSINESS IN AZERBAIJAN 2018

ov asad vasif by gned i des TION OUNDA N F TIO T PROMO ESTMEN INV ed by: T & epar 67 3 88 n pr ov.az y.gov.az tio mo.az onom zpro AIJAN EXPOR publica +994 12 598 01 52 +994 12 492 58 95 w.a w.ec x: x: AZPROMO established by: OF AZERBAIJAN MINISTRY OF ECONOMY OF THE REPUBLIC House”, Baku, Azerbaijan, AZ1000 84 U.Hajibayov str., “The Government phone: +994 12 49 fa e-mail: o[email protected] ww This AZERB ave., Baku, Azerbaijan, AZ1000 Baku Business Center, 32 Neftchiler 01 48 phone: +994 12 598 01 47, +994 12 598 fa e-mail: o[email protected] ww www.export.az Important notice: This information is provided for general guidance only. Specific legal advice should be sought prior to taking any action in respect of the matters discussed herein. Every possible effort has been made to ensure that the information con- tained in this book is accurate at the time going to press.

Statistical data by: The State Statistical Commit- tee of the Republic of Azerbaijan DOING BUSINESS IN AZERBAIJAN 2018 CONTENTS COUNTRY INFORMATION 9 HISTORY, GEOGRAPHY AND STATE...... 10 ECONOMIC SNAPSHOT...... 14

WHY AZERBAIJAN 23 POLITICAL AND ECONOMIC STABILITY...... 24 REFORMIST BUSINESS ENVIRONMENT...... 24 ATTRACTIVE INVESTMENT CLIMATE...... 24 SKILLED LABOUR FORCE...... 24 A PERFECT HUB...... 25 FAST DEVELOPING INFRASTRUCTURE...... 25 ABUNDANT RESOURCES...... 25 AZPROMO SERVICES...... 26 BUSINESS CLIMATE 29 ESTABLISHING A LEGAL PRESENCE...... 30 LAND AND PROPERTY...... 33 LICENSING...... 35 EMPLOYMENT...... 36 FOREIGN TRADE REGULATION...... 39 CURRENCY REGULATION AND REPATRIATION OF PROFITS �� 41 TAXATION...... 43 ACCOUNTING...... 50 INTELLECTUAL PROPERTY...... 52 DISPUTE RESOLUTION AND ARBITRATION...... 54 SECTORS REVIEW 59 ENERGY...... 60 CHEMICALS...... 63 AGRICULTURE...... 65 FOOD PROCESSING...... 68 CONTENTS TEXTILES...... 71 ICT...... 73 CONSTRUCTION...... 76 MACHINERY AND EQUIPMENT...... 78 TRANSPORT AND LOGISTICS...... 80 TOURISM AND HOSPITALITY...... 82 FINANCIAL SERVICES...... 85 INSURANCE...... 86 INDUSTRIAL PARKS...... 87 AGRO-PARKS...... 89 HIGH-TECHNOLOGY PARKS...... 89 OVERVIEW OF THE REGIONS 91 ABSHERON...... 92 ARAN...... 92 GANJA-GAZAKH...... 93 GUBA-KHACHMAZ...... 93 DAGLIG SHIRVAN...... 94 SHEKI-ZAGATALA...... 94 LANKARAN...... 95 NAKHCHIVAN...... 95 YUKHARI GARABAKH...... 96 KALBAJAR-LACHIN...... 96 GENERAL INFORMATION 99 BUSINESS ETIQUETTE...... 100 USEFUL CONTACTS 107 ANNEXES & MAP 117

ILHAM ALIYEV President of the Republic of Azerbaijan.

In 2017, our country developed rapidly and successfully. The results achieved in all spheres of life have made a great contribution to the overall development of our country. The Azerbaijani people, their will and our policy are the source of stability in Azerbaijan. Our policy is based on national interests, which are above everything for us. Security, stability, economic and social development of our country, its growing role in the international arena are guarantors of stability.

In 2017, great successes were achieved in the economic sphere. 2017 was a year of profound economic reforms.

The gross domestic product has increased, albeit not significantly. It is particularly gratifying that our non-oil sector has grown – the growth rate constitutes 2.5 per cent. The non-oil sector of our industry has increased by 3.6 per cent and agriculture by 4.1 per cent. Our foreign exchange reserves have also increased. Many important infrastructure and social projects were implemented in our country. These projects require tremendous resources. Despite this, our foreign exchange reserves increased by 4.5 billion dollars in 2017 and currently constitute about 42 billion dollars.

Our export potential is growing. In 2017, exports increased by 19 per cent and non-oil exports by 24 per cent.

In 2017, we created 221,000 jobs, including 177,000 permanent ones. This is a very good indicator. We should note that at the end of 2017, unemployment in Azerbaijan was at the level of 5 per cent and poverty at 5.4 per cent. I believe that this is one of the best results on a global scale.

Many important historic events took place in the field of energy. One of them was the extension until 2050 of the contract for the Azeri-Chirag-Gunashli field. This will allow us the opportunity to maintain our levels of production for many years – at least until 2050. This will make it possible for foreign investors to continue to invest heavily in the oil sector in Azerbaijan.

The Games of Islamic Solidarity were held in Azerbaijan . Another success has been added to our political, diplomatic and economic achievements – the sport success. The Games were held at the highest level. Azerbaijan hosted the entire Muslim world and showed its hospitality. Our athletes delighted us as our national team finished in the first place. At the same time, these Games have been an important step towards strengthening Islamic solidarity. They have demonstrated the intentions and policies of our country.

2017 was declared a Year of Islamic Solidarity in Azerbaijan. Many events held throughout the year both in Azerbaijan and abroad testify that the decision to declare 2017 a Year of Islamic Solidarity won great support and sympathy in the Muslim world.

2017 was a successful year for our country. Our country has become even stronger and is optimistic about the future. COUNTRY COUNTRYINFORMATION COUNTRY COUNTRY COUNTRYCOUNTRYINFORMATION

COUNTRYCOUNTRYINFORMATION COUNTRY INFORMATION INFORMATION COUNTRY COUNTRYCOUNTRYCOUNTRY COUNTRY INFORMATION INFORMATION INFORMATION INFORMATIONCOUNTRYCOUNTRY INFORMATION COUNTRYCOUNTRYCOUNTRYCOUNTRY

COUNTRY INFORMATION INFORMATION COUNTRY COUNTRYINFORMATION COUNTRY INFORMATION COUNTRYINFORMATION INFORMATION COUNTRY COUNTRY INFORMATION

COUNTRY COUNTRY COUNTRYINFORMATION COUNTRY COUNTRY COUNTRYCOUNTRYINFORMATION

COUNTRYCOUNTRYINFORMATION COUNTRY INFORMATION INFORMATION COUNTRY COUNTRYCOUNTRYCOUNTRY COUNTRY INFORMATION INFORMATION INFORMATION INFORMATIONCOUNTRYCOUNTRY INFORMATION COUNTRYCOUNTRYCOUNTRYCOUNTRY 9 COUNTRY INFORMATION INFORMATION COUNTRY COUNTRYINFORMATION COUNTRY INFORMATION COUNTRYINFORMATION INFORMATION COUNTRY COUNTRY INFORMATION

COUNTRY HISTORY, GEOGRAPHY AND STATE

10 Azerbaijan has a deep heritage, and is one dynasties were of Azerbaijani origin, including of the oldest cultures in the world. Gobustan, a the Karakoyunlu, Agkoyunlu and Safavids. De- UNESCO World Heritage Site, located about 70 spite the dominance of large neighboring states, kms south of Baku, has petroglyphs dating back northern Azerbaijan (Shirvan) managed to retain to the 12th century BC, which puts Azerbaijan some autonomy throughout the whole period, history and culture on the same level as sites including the hectic times of the Mongols and the in Egypt and China. The first recorded states in Teymurids. what is now Azerbaijan date back to the 9th century BC. The states of Manna, Maday and Alba- In the 18th century, the rise of the Russian nia, with their own unique traditions, succeeded Empire in the region led to the occupation of the COUNTRY INFORMATION INFORMATION COUNTRY one another in the period to follow. few autonomous Khanates located in Northern Azerbaijan. After the 1828 Turkmanchay Peace Azerbaijan was a strategic meeting point for all of Eurasia, which led to the country being a Treaty with Persia, the country was divided and major focus for trade and migration. This has in- Southern Azerbaijan was left under Persian sov- fluenced the country's ethnic mix. It is a hybrid ereignty. of Turkic, Persian, European and Caucasian influ- ences, which gives the region a unique history. The period of cultural and economic growth in Azerbaijan started in the late 19th and early The Arab conquest of Azerbaijan commenced 20th centuries. The industrial exploitation of the in the 7th century. The Caliphate prevailed over Azerbaijani oil fields commenced in the 1860’s. the Turkic Khazar Kaganate for domination over This led to the emergence of international busi- Azerbaijan and Azerbaijan remained under Arab nesses involving the Nobel Brothers, Rothschild, rule for around three centuries. Caliphate domi- Siemens and others. Consequently, the Nobel nance was interrupted for a short period of time, Brothers made their fortune in Baku, to become when a large scale Hurammi Freedom Move- one of the world`s richest families. ment, led by the leader Babek, overthrew the Ar- abs in Azerbaijan and parts of Iran. Azerbaijan is This economic rise led to a cultural revival. The an integral part of the Islamic cultural tradition. traditional Islamic & Oriental cultural influence Nizami, Nasimi, Tusi and other Azerbaijani po- was enriched by growing European and Russian ets and scholars are now regarded as among the influence. The 19th and 20th centuries were a pe- leading figures of Islamic civilization. Their con- riod of major advancement in Azerbaijani social tribution to the Islamic Renaissance is undeniable. life. The most notable cultural advances included the first opera in this part of the world, a national Azerbaijan witnessed some powerful empires drama theatre, the adoption of a modified Latin during The Middle Ages. These were predom- alphabet, and the first school for girls in the tra- inantly Turkic in origin. Some of the mightiest ditional Muslim world.

www.azpromo.az Today's Republic of Azerbaijan is the succes- civil rule. He launched a robust foreign policy 11 sor of the Azerbaijan Democratic Republic (ADR) campaign aimed at the recovery of territories il- declared on 28th May, 1918, by the first Azer- legally annexed by Armenia. On September 20, baijani parliament, the National Assembly (Milli 1994, a major oil and gas contract with a consor- Majlis). This year on 28th May, 2018 millions of tium of oil giants such as BP, Amoco, Total, and Azerbaijanis inside the country and across the others was signed. This is called the “Contract of world celebrated the centenary of ADR. Though the Century”. Along with economic rehabilita- short-lived, the ADR was the very first democrat- tion, the government of Azerbaijan launched ma- ic republic in the traditional Islamic world. Such jor political reforms aimed at bringing the country measures as electoral rights for women, rep- up to international standards with regard to the COUNTRY INFORMATION INFORMATION COUNTRY resentation of ethnic minorities in parliament, rule of law, democracy, and human rights. The era and other progressive initiatives were introduced of Heydar Aliyev ended in December, 2003 with in the country. These initiatives were ahead of his sad demise. But his policies were continued their time, even by European standards. After the by the ensuing administration, with increasing short life of the ADR, the 11th Soviet Red Army emphasis on social policies and the creation of a occupied Azerbaijan in late April 1920. liberal market economy. His successor, Ilham Al- iyev, elected president in 2003, 2008, 2013 and Azerbaijan declared its independence from 2018, continues on this course. the Soviet Union in 1991. The collapse of the USSR and Armenian aggression, beginning in 1988, had grave consequences for the new state. Armenian nationalists, backed by the late Soviet administration, launched a separatist movement in Western Azerbaijan (Nagorno-Karabakh). The conflict was further complicated by civil confron- tation within Azerbaijan. Several political groups were competing for power in the country. A succession of weak, largely unstable governments ended in 1993 when veteran politician and popular leader Heydar Aliyev was elected the Presi- dent.

The leadership of Heydar Aliyev led to a decade of rehabilitation and growth. Heydar Aliyev re-established peace and stability in the country, reinforced state infrastructure, and established

www.azpromo.az Heydar Aliyev

President of the Republic of Azerbaijan, in office 24 June 1993 - 31 October 2003 ESTABLISHMENT INDEPENDENCE CAPITAL LANGUAGE CURRENCY 13

28 May 1918 18 October 1991 Baku Azerbaijani Azerbaijani (II Republic) Manat COUNTRY INFORMATION INFORMATION COUNTRY TERRITORY NEIGHBOURS

Land territory of 86,600 km2 (12% forests, Borders in the south with Iran (765 km) and 1.7% water, 55.1% agricultural lands (30.5% Turkey (15 km), Russia in the north (390 km), of which are pastures) and 31.2% other lands). Georgia in the north-west (480 km), Armenia The territory also includes Azerbaijani sector in the west (1007 km). The coastline of Caspi- of the Caspian Sea. an Sea shared by Azerbaijan is 825 km.

COUNTRY LOCATION POPULATION

44˚- 52˚ E, 38˚- 42˚ N 9 898,1 thsd (53.1% urban, 46.9% rural)

www.azpromo.az POLITICAL SYSTEM FOREIGN POLICY

Government form LEGISLATIVE BRANCH DIPLOMATIC RELATIONS 14 Republic with 179 countries. Parliament Legal system Unicameral MEMBER OF Civil Law National Assembly UN, Council of Europe, OSCE, Commonwealth (Milli Mejlis) of Independent States, GUAM (Georgia, EXECUTIVE BRANCH Ukraine, Azerbaijan and Moldova alliance), JUDICIAL BRANCH Non-Aligned Movement, Organization of the Head of State Black Sea Economic Cooperation, Organiza- President Constitutional tion of Islamic Cooperation, European Bank Court, Supreme

COUNTRY INFORMATION INFORMATION COUNTRY for Reconstruction and Development, Asian Court, Court of Head of Government Development Bank, World Bank, Internation- Appeals, Courts of Prime Minister al Monetary Fund, Islamic Development Bank, First Instance Black Sea Trade & Development Bank.

ECONOMIC SNAPSHOT

GDP 66.0 69.7 74.2 75.2 53 37.8 40.8 (BLN USD)

GDP GROWTH 0.1 2.2 5.8 2.8 1.1 -3.1 0.1 (%)

NON-OIL GDP 32.2 37.2 41.6 45.9 23.2 24.9 25.6 (BLN USD)

NON-OIL GDP GROWTH 9.4 9.7 10.0 7.0 1.1 -4.5 2.7 (%)

2011 2012 2013 2014 2015 2016 2017

www.azpromo.az 15

GDP PER CAPITA 7 285 7 594 7 977 7 986 5 559 3 927 4 186 (USD)

INFLATION 7.9 1.1 2.4 1.4 4 12.4 12.9 (%) COUNTRY INFORMATION INFORMATION COUNTRY

EXTERNAL DEBT 4.8 5.7 6.1 6.5 6.9 6.9 9.4 (BLN USD)

TOTAL INVESTMENT 21.6 25.8 27.3 27.7 19.4 14.3 13.9 (BLN USD) FOREIGN INVESTMENT 8.6 10.3 10.5 11.5 10.7 10.1 9.1 (BLN USD) DOMESTIC INVESTMENT 12.9 15.5 16.8 16.2 8.7 4.2 4.7 (BLN USD)

FDI 4.3 5.4 6 7.6 7.5 7.3 5.7 (BLN USD)

FOREIGN TRADE 36.4 33.6 34.7 31.0 20.6 17.6 22.6 (BLN USD)

2011 2012 2013 2014 2015 2016 2017

www.azpromo.az 25 %

30 % www.azpromo.az

25 % 20 % 30 %

15 % 35 %

10 %

40 %

5 %

45 % 0 %

50 %

95 % 95

55 % 55

90 % 90

60 % 60

85 % 85

65 % 65

80 % 80

70 % 70 75 % 75 COUNTRY INFORMATION 2.4 % 2.9 % 3.0 % 3.5 % 3.6 % 4.0 % 5.7 % 9.5 % CANADA 11.7 % CZECH REPUBLIC 20.9 % ISRAEL USA UKRAINE GERMANY CHINA RUSSIA

TURKEY

ITALY 16

LEADING FOREIGN TRADE PARTNERS (2017) PARTNERS TRADE FOREIGN LEADING 80 % 80 2.4 % 2.9 % 3.0 % 3.5 % 3.6 % 4.0 % 5.7 % 9.5 % CANADA 11.7 % CZECH REPUBLIC 20.9 % ISRAEL USA UKRAINE GERMANY CHINA RUSSIA TURKEY ITALY EXPORT (BLN USD)

26.6 23.9 24.0 21.8 17 13.8 11.4 9.1

2011 2012 2013 2014 2015 2016 2017

TOP EXPORT PRODUCTS INFORMATION COUNTRY • Crude oil • Sugar • Natural gas • Cotton fibre and yarn • Oil products • Vegetable oils • Fruit-vegetables

LEADING EXPORT PARTNERS (2017)

ITALY 31.9%

TURKEY 9.9%

ISRAEL 4.6%

RUSSIAN FEDERATION 4.3%

CZECH REPUBLIC 4.0%

CANADA 3.9%

GEORGIA 3.4%

INDONESIA 3.4%

GERMANY 3.3%

PORTUGAL 3.2%

www.azpromo.az IMPORT (BLN USD)

9.8 9.7 10.7 18 9.2 9.2 8.5 8.8

2011 2012 2013 2014 2015 2016 2017

COUNTRY INFORMATION INFORMATION COUNTRY TOP IMPORT PRODUCTS • Machinery and equipment • Medical products • Food products • Tobacco • Transport vehicles and their parts • Furniture and parts • Articles of iron and steel

LEADING IMPORT PARTNERS (2017)

RUSSIAN FEDERATION 17.7%

TURKEY 14.5%

CHINA 9.7%

USA 8.2%

UKRAINE 5.2%

GERMANY 5.1%

ITALY 3.6%

IRAN 2.7%

UNITED KINGDOM 2.7%

BRAZIL 2.0%

www.azpromo.az FDI BY COUNTRIES (2017)

UNITED KINGDOM 32.08%

TURKEY 17.67%

MALAYSIA 10.80% COUNTRY INFORMATION INFORMATION COUNTRY

RUSSIAN FEDERATION 10.09%

USA 7.39%

IRAN 6.97%

JAPAN 4.67%

NORWAY 2.66%

NETHERLANDS 1.22%

INDIA 0.83%

OTHER COUNTRIES 5.62%

www.azpromo.az GDP SECTOR COMPOSITION

20 The GDP composition by sectors is changing, with the non-oil sector forming an increasing portion of economy. Today the non-oil sector share in GDP is 63%.

34.2% MINING

16.4% SOCIAL AND OTHER SERVICES

COUNTRY INFORMATION INFORMATION COUNTRY 10.4% TRADE; REPAIR OF TRANSPORT MEANS

9.5% CONSTRUCTION

7.3% PRODUCTION AND IMPORT NET TAXES

6.8% TRANSPORTATION AND STORAGE

5.6% AGRICULTURE, FORESTRY AND FISHING

4.7% MANUFACTURING

2.3% ACCOMMODATION AND FOOD SERVICE ACTIVITIES

1.6% INFORMATION AND COMMUNICATION

1.0% ELECTRICITY, GAS AND STEAM PRODUCTION, DISTRIBUTION AND SUPPLY

0.2% WATER SUPPLY, WASTE TREATMENT AND DISPOSAL

www.azpromo.az 21 COUNTRY INFORMATION INFORMATION COUNTRY

www.azpromo.az AZERBAIJAN WHY AZERBAIJANAZERBAIJAN AZERBAIJAN AZERBAIJAN AZERBAIJAN WHY AZERBAIJANAZERBAIJANWHY AZERBAIJAN

AZERBAIJAN AZERBAIJAN AZERBAIJANWHYAZERBAIJAN AZERBAIJAN AZERBAIJAN AZERBAIJAN AZERBAIJANAZERBAIJAN WHY AZERBAIJANWHY AZERBAIJANWHY AZERBAIJANAZERBAIJAN WHYWHY AZERBAIJAN AZERBAIJANWHY WHY AZERBAIJAN WHY WHY WHY AZERBAIJANAZERBAIJAN WHY AZERBAIJAN AZERBAIJAN WHY AZERBAIJAN AZERBAIJAN WHY WHY AZERBAIJANAZERBAIJAN AZERBAIJAN AZERBAIJAN AZERBAIJAN

AZERBAIJAN AZERBAIJAN WHY AZERBAIJANAZERBAIJAN AZERBAIJAN AZERBAIJAN AZERBAIJAN WHY AZERBAIJANAZERBAIJANWHY AZERBAIJAN

AZERBAIJAN AZERBAIJAN AZERBAIJANWHYAZERBAIJAN AZERBAIJAN AZERBAIJAN WHY AZERBAIJAN AZERBAIJANWHY AZERBAIJANAZERBAIJAN WHYWHYWHY AZERBAIJAN AZERBAIJAN AZERBAIJAN WHY AZERBAIJANAZERBAIJAN WHY WHY 23 WHY WHY AZERBAIJANAZERBAIJAN WHY AZERBAIJAN AZERBAIJAN WHY AZERBAIJAN AZERBAIJAN WHY WHY AZERBAIJANAZERBAIJAN AZERBAIJAN AZERBAIJAN AZERBAIJAN

AZERBAIJAN 24 POLITICAL AND ATTRACTIVE ECONOMIC STABILITY INVESTMENT CLIMATE

•• In the past 10 years, GDP and foreign trade •• Attractive investment incentive schemes. has doubled in size. •• NO restrictions on foreign investments. •• The foreign debt of Azerbaijan is only 23% of •• NO local content requirement. the GDP. •• NO business inspections by state authorities WHY AZERBAIJAN •• 35th most competitive economy in the WEF and agencies. Global Competitiveness Report (2017-2018) •• Party to all major multilateral instruments on protection and promotion of foreign invest- •• Azerbaijan is ranked 57th in the World Bank Doing Business Guide (2018). ment. • 48 bilateral investment treaties and 53 avoid- •• Investments worth 220 billion USD since • 1995. ance of double taxation treaties with foreign countries (see Annexes 1 and 4 for the lists of treaties). REFORMIST BUSINESS •• Over 450 e-services by state authorities. ENVIRONMENT SKILLED • A number of fundamental reforms aimed at • LABOUR FORCE promotion of exports and investments. • New economic reforms launched by the Pres- • •• About half of the population is economically ident through the series of Strategic Road- active. maps in 2016. •• One of the highest employment rates in the •• Top reformer of business regulations in the region (95%). world according to the World Bank's Doing •• The main driver of employment is the private Business Guide 2009 and 2015. sector (75.4%). •• Improved access to tourism and business •• Extremely high literacy rate of 99.8%. through the launch of the ASAN e-visa sys- •• Around 30,000 students graduate from uni- tem. versities and other higher educa-tion institutions annually. •• Low burden of government regulation. • Large number of Azerbaijani students study- • Strengthening a welcoming business environ- • • ing in the best universities worldwide. ment and legislative reforms are among the •• A large R&D center, the National Academy of top priorities of "Azerbaijan 2020: The Vision Sciences (altogether they affili-ate about 40 of the Future" - national development con- research and cultural institutions throughout cept. the country) in parallel with 54 universities

www.azpromo.az and 113 primary vocational educational insti- 60kms south of Baku, with annual capacity 25 tu-tions ensures the scientific and HR compo- of 10-11.5 million tons of cargo and 50,000 nent of economic development. TEU (to be in-creased up to 21-25 M tons of cargo and 1 M TEU); A new shipyard and the only one on the Caspian Sea commissioned in A PERFECT 2013. HUB •• Over 2,000 km of operational railroads: The so-called “Iron Silk Way”, Baku-Tbilisi-Kars •• Located on the south-eastern border of Eu- trunk-railway connecting European and Asian WHY AZERBAIJAN rope serving as the natural bridge between railway systems, is under construction. Europe and Asia. •• •• Trans-Caspian East-West Trade and Transit ABUNDANT Corridor as a key route connect-ing two major global economies, China and Europe (4,200 RESOURCES km length, 12-14 days transit period). • 9 climatic zones out of 11 existing in the world • South-North Transit Corridor from Iran to Eu- • • ranging from humid subtropical climate to rope. semi-arctic. • Logistics hub for the Caspian region with the • • The territory of Azerbaijan stands out for its biggest airport, sea port and railway network. • complex geological structure and diversity of • Free access to CIS and Georgia markets of 270 • minerals. million consumers and GDP worth 1.6 trillion • Major deposits of oil and gas. USD. • • Ferrous and nonferrous, rare and fine metals: • Outreach to 50 countries with almost 50% of • • iron and chromite ores, copper, lead and zinc, world consumers within 4-hour flight range cobalt, molybdenum, aluminum, quicksilver, (medium-haul flight). gold. •• Nonferrous minerals and construction materi- FAST DEVELOPING als: building stone, facing stone, clay, cement INFRASTRUCTURE raw materials, construction stone, sand-grav- el, sand, bituminous sands, perlite, pumice, •• The most state-of-the-art transport infra- gypsum, anhydride, alabaster, bentonite structure in the region. clays, sodium chloride, dolomite, quartzite, •• About 19,000 km of hard-surface roads, limestone for flux and soda, ceramic raw ma- 8,000 km of which built and constructed in terials, mineral dye (clayey ochre), quartz past 10 years. sands, barite, pebble, brimstone, Icelandic •• 6 international airports - Baku operates the spar, refractory and hard clays, natural soda largest international airport in the region. flashes, zeolites. •• A new international sea port, located at Alat,

www.azpromo.az Baku Business Centre AZPROMO SERVICES

INFORMATION ORGANIZATIONAL SUPPORT SUPPORT

»» Consideration of applications for investments »» Building relationships and organizing meet- in non-oil areas in Azerbaijan; ings between potential investors and public, »» Theoretical information about the business private entities; and investment environment: strategic in- »» Support of foreign companies wishing to sup- dustries, economic sectors and projects report business in Azerbaijan; quiring investments, benefits and industrial »» Organization of business missions to Azer- parks; baijan with the purpose of acquaintance with »» Investment promotion document (IPD) local investment and business environment; »» Business registration: procedures, payment »» Organization of internal business of mean- for services and terms; ingful business trips; »» Neighboring markets and the possibility of »» Support in finding local partners in the field entering foreign markets; of various investment services and invest- »» Directions and advantages in the field of ment projects; logistics and transport; »» Post-registration support: expansion of in- »» Legislation, changes and innovations in the vestment investments, improvement of in- business environment. vestment plans.

LEGAL MARKETING SUPPORT SUPPORT

»» Assist with foreign investment and business »» Search for potential partners, supporters and registration: general procedures, necessary buyers in the local market; documents, rules and conditions; »» Establishing contacts with local advertising »» Licensing and permissionsi. agencies and structures; »» Organization of various business events aimed at establishing and developing cooperation between business people; »» Presentations of companies. BUSINESS CLIMATE CLIMATE BUSINESS CLIMATE BUSINESS

CLIMATE BUSINESS BUSINESS CLIMATE BUSINESS CLIMATE CLIMATE BUSINESS BUSINESS CLIMATE BUSINESSBUSINESS BUSINESS CLIMATECLIMATE BUSINESS BUSINESSBUSINESS CLIMATEBUSINESS CLIMATE CLIMATE CLIMATE BUSINESS BUSINESS CLIMATE CLIMATE BUSINESS CLIMATE

BUSINESS CLIMATECLIMATE BUSINESS BUSINESS CLIMATE BUSINESS CLIMATE BUSINESS CLIMATE CLIMATE BUSINESSCLIMATECLIMATE BUSINESSBUSINESS BUSINESS CLIMATE BUSINESS CLIMATE CLIMATE BUSINESS

BUSINESS CLIMATEBUSINESS CLIMATE BUSINESS CLIMATE CLIMATE BUSINESS CLIMATE BUSINESS

BUSINESS CLIMATECLIMATE BUSINESS 29 BUSINESS CLIMATE BUSINESS CLIMATE BUSINESS CLIMATE CLIMATE BUSINESSCLIMATECLIMATE BUSINESSBUSINESS BUSINESS CLIMATE BUSINESS CLIMATE CLIMATE BUSINESS

BUSINESS CLIMATEBUSINESS CLIMATE ESTABLISHING A LEGAL PRESENCE

30 A company may start operations in Azerbaijan Azerbaijani law recognizes the following types from the moment of state registration. The reg- of commercial legal entities (commercial legal istration of commercial legal entities is handled entities are defined as those operating for profit): by the Ministry of Taxes within 2 business days. Limited liability companies with local investment • General partnership (“GP”) can be registered online. The Law “On State Reg- • istration of Legal Entities and State Register” sets •• Limited partnership (“LP”) out the requirements of the legal registration BUSINESS CLIMATE BUSINESS • Limited liability company (“LLC”) process. • •• Additional liability company (“ALC”) A certain, limited number of documents must • Joint-stock company (open or closed JSC) be submitted to the Ministry of Taxes for reg- • istration purposes. Azerbaijan is a party to the •• Cooperatives Hague Convention Abolishing the Requirement of Legalisation for Foreign Public Documents, LLCs and JSCs are the most popular choices and the legalisation requirement has ceased to for incorporation (see Annex 2 for a brief com- exist in respect of documents produced and exe- parative analysis of these two types of legal en- cuted in the convention’s member countries. tities).

There are numerous forms in which a legal Due to practical irrelevance, non-profit organ- entity/company can be incorporated in Azerbai- isations are not covered in present publication. jan. There are no specific rules for the incorporation of companies by foreigners, apart from the GENERAL PARTNERSHIP standard legal and translation requirements. For- GP is formed by private entrepreneurs and/ eign investor may either establish a limited pres- or commercial legal entities. An individual may ence (representative office or branch) or opt for a participate in the creation of a GP only if this in- full presence through various legal organisational dividual is registered as an entrepreneur. Individ- forms. uals and/or legal entities may only participate in one GP. Partners are jointly and severally liable There is no local content requirement and for GP’s liabilities with their property. The prof- no specific requirements for the size of share or its and losses of a GP are allocated among the legal limitations for the foreign component in a participants in proportion to their shares in the company and investment. With the exception of charter capital. If, due to losses incurred, the GP’s certain licensed activities, there are no addition- net assets decrease below its charter capital, no al general approvals or permissions apart from state registration for the start up. earnings distribution may occur until the net assets exceed the charter capital.

www.azpromo.az ESTABLISHING A LEGAL PRESENCE

LIMITED PARTNERSHIP ue. A single individual or legal entity may be the 31 LP has one or more general partners and one founder or the shareholder of a JSC. The charter or more limited partners. General partners are capital of a JSC is divided into a fixed number of personally liable for the partnership's obligations. shares with a stated par value. Pursuant to the Limited partners' liability is limited to the amount Civil Code of the Republic of Azerbaijan, mem- of their contributions. A person may participate bers of the Board of Directors must be individu- as a general partner only in one LP. Similarly, a als. An individual who is not a shareholder of the

partner of a GP may not participate as a general JSC may also be a member of Board of Directors. CLIMATE BUSINESS partner in an LP. A Supervisory Board is mandatory for JSCs with more than 50 shareholders and for public interest LIMITED LIABILITY COMPANY entities (credit organisations, insurance compa- LLC is an entity established by one or more in- nies, investment funds, non-state (private) so- dividuals and/or legal entities contributing their cial funds, legal entities with securities traded on shares to the charter capital. An LLC that has only the stock exchange etc.). The General Meeting of one participant may not be the sole participant Shareholders is the supreme body in a JSC. Azer- of another LLC or any other company. The par- baijani law sets a minimum share capital required ticipants of an LLC are liable only to the extent of for the establishment of JSCs, which ranges from their contributions. An LLC is not responsible for AZN 2,000 for a closed JSC to AZN 4,000 for an the obligations of its participants to third parties. open JSC. Additional statutory requirements exist for the establishment of banks, insurance ADDITIONAL LIABILITY COMPANY companies and investment funds in the form of ALC is an entity established by one or more in- a JSC. dividuals and/or legal entities contributing their shares to the charter capital. The legal structure COOPERATIVE of an ALC is similar to an LLC, except that the A cooperative is a voluntary union of at least participants in an ALC may assume liability for five individuals and/or legal entities, for the the company in excess of their contributions, as purpose of satisfying the needs of its members regulated by the charter. through the consolidation of their financial or in-kind resources. Depending on the purpose of JOINT-STOCK COMPANY their activity, cooperatives may be of different JSC is a legal entity with charter capital divid- kinds, such as consumer or housing cooperatives. ed into a certain number of shares (securities). JSC shareholders are liable for the obligations of SUBSIDIARIES the JSC only to the extent of their shares' par val- A legal entity, whether or not established in Azerbaijan, may form a subsidiary in Azerbaijan

www.azpromo.az ESTABLISHING A LEGAL PRESENCE

32 in any legal form available for commercial purposes, i.e. a GP, an LP, a JSC, an LLC, or an ALC. A subsidiary is a separate and distinct legal entity; the parent enterprise may contribute property to its subsidiary but is typically not liable for the obligations of the subsidiary. A parent company, however, may be held liable for the obligations of its subsidiary in bankruptcy if such bankruptcy BUSINESS CLIMATE BUSINESS was caused through the fault of the parent company in connection with the execution of its instructions.

Additionally, a parent company and its subsidiary are jointly liable for obligations incurred by the subsidiary as a direct result of the implementation of the parent’s instructions, even if the former is not in bankruptcy.

A subsidiary cannot purchase the shares of its parent company.

REPRESENTATIVE OFFICES AND BRANCHES Neither representative offices nor branches are legal entities in and of themselves. These are separate divisions of a foreign legal entity they represent. Unlike a representative office, which only represents interests of a legal entity, a branch may perform the commercial activities that the head office does.

www.azpromo.az LAND AND PROPERTY

Azerbaijan was one of the first among the for- either party to the lease or use agreement. 33 mer USSR republics to introduce the private own- •• The concept of ownership in Azerbaijan in- ership of land, as well as free trade and transfer cludes the right to exercise possession, the of title to land. right to use/benefit and the right to dispose of the land (transfer ownership or other Azerbaijani law provides for the following ba- rights in land to third parties). sic rights in land: (I) ownership; (II) lease; and (III) use. In Azerbaijani legislation real estate is gener- CLIMATE BUSINESS It should be noted that the right to own land ally referred to by the term "immovable proper- is a privilege of (I) the Republic of Azerbaijan, (II) ty". Pursuant to the Law on the State Register of municipalities, and (III) Azerbaijani individuals Immovable Property (the “State Register Law”), and legal entities (including legal entities with the creation of rights to property (ownership and foreign investment). Foreigners (individuals and other rights), transfers and the termination of legal entities) and stateless individuals may not rights are subject to state registration with the own land in Azerbaijan and may not be granted register of immovable property. a purchase option on a lease. However, international organizations, foreign legal entities and As a general rule, the registration of proper- foreign citizens and states may lease land in Azer- ty rights to immovable property takes not more baijan. Foreigners who have acquired ownership than 10 business days. The State Register Law rights in land through general legal procedures, contains special provisions in respect of registra- such as the enforcement of a security interest, a tion of certain rights in immovable property: grant or a succession must dispose of their ownership (e.g. through a sale) within one year; oth- •• Ownership and other property rights regard- erwise, the land shall be subject to compulsory ing unfinished construction of immovable purchase by relevant authority or municipality. property may be registered in advance. There is no legal limitation on the ownership of buildings, constructions etc. by foreign individu- •• Property rights regarding individual apart- als and legal entities. ments in unfinished buildings or non-residential properties and mortgages thereon In addition to ownership, the Land Code rec- may also be registered in advance. ognizes perpetual and temporary land use rights, •• In the event that immovable property is lease rights and easements. A temporary land leased or given for use for a period exceeding use right is granted for a short-term (up to 15 11 months, such right must be registered by years) or long-term (between 15 and 99 years

www.azpromo.az LAND AND PROPERTY

34 for private owned lands and between 15 and 49 years for state/municipality owned lands) peri- ods and may be extended by the parties. A perpetual land use right is granted for an indefinite period. The holder of such rights is liable only for the land tax for land use. Perpetual and temporary land use rights are granted by the state and

BUSINESS CLIMATE BUSINESS municipalities only in exceptional circumstances to a limited number of persons listed in the Land Code. Landowners may grant perpetual or temporary land use rights under an agreement with the land user. Land use terms are defined by an agreement between the landowner and the land user. The lease of land is the use of land for a specific period for a charge. Leases are concluded for a period agreed by the parties. Rent payments for the lease of privately held land parcels are freely negotiable. Rent payments for state owned land parcels are determined according to the guidelines approved by the relevant executive authority taking into account their purpose, geographical location and quality. With regard to agricultural land, discounts from statutory rents are available depending on market conditions in the agricultural sector.

www.azpromo.az LICENSING

Azerbaijan introduced a streamlined licensing tity or register as an individual entrepreneur, i.e. 35 system. become a “sole proprietor”, and then apply for a license. An applicant is required to submit all doc- Under Azerbaijani law: a license is an official uments specified in the regulations and pay the document permitting relevant types of entrepre- fee. The list of documents required to obtain a li- neurial activities. There are 39 types of business cense is exhaustive. No other documents may be activities requiring a license (see Annex 3). demanded from a business to issue the license. Provided the application meets all requirements, BUSINESS CLIMATE BUSINESS A license is granted without discrimination to a license is issued within 10 business days. Li- any entity that satisfies the requirements for that censes are issued for a life-long period with no specific license. Thus (with certain exceptions), fixed term. foreign investors may obtain licenses under the same conditions and in accordance with the same A new Law “On Licenses and permits” adopt- procedure as Azerbaijani nationals. A licensee ed on 15 March 2016 sets out a system of per- may not transfer a license to another person. mits. According to the Law a “permit” is an official document (permit, approval, certificate, Licensing in Azerbaijan is strictly regulated by accreditation, etc.) granted by the authority re- the legislation. The Ministry of Economy is en- sponsible for issuing the permit for the purpose trusted to exercise overall state policy in the field of the fulfillment of the relevant entrepreneurial of licensing and to maintain a single register of activities or certain actions in connection with licenses. Issuance of 25 types of licenses is car- the implementation of entrepreneur activities. ried out via one-stop-shop system by the Min- The list of permits includes 86 types of commer- istry of Economy at “ASAN Service” centers and cial activities. through the E-Portal. Licenses for state security financial markets related activities, as well as es- An information portal on permits and licenses tablishment of biometric technologies and infor- (www.icazeler.gov.az) provides broad informa- mation resources of personal data, cellular com- tion on the type of permit required, the process munication services, TV and radio broadcasting for obtaining it, the granting authority, the state are issued by relevant authorities such as State fee and other related information. Security Service, Financial Markets Supervision Chamber, Ministry of Transport, Communication and High Technologies, National Television and Radio Council.

A person willing to carry out licensed entrepreneurial activity should either create a legal en-

www.azpromo.az EMPLOYMENT

36 Labor relations governing the employment of An employer has the duty of giving notice of all employees in the Republic of Azerbaijan are termination. The general term of such notices is regulated by the Labor Code, the Migration Code two months (e.g., redundancies). However, cer- and other relevant legislation. tain exceptions apply (e.g., in case of a gross vio- lation of job duties, when no notice is required). Employment relations become effective, An employee can terminate a contract at any time not following the signature of the employment on one month’s notice or on the day indicated in

BUSINESS CLIMATE BUSINESS agreement, but from the time of the registration the resignation letter if, for example, he/she con- of the employment agreement in an electronic cludes a contract with another employer. When database for maintaining records of employment employment is terminated by the employer due agreements created by the Ministry of Labor to redundancy, for a period of two months prior and Social Protection of Population. Under this to termination the employer must allocate to the rule, notification of all employment agreements, employee at least one business day in a working amendments to employment agreements and week to allow the employee to look for a new job. information on the termination of employment For certain categories of employees (e.g., preg- agreements must be submitted to the Ministry nant women, women with children under three of Labor and Social Protection of Population. years of age), termination of employment is pro- hibited, unless the employer is being liquidated Employment contracts are concluded in most or the term of the fixed-term contract expires. cases without a fixed term. In limited cases (such as seasonal employment, work on a fixed-term In cases of termination of employment due to project or assignment, or by agreement of the redundancy or the liquidation of an enterprise, employer and employee) the employment con- the employer must make severance payments to tract may be concluded for a fixed term of up to employees including employee’s average salary five years. A fixed-term contract is deemed to be for additional two months if the employee is un- extended for the same period unless terminated able to find a job. by notice within seven days of the expiration of the original term of the contract. If the term of Generally, employers are liable for paying the fixed-term contract lasts continuously for monthly social insurance contributions equal to more than five years, it will be deemed to be an 22% of the salary fund of their employees. Em- indefinite term contract. ployers are also obligated to withhold employees' social insurance contributions in the amount A contract without a fixed term may be termi- of 3% of gross salaries and transfer them on the nated by the employer only in cases specified in employees’ behalf to the State Social Protection the Labor Code (see Termination below). Fund.

www.azpromo.az EMPLOYMENT

Individual entrepreneurs are generally re- WORK WEEK 37 quired to pay social insurance contributions equal The regular work week is 40 hours, reduced for to 20% of the minimum salary. Different rates are certain groups of people and workplaces. Over- provided for certain regions and categories of in- time work is allowed in order to prevent a natural dividual entrepreneurs (such as private notaries, disaster, an industrial accident, or other emer- auditors, accountants etc.). gency events, or to eliminate their consequences, as well as to prevent the loss of perishable goods.

Azerbaijani law also provides for mandatory CLIMATE BUSINESS The duration of overtime work may not exceed a insurance against accidents at work and occupa- certain limit established by the Labor Code. For tional diseases to be obtained by all employers. each hour of overtime work, an employee must COMPENSATION IN be compensated at a rate at least double of a nor- FOREIGN CURRENCY mal hourly rate. All salaries paid in Azerbaijan must be paid in Azerbaijani manats, unless there is a special HOLIDAYS agreement (for example, a Production Sharing Employees are entitled to 19 official public Agreement for the development of hydrocar- days off, 18 of which are public holidays and one bon reserves) concluded with the Government is a national mourning day. The minimum paid of Azerbaijan allowing payments in other curren- annual leave is 21 calendar days, more for certain cies. groups of employees and in certain workplaces.

PROBATIONARY PERIOD Overtime and work during days-off (which A probationary period of up to three months are Saturdays, Sundays, public holidays and the is allowed in most cases if envisaged in the em- day of mourning) are compensated in accordance ployment contract. The contract may be termi- with the law. nated by either party before the expiration of the probationary period upon giving a three-day no- SICK LEAVE tice. A probationary period may not be imposed Except for the first 14 days of any absence, on certain categories of staff listed in the Labor compensation for sick leave is provided by the Code. State Social Protection Fund, not the employer. Compensation is calculated on the basis of em- MINIMUM WAGE ployee’s income (monthly salary, bonuses, etc.) Employee remuneration may not be lower for the last 12 complete calendar months prior to than the minimum monthly wage, currently AZN sick leave. 130 per month.

www.azpromo.az EMPLOYMENT

38 MATERNITY LEAVE terprises (subsidiaries), branches or represent- Women are entitled to be paid maternity leave ative offices operating in Azerbaijan are subject for 70 calendar days prior to and 56 days (70 or to Azerbaijani labor law, except for those work- 110 days in certain cases) after the birth of a ing in branches or representative offices located child. Maternity pay is provided by the State So- in Azerbaijan under employment contracts con- cial Protection Fund. cluded with the foreign state’s enterprise in that state.

BUSINESS CLIMATE BUSINESS TERMINATION Foreign nationals travelling to Azerbaijan to Grounds for dismissal include, among other take employment here, have to obtain work and things: staff redundancy; employee’s failure to temporary residence permits. These permits are meet required competency standards as deter- issued by the State Migration Service for the pe- mined by the decision of a competency assess- riod of up to one year. The term of validity can be ment body; liquidation of an enterprise; and vi- extended every time for another period of up to olation of employment duties as determined by one year. Permanent residents, persons engaged the employment contract or labor law. in entrepreneurship activities in Azerbaijan, staff There are statutory restrictions relating to the of diplomatic missions, consulates and interna- dismissal of certain categories of employees. In tional organizations, heads and deputy heads of certain cases, an employer is required to report organisations established by international agree- an employee’s dismissal to the appropriate state ments, persons employed by relevant executive authorities and/or trade unions. authorities, persons on secondment in certain statutorily listed areas for no more than 90 days INCOME TAX a year, heads and deputy heads of branches and The employer is obliged to withhold income representative offices of foreign legal entities in taxes for its employees at source and remit them Azerbaijan, heads and deputy heads of legal en- to the state budget (see Taxation chapter). tities founded in Azerbaijan by a foreign legal entity or a foreign individual and some other cate- FOREIGN WORKERS IN AZERBAIJAN gories of foreign nationals are exempt from work Foreign employees who are employed by en- permits.

www.azpromo.az FOREIGN TRADE REGULATION

Import and export operations are regulated customs entry channel: “green” (no physical ex- 39 by the Presidential Decree No 609 “On Further amination), “blue” (customs control measures Liberalization of Foreign Trade in the Republic of after entry into the customs territory), “yellow” Azerbaijan”, Customs Code and other relevant (a thorough examination of documents, goods legislation. and vehicles at customs border checkpoints) and “red” (examination of documents, physical ex- All goods imported in or exported from Azer- amination of goods, vehicles and persons). baijan shall be declared at customs authorities. CLIMATE BUSINESS Azerbaijan applies a single-window system for There are no export duties in Azerbaijan (ex- the inspection of goods and vehicles crossing cept for certain types of metals and metal prod- the state borders. Thus, inspection of goods and ucts), while imported goods are subject to import transport documents, veterinary, phytosanitary, duties. hygienic and other certificates, as well as the veterinary, phytosanitary, sanitary control is car- In the case of temporary imports, no duties or ried out by customs authorities. Moreover, State reduced duties are applied and the goods must Customs Committee of Azerbaijan introduced be re-exported from Azerbaijan by the deadline “e-Customs” for a number of services including established by the customs authorities. Goods e-declaration. brought in as temporary imports should be re-exported without substantial changes in their na- Azerbaijani law recognizes several customs ture. procedures applicable to goods imported into Azerbaijan, the most important of which are Excise tax applies to certain types of import- transit (international and national), warehouse ed goods (e.g., tobacco and alcohol products, (temporary storage and customs warehouse), fur-leather goods). Azerbaijan has adopted a free zone, special use (temporary import and end “destination VAT” principle and VAT (currently use), and processing (in and outside customs ter- set at 18%) is payable (subject to the applicable ritories). customs regime) on the declared value of goods (including assessed import duties and excise tax). In order to facilitate customs clearance for Certain categories and types of goods are exempt goods and vehicles, Azerbaijan introduced “Green from import duties, while certain other types of Channel System” at entry points. This system is goods are subject to 0% VAT (the list of goods is based on risk assessment prior to entry of goods approved by relevant resolutions of the Cabinet and vehicles into the customs territory. Automat- of Ministers). ed digital information system determines type of

www.azpromo.az FOREIGN TRADE REGULATION

40 Azerbaijan has free trade agreements with applied to certain goods depending on their value Russia, Ukraine, Georgia, Kazakhstan, Kyr- and local components used for their production gyzstan, Tajikistan, Uzbekistan, Moldova and Be- at the basis rate of 3 and 6 % of their customs val- larus (see Annex 5). Goods imported from these ue indicated in the export customs declaration. countries are free of customs duties. Azerbaijan Furthermore, export grant scheme was intro- has also ratified the United Nations Convention duced to support the participation of exporters in on Contracts for the International Sale of Goods international exhibitions, organisation of export

BUSINESS CLIMATE BUSINESS (Vienna, 1980). missions, market researches, entry of goods into the foreign market chains and duty-free shops, Export promotion and stimulation mecha- promotion of “Made in Azerbaijan” brand in for- nisms are available for non-oil goods produced eign countries and export product related R&D in Azerbaijan. Export reimbursement system is programmes.

www.azpromo.az CURRENCY REGULATION AND REPATRIATION OF PROFIT

National currency of Azerbaijan is the Azer- •• Transfers of dividends, interest, and other in- 41 baijani Manat (AZN). come from deposits, investments, credits and other operations; and FOREIGN EXCHANGE •• Non-commercial transfers, for example in- Foreign exchange transactions are governed cluding transfers of inheritances, wages, pen- by the Law “On Currency Regulation”. The Cen- sions or alimony. tral Bank of Azerbaijan administers the overall

enforcement of currency regulation. Financial Operations involving the movement of capital CLIMATE BUSINESS Markets Supervision Chamber regulates certain include the following: aspects of currency related transactions. Various aspects of foreign currency regulation also cover •• Direct investment; precious metals and foreign securities. •• Purchase of securities; •• Payments for ownership and other rights to Azerbaijan’s currency control legislation dis- immovable property; tinguishes between residents and non-residents. •• Transfers in connection with the financing of The definition of resident includes individuals export/import transactions with a term ex- having a permanent place of residence in Azer- ceeding 180 days; baijan and legal entities established in accord- •• Deposits in the authorised banks with a term ance with Azerbaijani legislation. Branches and exceeding 180 days; representative offices of foreign entities estab- •• Any other currency operation not deemed to lished in Azerbaijan do not fall within the defini- be a routine currency operation. tion of a resident. Sale and purchase of foreign currency in Azer- Foreign currency operations are divided into baijan shall be carried out through authorised routine currency operations and operations in- banks and non-banking financial institutions. volving the movement of capital. Routine currency operations include: No licensing of currency operations involving the movement of capital is required at present •• Transfers for the payment of goods and ser- for residents. There is no specific limitation as to vices under import/export contracts; the amount allowed for transfer. •• Transfers in connection with the financing of export/import transactions with a term not Both residents and non-residents are permit- exceeding 180 days; ted to have foreign currency accounts in the au- •• Transfers in connection with financial loans thorised banks, as well as outside the Republic of with a term not exceeding 180 days; Azerbaijan without restriction, may deposit their

www.azpromo.az CURRENCY REGULATION AND REPATRIATION OF PROFIT

42 funds outside the country, and are not required to the customs authorities. In case of export of the sell foreign currency proceeds or submit a report hard foreign currency in the amount exceeding upon the withdrawal of foreign currency, subject the equivalent of USD 10,000 but less than the to a routine procedure involving the obtaining of equivalent of USD 50,000, customs document a duplicate of registration certificate from the confirming previous import of this amount in Ministry of Taxes (e-application is available). cash to Azerbaijan and written customs declara- Non-resident legal entities may purchase foreign tion are required. In all other cases foreign cur-

BUSINESS CLIMATE BUSINESS currency on the domestic foreign currency mar- rency shall be transferred via authorised bank or ket for routine currency operations and in other national postal service operator. cases stipulated by legislative acts. CASH SETTLEMENTS IMPORT/EXPORT OF In order to ensure transparency of settlements FOREIGN CURRENCY IN CASH and protection of consumer rights, a new law on Resident and non-resident individuals and le- non-cash settlements was adopted on 16 Decem- gal persons are treated equally with regard to the ber 2016. According to the new law, the following import of foreign currency in cash form. There settlements are to be conducted cashless: are no limitations on the amount of foreign currency an individual or legal person may bring into •• Payments by VAT payers of over AZN 30.000 Azerbaijan, provided that the amount is declared per calendar month; to the Azerbaijani customs authorities. •• Payments by other taxpayers of over AZN 15.000 per calendar month. Resident and non-resident natural and legal persons may export hard currency in the amount 1% simplified tax is applied for cash withdraw- als by legal entities and sole entrepreneurs from up to the equivalent of USD 10,000 without any their bank accounts. documentation, except a verbal declaration to

www.azpromo.az TAXATION

Taxation in Azerbaijan is regulated by the baijani sources: 43 Tax Code and other relevant legislative acts. Tax •• Dividends - 10% Code establishes the statutory tax regime and •• Interest - 10% defines taxation in the industrial and technolog- •• Rent and royalties - 14% ical parks. In addition, Tax Code recognizes the •• International communication and transport existence of special tax regimes. Such special tax services - 6% regimes are existent predominantly in the oil & •• Risk insurance and re-insurance fees - 4% gas sector under Production Sharing Agreements •• Interest on financial leasing - 10% CLIMATE BUSINESS (PSAs) and under Host Government Agreements •• Income received from performing works and (HGAs). rendering services - 10% •• Wins at sports betting – 10% This review concentrates on the corporate taxation under the statutory tax regime. TRANSFER PRICING As of 01.01.2017, transfer pricing rules apply TAX CODE ESTABLISHES to the related party transactions which exceed FOLLOWING TAXES: AZN 500.000 during a calendar year. These rules are applied to the transactions concluded be- PROFIT TAX tween below-mentioned parties: Legal entities are taxed on profit, which is determined as gross income from economic ac- •• Resident of the Republic of Azerbaijan and tivities less allowable deductions at a flat rate non-resident in a related party relationship; of 20%. Both resident and non-resident entities •• Permanent establishment of non-resident in (through their permanent establishment) pay the Republic of Azerbaijan and that non-res- profit tax in Azerbaijan. ident or its any representative office, branch office or other unit located in other countries; The gross income of a non-resident enter- •• Resident of the Republic of Azerbaijan and prise that is not connected with the permanent (or) permanent establishment of non-res- establishment is taxed at the source of payment ident in the Republic of Azerbaijan and legal without the deduction of expenses. Unless other- entities incorporated in countries with prefer- wise specified in the double taxation treaties that ential tax regimes. Azerbaijan has entered to (see Annex 4), foreign legal entities with no permanent establishment All the persons mentioned above should sub- in Azerbaijan are subject to the following with- mit a certificate in a relevant form determined by holding tax rates on items of income from Azer- the Ministry of Taxes regarding the transaction

www.azpromo.az TAXATION

44 exceeding AZN 500.000 during a calendar year no tax. Individuals who are present in Azerbaijan later than 31 of March after the reporting year, as for more than 182 cumulative days during a cal- well as provide information about those persons. endar year, or those with a place of permanent residence, a centre of vital interests or an habit- VAT ual adobe in Azerbaijan, or who have Azerbaijani Supply of goods and rendering of services in citizenship, are considered to be tax residents of Azerbaijan, as well as import of goods are subject Azerbaijan.

BUSINESS CLIMATE BUSINESS to VAT. The VAT rate is 18%. Taxable income is defined as gross income re- Separate VAT registration is required under ceived from all sources worldwide during the tax the Tax Code. Companies with taxable transac- year, regardless where the income was earned or tions exceeding a certain threshold (currently paid, less allowable deductions. Non-residents AZN 200,000 during in a consecutive 12 month are subject to Azerbaijani income tax only on period) must register as VAT payers. Other com- income received from Azerbaijani sources. The panies doing business in Azerbaijan may volun- effective progressive tax rate ranges from 14% tarily register. Only registered VAT payers may (for monthly income up to AZN 2,500 less 173 charge VAT or claim a credit for the input VAT AZN) up to 25% (AZN 350 + 25% of the monthly that they pay. amount exceeding AZN 2,500).

PROPERTY TAX Individual entrepreneurs are taxed at a fixed Legal entities are levied with 1% property tax rate of 20%. Wins at sports betting are subject to on average annual value of fixed assets on the 10% personal income tax. enterprise’s balance sheet. Non-resident legal entities with permanent representation in Azer- SOCIAL INSURANCE baijan pay property tax on the average annual Both Azerbaijani nationals and foreign indi- value of fixed assets connected with the perma- viduals are subject to social insurance contribu- nent representation. tion requirement. Employers are liable for paying social insurance contributions at a rate of 22% of Property tax for individuals is calculated for the employee’s gross salary, and 3% is deducted buildings and their parts, as well as water and air from the employee’s gross salary as the employ- transport vessels in individual’s ownership at dif- ee’s portion of the social insurance contribution. ferent rates. As per 1 January 2018, 0.5% is deducted from employee’s gross salary and 0.5% is paid by the PERSONAL INCOME TAX employer for each employee to the State Social Residents of Azerbaijan are subject to income Protection Fund as unemployment contribution.

www.azpromo.az TAXATION

Subject to relevant international agreements of foreign countries at the relevant final railway 45 Azerbaijan, foreign citizens may be exempted station on the territory of Azerbaijan and their from paying Azerbaijani social insurance contri- forwarding to another country via the nearest butions. border and a customs checkpoint; •• At transportation of goods from the territo- MINING TAX ry of another country by trucks, trailed and Legal entities and individuals extracting min- semi-trailed vehicles of foreign countries via eral resources in Azerbaijan pay mining tax at the nearest border and a customs checkpoint CLIMATE BUSINESS rates from 3% to 26%. to the nearest relevant railway station on the territory of Azerbaijan. LAND TAX A land tax is imposed on owners and users of SIMPLIFIED TAX land plots, the amount of which depends on the The simplified tax is charged at the following use and location of the land. rates on taxpayers’ gross revenue: EXCISE TAX All natural and legal persons producing excis- •• 4% for taxpayers operating in Baku able goods in or importing them to Azerbaijan •• 2% for taxpayers operating in other regions of are subject to excise tax, the rate of which differs Azerbaijan among the products. In order to qualify for this tax, the total rev- ROAD TAX enue of the legal entity should not exceed AZN Non-residents owning passenger and cargo 200,000 for a consecutive 12 month period and vehicles entering or transiting Azerbaijan, as well not be registered for VAT. The payers of simpli- as the persons producing or importing petrol, die- fied tax are exempt from paying VAT, profit tax sel and liquefied gas in Azerbaijan shall pay road and property tax. tax. Persons engaged in trading and catering ac- Trucks, trailed and semi-trailed vehicles of tivities whose taxable turnover exceeds AZN foreign countries are exempted from road tax 200,000 in any month within consecutive twelve from 1st July 2016 for the period of 3 years in the months are entitled to a simplified tax at the fol- following cases: lowing rates:

• At relocation of goods transported by rail onto • •• 6% for trading activities the trucks, trailed and semi-trailed vehicles of •• 8% for catering activities

www.azpromo.az TAXATION

46 Persons engaged in the construction of build- Certain categories of entrepreneurs, e.g. pro- ings are also entitled to register as simplified tax- ducers of excised goods, credit and insurance payers voluntarily. In such case simplified tax is organizations, investment funds, professional calculated at a rate of AZN 45 per square meter securities market participants, non-public pen- multiplied by the location zone ratio, which var- sion funds and others cannot enjoy the right for ies from 0.5 to 4.0. The ratio for non-residential simplified tax. buildings is 1.5 regardless of location.

BUSINESS CLIMATE BUSINESS INDUSTRIAL AND Transportation service providers (except for TECHNOLOGY PARKS international transportation), operators and Residents of industrial and technology parks commissioners of sports betting, as well as per- enjoy certain tax holidays and exemptions within seven years starting from the year of registration sons selling residential and non-residential prop- in the park: erty (with certain exemptions) are simplified tax payers in any case. •• no income tax on any income (other than income from employment) generated from the Tax rates for sports betting operators and activity in the industrial and technology parks commissioners: by individual entrepreneurs that are residents of such parks; • 6% for operators of sports betting • •• no profit tax on any income generated from •• 4% for commissioners of sports betting activities in the industrial and technology parks by legal persons that are residents of Rates for simplified tax payers providing such parks; transportation services vary from AZN 1 up to •• no VAT and no customs duties on imports of AZN 9, and more per month depending on such machinery, technological equipment and in- factors as the number of seats, cars and tonnage. stallations by residents with the purpose of a) construction of the production facilities in Income from the sale of residential and the parks and b) research and development non-residential property, including property ac- works; quired from persons engaged in construction, •• no property tax for residents on property used is subject to a simplified tax at a rate of AZN 15 in the parks; per square meter multiplied by the location zone •• no land tax for residents on land used in the rate, which varies from 0.5 to 4.0. The rate for parks. non-residential buildings is 1.5 regardless of location.

www.azpromo.az TAXATION

INVESTMENT PROMOTION DOCUMENT 47 Holders of Investment Promotion Document (IPD) enjoy certain tax and customs benefits. The issuance of an IPD is based on the following criteria: •• areas of economic activity in which investments will be made; •• a minimum amount in relation to the scope of an investment project; •• the territorial administrative units where investment projects will be performed. MINIMUM INVESTMENT AREAS OF ECONOMIC ACTIVITIES IN WHICH REQUIREMENT (MILLION AZN) CLIMATE BUSINESS CEA INVESTMENT IS MADE REGION REGION REGION REGION REGION 1 2 3 4 5

1 Sorting and packaging of agricultural products - 2 1 0,4 0,2 2 Transportation of food products by special vehicles (refrigerator) - 2 1 0,4 0,2 Intensive growing of plants (farms with cultivation area no less 3 - - - 0,4 0,2 than 50 hectares using overhead irrigation) Intensive horticulture, watermelon, melon, gourd and tea grow- 4 ing (farms with no less than 5 hectares of area irrigated with drip - 1 - 0,4 0,2 and overhead irrigation systems) Raising of cattle (for milk and meat production) (farms with no 5 - - - 0,4 0,2 less than 50 pedigree cattle) 6 Industrial fish farming - - - 0,4 0,2 7 Mining and preparation of metal ores - - - - 50 8 Manufacture of food products - 2 1 0,4 0,2 9 Manufacture of beverages - 2 1 0,4 0,2 10 Manufacture of tobacco products - 2 1 0,4 0,2 11 Manufacture of textiles and related products 5 2 1 0,4 0,2 12 Manufacture of wearing apparel 5 2 1 0,4 0,2 13 Manufacture of leather and related products, footwear1 5 2 1 0,4 0,2 14 Manufacture of wood and of products of wood - 2 1 0,4 0,2 15 Manufacture of paper and paperboard - 2 1 0,4 0,2 Production of oil lubricants from the category of SCIP 19.20 16 - 3 2 1 0,5 Manufacture of refined petroleum products Manufacture of chemicals and chemical products (except SCIP 17 - 3 2 1 0,5 20.51 Manufacture of explosives)

www.azpromo.az TAXATION

48 MINIMUM INVESTMENT AREAS OF ECONOMIC ACTIVITIES IN WHICH REQUIREMENT (MILLION AZN) CEA INVESTMENT IS MADE REGION REGION REGION REGION REGION 1 2 3 4 5

18 Manufacture of pharmaceuticals - 10 10 10 5 19 Manufacture of rubber and plastics products - 3 2 1 0,5

BUSINESS CLIMATE BUSINESS Manufacture of construction materials (except manufacture of products falling under the categories of SCIP 23.63 Ready-mixed 20 concrete, 23.64 Dry-mix concrete, and manufacture of asphalt - 3 2 1 0.5 falling under the category of SCIP 23.99 Manufacture of other non-metallic mineral products) 21 Manufacture of products of metallurgy industry 5 5 3 2 1 Manufacture of fabricated metal products, except machinery 22 5 3 2 1 0,5 and equipment 23 Manufacture of computers and other electronic equipment 5 3 2 1 0,5 24 Manufacture of electrical equipment 5 3 2 1 0,5 25 Manufacture of machinery and equipment 5 3 2 1 0,5 26 Manufacture of motor vehicles, trailers and semi-trailers - 5 3 2 1 27 Manufacture of other transport equipment 5 5 3 2 1 28 Manufacture of furniture - 3 2 1 0,5 Manufacture of jewellery, musical instruments, sports goods 29 5 3 2 1 0,5 and medical equipment 30 Alternative energy generation 5 3 2 1 0,5 Construction of tourism services facilities included in the Gener- al development plans in the tourism and recreation areas: 31 1. Hotels and equal accommodation facilities; - - - 1 1 2. Catering services facilities; - - - 0.1 0.1 3. Entertainment services facilities - - - 0.5 0.5

Establishment of hostel type accommodation facilities 32 Note: Areas which are not included in region 4 and region 5 - - 0.1 0.1 0.1 tourism and recreation areas

Establishment of 2 and 3 star accommodation facilities 33 Note: Areas which are not included in region 4 and region 5 - - 2 2 2 tourism and recreation areas

www.azpromo.az TAXATION

ABBREVIATIONS: 49 CEA - Classification of Economic Activities (III edition, 2009) SCIP - Statistical Classification of Industrial Products (III edition, 2009)

FOOTNOTES: 1 Except establishing manufacturing falling under the category of tanning, dyeing and dressing of leather in Region 1

2 Investment promotion on manufacture of cement does not apply to cement enterprises not CLIMATE BUSINESS producing clinkers

Region 1 - Baku city (except settlements around Baku). Region 2 - Settlements around Baku and Absheron region. Region 3 - Sumgayit city, Ganja city. Region 4 - Cities and regions not falling under Regions 1, 2, 3 and 5. Region 5 - Nakhchivan Autonomous Republic, regions of Fuzuli, Khojavand, Agdam, Tartar, Agjabadi, Naftalan, Goranboy, Goygol, Gadabay, Dashkasan, Gazakh, Tovuz, Agstafa, Lerik, Yardimli, Balakan, Gusar.

Holders of IPD enjoy the following tax and customs exemptions within seven years starting from the date of issue of IPD:

•• 50% reduction of income tax for individual entrepreneurs; •• 50% reduction of profit tax for legal persons; •• no VAT and no customs duties on imports of machinery, technological equipment and installations; •• no property tax; •• no land tax.

www.azpromo.az ACCOUNTING

50 The law “On Accounting” stipulates that all balance method, and the following rates apply to significant entities including credit institutions, these selected categories of assets: insurance companies, investment funds and commercial organizations which meet certain •• Buildings and structures – up to 7% p.a. on a criteria are subject to International Financial reducing balance basis; Reporting Standards (IFRS). Others (except for •• Machinery and equipment– up to 20% p.a. on small private businesses) have the choice of us- a reducing balance basis;

BUSINESS CLIMATE BUSINESS ing either IFRS or National Accounting Standards •• High-tech products – up to 25% p.a. on a re- (NAS). Small private businesses also have the ducing balance basis; right to choose between NAS or the simplified •• [Motor] vehicles – up to 25% p.a. on a reduc- method of accounting. ing balance basis; •• Geological exploration costs and development All entities registered in Azerbaijan, which in- costs preparatory to the extraction of natural cludes Azerbaijani legal persons, representative resources (including the cost of acquiring the offices and branches of companies within the right to explore, develop or exploit natural territory of Azerbaijan are required to keep their accounts and records in local currency, and in resources) – up to 25% p.a. on a reducing bal- accordance with the Azerbaijani accounting leg- ance basis; and islation (“AAL”). This includes the use of a man- •• Intangible assets with a life of more than one datory and quite rigid chart of accounts which, in year – depreciated over the useful life of the most cases, will also necessitate the employment asset or, where the useful life cannot be deter- of a full-time, experienced Azerbaijani chief ac- mined, at up to 10% p.a. on a reducing balance countant. basis.

The Civil Code (2000) contains general provi- AAL differs from IFRS and generally accepted sions regarding financial reporting and audit re- accounting principles in other countries (e.g., the quirements for legal entities. Joint-stock compa- United States). Below is a summary of the most nies and limited-liability companies are required significant differences. to use an independent auditor to audit their annual financials. Similarly, joint-stock companies ACCOUNTING POLICIES are required to publish their annual accounting AAL does not require a detailed disclosure of reports and balance sheets. The Tax Code (2000) the accounting policies used in the preparation of also contains certain provisions dealing with ac- the financial statements or footnote disclosures counting matters, such as depreciation. Depre- that provide additional information, analysis and ciation is accrued in accordance with a declining clarification relating to the financial statements.

www.azpromo.az ACCOUNTING

PROPERTY, PLANT AND IFRS requires, among other things, that long- 51 EQUIPMENT (“PPE”) lived assets and certain identifiable intangibles Property, plant and equipment is maintained that are held and used by an entity be reviewed under the historical cost convention (at acquisi- for impairment whenever events or changes in tion price or at the cost of production including circumstances indicate that the carrying amount transportation and assembly costs) as modified of an asset may not be recoverable. In addition, by the revaluation of these assets, if revalued. At provisions may also be set up on the carrying value of short-term assets (for example, accounts various times since 1992, PPE in Azerbaijan have CLIMATE BUSINESS receivable) when it is likely that the full carrying been revalued in accordance with Government value of the asset will not be recovered. decrees (the latest such revaluation occurred in 1996). DEFERRED TAXES Deferred tax assets and liabilities under IFRS The indexes used for these revaluations did are recorded for the expected future tax conse- not properly account for the changes in the value quences of existing differences between the as- of the Azerbaijan Manat, nor did they provide a set and liabilities base of financial and tax report- market value for the fixed assets to which they ing, and loss or tax credit carry forwards. Under were applied. Revaluations of property, plant and AAL rules, there are no such provisions dealing equipment are generally not required under IFRS with deferred tax accounting. and US GAAP, except under certain circumstances. EQUITY In the balance sheet of an Azerbaijani com- IMPAIRMENT OF ASSETS pany equity is generally represented by charter AAL does not permit the recording of a pro- capital, additional paid-in capital, reserve capital, vision against the carrying value of an impaired appropriated earnings, social funds and retained asset. This includes setting up provisions for tan- earnings for the current and previous years. De- gible assets, as well as inventories, accounts re- ductions can be made directly from reserve funds ceivable and other assets. for non-tax deductible expenses.

www.azpromo.az INTELLECTUAL PROPERTY

52 Intellectual property rights in Azerbaijan in- Azerbaijan is a party to several internation- clude: all rights to industrial property (including al agreements on the protection of intellectual inventions, industrial designs, utility models, property, including: the Convention Establishing trademarks, and geographical indication), copy- the World Intellectual Property Organization, the right and related rights. Paris Convention for the Protection of Industrial Property, the Madrid Agreement Concerning the Responsibilities for different spheres of intel- International Registration of Marks, the Madrid lectual property rights in the Republic of Azerbai- Protocol, the Patent Cooperation Treaty, the BUSINESS CLIMATE BUSINESS jan were divided between State Copyright Agen- Eurasian Patent Convention, the Performances cy and Standardization, Metrology and Patent and Phonograms Treaty of the World Intellectual Committee. Property Organization, and the Copyright Treaty of the World Intellectual Property Organization. On April 20, 2018 the President of the Republic of Azerbaijan has signed an Order “On measures Azerbaijan is a “first to file” and not a “first to to improve management in the field of consumer use” jurisdiction, meaning early registration of intellectual property rights is essential to ensure market surveillance, standardization, metrology protection. Patent protection is granted to an and protection of intellectual property rights”. invention if it is novel, inventive and useful. The maximum duration of protection for an invention Based on the above-mentioned Order, the patent is 20 years. Standardization, Metrology and Patent Commit- tee was dissolved and the Intellectual Property Utility models are granted patent protection Agency will be created through the reorganiza- if they are new and “industrially applicable”. The tion of the Copyright Agency and the Center for term of utility patents is 10 years. Patents and Trademarks. An industrial design right is characterized by Also, the mentioned Order lays out that the an artistic and structural form which determines responsibilities of the dissolved Committee re- its external appearance. Patent protection is garding the protection of industrial property granted if an industrial design is novel and orig- objects will be transferred to the Intellectual inal. The term is 10 years. Property Agency and responsibilities regarding technical regulation, standardization, metrology, Patents may be assigned and/or licensed by conformity assessment, accreditation and quali- their owner(s) to natural persons or legal entities. ty management will be transferred to the newly However, an assignment and/or license must be established State Agency for the Control of An- registered with the relevant state agency to be timonopoly and Consumer Market, which will be enforceable. Infringement carries civil, criminal separated from the Ministry of Economy. and administrative liability.

www.azpromo.az INTELLECTUAL PROPERTY

The right to a trademark is based on registra- stage productions, phonograms of radio or ca- 53 tion with the respective state agencies. Trade- ble broadcasts, and computer programs and da- mark registration is granted for a term of 10 tabases (related rights). Copyright protection is years, renewable every 10 years. Assignments of normally granted to the author without registra- licenses for trademarks must be registered with tion. The right to use a copyrighted work may be the relevant state agency. reassigned. A copyright provides protection for the lifetime of the author and normally for a peri- Legal protection is given to the appellation od of 70 years following his or her death. BUSINESS CLIMATE BUSINESS of origin of goods based on registration with the relevant state agency, and to trademarks Rights to computer programs, databases and existing under international agreements on the topologies of integrated circuits are protected registration thereof or bearing the status of a under the Copyright Law, the Law “On Topolo- well-known trademark. Violations of intellectual gy of Integrated Circuits” and the Law “On Legal property rights lead to civil, criminal, and admin- Protection of Compilations of Data”. The unau- istrative liability. thorized recreation (copying) of computer programs, alteration of existing programs, and un- The Copyright Law protects works of sci- lawful accessing of legally protected computer ence, literature and the arts (works) as well as information are criminal offences.

www.azpromo.az DISPUTE RESOLUTION, ARBITRATION AND MEDIATION

54 COURTS ARBITRATION Azerbaijan has a three-tier court system - Referral of a dispute for arbitration is a per- courts of first instance, appellate courts and a mitted dispute resolution mechanism. In general, cassation court. matters over which courts have jurisdiction can be arbitrated in cases provided by law, interna- Courts of first instance are the district (city) tional and bilateral agreements of Azerbaijan. courts of general jurisdiction, local administra- BUSINESS CLIMATE BUSINESS tive-economic courts, felony courts, and military Azerbaijani courts have exclusive jurisdic- courts. tion over certain matters, which include, inter alia, rights over immovable property located in Courts of general jurisdiction hear cases on Azerbaijan, cases concerning the recognition of civil, family, or land-related matters, use of nat- patents or other marks or rights, if they were reg- ural resources, environmental protection, tax, istered (or application for registration was filed) administrative and other matters, where at least in Azerbaijan, cases where an action is brought one of the parties to a dispute is a natural person against a carrier under a contract for the carriage without the status of a sole proprietor, or, in case of goods, cases relating to the existence of a legal of such status, where the dispute is not related person registered in Azerbaijan, or cases where to the carrying out of entrepreneurial activity by the cancellation of a decision taken by a legal this natural person. person is sought.

The administrative-economic courts hear cas- Legislation on civil procedures does not set es in respect of economic disputes arising from forth provisions regulating the conduct of do- civil, administrative and other legal relations be- mestic arbitration. Hence, it is assumed that the tween legal entities and natural persons with the parties have liberty to establish these provisions status of sole proprietor. through an agreement.

There are 6 regional appellate courts in Azer- In terms of international mechanisms, Azer- baijan each having civil, criminal, military and ad- baijan acceded to and ratified the 1958 New York ministrative-economic chambers. Their decisions Convention on the Recognition and Enforcement can be further considered under the cassation of Foreign Arbitral Awards (the “New York Con- proceedings in the Supreme Court also having vention”), the 1965 Washington Convention on civil, criminal, military and administrative-eco- the Settlement of Investment Disputes between nomic chambers. States and Nationals of Other States (the “Wash-

www.azpromo.az DISPUTE RESOLUTION, ARBITRATION AND MEDIATION ington Convention”) and the 1961 European the law to which the parties have subjected 55 Convention on Foreign Commercial Arbitration. it or, failing any indication thereon, under the Azerbaijan has also enacted the Law “On Inter- law of the state the decision was taken in; national Arbitration”, which basically adopts the •• a defendant has not been given notice of the UNCITRAL Model Law on International Com- appointment of an arbitrator or of the hearing mercial Arbitration of 21 June 1985. In addition, and a fair opportunity to be heard; Azerbaijan is a signatory to the Agreement on the •• the dispute does not fall within the scope of the arbitration agreement; Manner of Reciprocal Enforcement of Arbitral CLIMATE BUSINESS Awards and Economic Court Judgments on the •• the composition of the arbitration court or the Territory of the Member States of the Common- arbitration procedure was not in accordance wealth of Independent States (1998). with the agreement of the parties; •• the arbitral award is not yet effective or has Decisions on the enforcement and recognition been repealed or suspended by a court of the of foreign arbitral awards are taken by the Su- state the arbitration decision was taken in; preme Court. In certain cases, enforcement can •• the subject-matter of the dispute is not sub- be declined, most notably, if: ject to settlement by arbitration under the legislation of the state the arbitration decision was taken in; •• an award contravenes legislation, or offends • the arbitral award is in conflict with the Azer- public policy or the sovereignty of the Repub- • baijani legislation. lic of Azerbaijan; • the principle of reciprocity is not adhered to; • The New York Convention shall not apply to • there is a valid judgment of an Azerbaijani • the recognition and enforcement of domestic court relating to the same parties and same awards by Azerbaijani courts (where an award is subject-matter; made in Azerbaijan arbitral proceedings). •• an award has not entered into force in the country where it was made. It is noteworthy that under the Constitution of Azerbaijan international treaties ratified by Moreover, the Law “On International Arbitra- the Republic of Azerbaijan prevail over national tion” lists several reasons for a refusal of recogni- (domestic) laws (except for the Constitution and tion and enforcement of an arbitral award inde- acts adopted by referendum) in case of conflict. pendent of the country it was taken in: Therefore, in case of international arbitration under the Washington Convention, the arbitral •• one of the parties in the arbitral award is le- award will be enforceable in Azerbaijan as if it gally incapable; were a final judgment of a court in Azerbaijan •• the arbitration agreement is not valid under (Article 54 of the Washington Convention).

www.azpromo.az DISPUTE RESOLUTION, ARBITRATION AND MEDIATION

56 Among the recent reforms, adoption of the Agency (SMEDA) approved on 26 June 2018 and Law on Alat Free Trade Zone adopted on 18 May Strategic Roadmaps approved on 6 December 2018, is worthwhile to mention. The Law on Alat 2016 paved a way for the mediation concept in Free Trade Zone envisages establishment of Ar- Azerbaijan. bitration Center among the competent authorities of the Free Zone. However, the said Law will The Strategic Roadmap proposes adopting come into force only after the relevant modifi- new Law on Mediation and establishment of cations to the Constitutional Law on Normative Mediation Council in order to improve the al- BUSINESS CLIMATE BUSINESS legal acts. ternative ways of pre-trial dispute resolution. In addition to this, as per the charter of SMEDA ap- MEDIATION proved with the aforementioned Decree, SMEDA Presidential Decree on Ensuring activities of has the right to resolve the disputes arisen during Small Medium Entrepreneurship Development entrepreneurial activities through mediation.

www.azpromo.az 57 BUSINESS CLIMATE BUSINESS

www.azpromo.az SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORSSECTORS REVIEW REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORSSECTORS REVIEW REVIEW SECTORS REVIEW SECTORS REVIEW SECTORSSECTORS REVIEW REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS SECTORS REVIEW REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS SECTORS REVIEW REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS SECTORS REVIEW REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORSSECTORS REVIEW REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW INTRODUCTION

Abundant hydrocarbon resources made Baku the birthplace of the global oil industry. Over a hun- dred years later, the oil & gas sector remains an important part of the Azerbaijani economy. But as the world economy changes, so too is Azerbaijan giving non-oil sectors an increasingly important role. The SECTORSnew industrial policies launched REVIEW by the government aim to diversify the Azerbaijani economy, make the country less dependent on oil & gas revenues, increase the role of private sector and establish a sus- SECTORStainable development REVIEW trend in non-oil sector. The new initiatives of recent years have produced some SECTORS REVIEWsignificant results. For example, during the last ten years, machinery industry has increased production by 15 times and holds 21.5% share in the non-oil manufacturing sector of the economy. This section SECTORS REVIEW provides a brief review for the major industries of the Azerbaijani economy. SECTORS REVIEW SECTORSSECTORS REVIEW REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW 59 SECTORS SECTORS REVIEW REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS SECTORS REVIEW REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS SECTORS REVIEW REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW SECTORS REVIEW ENERGY

60 The energy sector is the key and the largest accounted for half of the world’s oil production. part of Azerbaijani economy. Energy sector has The first ever oil pipeline, oil refinery, oil tanker, made a strong contribution to the economic railway tank (cistern), and operating offshore growth in the country. It is the major recipient platform are all part of Azerbaijan`s oil history. of investments, in particular FDI and modern technologies. Consequently, Azerbaijan is able Following its independence from the Soviet to supply 100% of its gross energy demand from Union in 1991, a successful oil and gas strategy

SECTORS REVIEW the local sources. The country does not depend was implemented by the Azerbaijan government, on foreign resources in the energy sector. with the signing of the “Contract of the Century" in 1994. This was followed by a deal on the Shah Azerbaijan exports oil, natural gas and elec- Deniz gas field in 1996, which led to an extraordi- tricity. Azerbaijan is self-sufficient in energy, nary amount of international investment flowing which provides business with stability and se- into the oil and gas sector. curity of supply. Moreover, Azerbaijan is ranked 36th globally in the Energy Architecture Perfor- In December 2013, a consortium of 10 com- mance Index 2017. This measures the extent to panies signed a deal to develop the Shah Deniz which a country’s energy architecture secures its field, discovered in 1999. It is one of the world's economic growth, the environmental impact of largest gas and condensate fields. A ccording to energy supply and consumption, as well as the British Petroleum (BP), the operator of the devel- extent to which an energy supply is secure, ac- opment, it has approximately 40 Tcf of natural cessible and diversified. gas in place. The project will bring about USD 50 billion of capital investment into Azerbaijan and The energy sector in Azerbaijan consists of 3 its partners, with the development of the South- main elements: extraction of oil and gas, conven- ern Energy Corridor. This includes the South Cau- tional electricity generation, and utilization of re- casus Pipeline Expansion, the Trans-Anatolian newable energies. Pipeline (TANAP), and the Trans-Adriatic Pipeline (TAP), will bring another USD 50 billion invest- OIL AND GAS ment to Azerbaijan and other participants in the Azerbaijan is among the largest producers of corridor. It places Azerbaijan as a key strategic oil and gas worldwide. It is one of the world’s energy partner for Europe, and will encourage oldest oil producers and the city of Baku and the opportunities for local producers to supply their Absheron Peninsula have long been known as products and services to the industry. historic sites for oil. The first oil well in the world was drilled in the Bibiheybat part of Baku in 1847, The energy sector has played an important eleven years before the first well in Pennsylvania, role in the development of the non-oil sector. USA. At the turn of the 20th century, Azerbaijan Since oil revenues became available in 2006,

www.azpromo.az ENERGY

the profits from the sector have been re-invest- SOFAZ plays a crucial role in the government’s 61 ed into the economy, through payments to the efforts to diversify the economy. It is funding the State Oil Fund (SOFAZ). SOFAZ was established development of a world-class infrastructure to as an extra-budgetary fund to ensure macroeco- assist the growth of the non-oil sector, for exam- nomic stability, oil and gas revenue management ple, the development of a fiber-optic network for transparency, sustainable utilization of natural broadband internet access. resources for the benefit of future generations. SECTORS REVIEW

FACTSHEET 2017

OIL GAS 38.8 MLN TONS 28.6 BILLION M3 PRODUCTION PRODUCTION 27227.9 THSD TONS 7543.5 MLN M3 EXPORT EXPORT

ELECTRICITY ALTERNATIVE ENERGIES 24.3 BILLION KWH 2.2 BILLION KWH GROSS PRODUCTION GENERATION FROM RENEWABLE ENERGY 1.3 BILLION KWH EXPORT

Source: State Statistical Committee of Azerbaijan

www.azpromo.az ENERGY

62 INVESTMENT OPPORTUNITIES attention to developing renewable energy sector. •• RENEWABLE ENERGY EQUIPMENT This is reflected by the adoption of the State Pro- •• OIL EQUIPMENT AND SERVICES gramme on the Use of Alternative and Renewa- •• ELECTRICITY GRID AND TRANSMISSION ble Energy Sources 2004-2013, Azerbaijan`s ac- •• ALTERNATIVE FUELS cession to the International Renewable Energy •• ALTERNATIVE ELECTRICITY Agency (IRENA) in June 2009, and the creation of •• WIND POWER the State Agency on Alternative and Renewable

SECTORS REVIEW •• GEOTHERMAL Energy Sources (SAARES) in 2013. The govern- •• SOLAR PV ment is prioritizing the development of policies to encourage greater private sector involvement ELECTRICITY SECTOR in the development of the sector, such as the Azerbaijan has prioritized its energy security. creation of a feed-in tariff system in line with in- Currently, Azerbaijan operates 13 thermal power ternational best practice. SAARES has recently plants, 11 hydro power plants, and 6 small hy- adopted a special Strategy Plan for the further dro power plants has an installed capacity above improvement of the renewable energy sector. 7000 MW. Total length of high voltage transmission lines is more than 7600 km. A large scale The potential of renewable energy sector of investment programme for electricity has re- Azerbaijan is promising. According to SAARES, sulted in the construction and upgrade of power the capacity of all renewable energy sources transmission lines, substations, and new power could be as follows: plants. The state-owned company Azerenergy OJSC owns all of the high voltage transmission MW lines and also controls the dispatching of the high Wind 15,000 voltage grid. The transmission grid voltages are Solar 8,000 500 kV, 330 kV, 220 kV and 110 kV. Azerbaijan has interconnections with Georgia, Russia, Iran, Biomass 900 and Turkey that enables the export and import of Geothermal 800 electricity to and from these countries. Azeren- Small rivers 650 ergy OJSC produces and transports electricity throughout the whole country, while Azerishig The government has included the waste-to-en- OJSC is responsible for its distribution and sales. ergy process among its renewable energy development plans, with public investments directed RENEWABLE ENERGY towards the construction of solid and municipal Although Azerbaijan is rich in oil and gas, the waste incineration plants. Additionally, geother- government has recently started paying greater mal energy can partially meet domestic needs.

Source: State Statistical Committee of Azerbaijan

www.azpromo.az CHEMICALS

Chemical industry is one of the key sectors chemicals for the former Soviet Union economy. 63 of the Azerbaijani economy. Azerbaijan’s prox- imity to the raw materials of oil and gas, salt, To meet the long term demand in the region, iodine-bromide mine water, and the waste of and to conform to international standards, the ferrous metals, combined with access to large Government recognizes that the future compet- neighbouring consumers, gives Azerbaijan a com- itiveness of the sector requires investment to parative advantage in the sector. During the So- adopt high-technology techniques. It has adopt- viet period, Azerbaijan was one of the centers of ed regulations to reach the highest standards of SECTORS REVIEW chemical industry and produced over 70% of key environmental protection.

FACTSHEET 2017 (EXCLUDING PETROCHEMICALS)

VOLUME OF CHEMICAL NUMBER OF ACTING PRODUCTS ENTERPRISES 293.1 M USD 84

MANUFACTURE OF ETHYLENE THE PROPYLENE 48.5 THS TONS 96 THS TONS

Source: State Statistical Committee of Azerbaijan

www.azpromo.az CHEMICALS

64 MAJOR PRODUCTS •• ACYCLIC ALCOHOLS AND THEIR DERIVA- •• NITROGEN TIVES •• ETHYLENE •• PVC •• METHANOL •• CHLORIDES, HYDROXIDES, SODIUM (CAUS- •• POLYETHYLENE TIC SODA) AND CAUSTIC POTASH •• ISOPROPYL ALCOHOL •• CAR TIRES •• IODINE •• ENGINE OILS SECTORS REVIEW •• PROPYLENE •• SINGLE CRYSTAL WAFER •• SOAP AND CLEANING AGENTS INVESTMENT OPPORTUNITIES •• HOUSEHOLD CHEMICALS • EPOXY RESINS AND ADHESIVES •• NITROGEN, PROSPHORUS, POTASSIUM • CONTAINING FERTILISERS (NPK) •• MEDICAL DISPOSABLE SYRINGES AND SYSTEMS •• FIBRE GYPSUM BOARDS • ANTIBIOTICS •• BASALT FIBRE • •• GLASS AND CARBO FIBRE Source: State Statistical Committee of Azerbaijan

www.azpromo.az AGRICULTURE

The importance of agricultural sector in the The strategic location of Azerbaijan, next to 65 global context is undeniable. According to the the very large consumer markets of Russia (the FAO, although the agricultural production in- largest importer of apples in the world) and the creases, it cannot supply the demand of growing Middle East, make Azerbaijan a suitable hub for population. Accordingly, the agriculture sector export-orientated production. To fulfill this po- becomes an important part of Azerbaijani econ- tential, the government is increasing the glob- omy. al profile of Azerbaijani agricultural products, SECTORS REVIEW through its ‘Made in Azerbaijan’ campaign. Between 1995-2015, the total agricultural production in actual prices in Azerbaijan grew by Azerbaijan provides numerous incentives pro- 7.7 times. According to the FAO Gross Produc- grammes for farmers, processors and traders of tion Index Number, Azerbaijan is above an aver- agricultural products. These range from tax and age in global indicators. The agriculture sector in- customs exemptions, to subsidies and discounts. creases its share in Azerbaijan’s GDP too. During In particular, they cover the purchase of fuel and 2010-2015, the share of agriculture sector grew motor oils, mineral fertilizers, wheat seeds, ped- from 5.5% to 6.2%. igree cattle, and the insurance of crop and vegetable products. Azerbaijan has natural advantages in the agriculture sector. The country hosts nine climatic zones out of eleven existing ranging from humid subtropical climate to semi-arctic. The Kur River dissects the country, and is fed by water and al- luvial deposits from the mountain ranges of the Greater Caucasus, Lesser Caucasus and Talysh, thus giving it fertilising qualities. Azerbaijan has the basis for the strong cultivation of specialized, often rare, crops, including cotton, tea, tobacco and hazelnut. Azerbaijan produces other potentially valuable crops, including pink grapes and persimmon. Ninety percent of the production of these crops are dependent on irrigated lands, which constitute one third (1,445 thousand ha) of total agricultural lands.

www.azpromo.az AGRICULTURE

66 FACTSHEET 2017 SECTORS REVIEW

GROSS OUTPUT AGRICULTURAL LAND 3.8 BLN USD 4.8 M HA

ARABLE LAND PERMANENT CROPS 2.1 M HA 247 THSD HA

CROP PRODUCTION LIVESTOCK FARMING 45.9% 54.1%

Source: State Statistical Committee of Azerbaijan

www.azpromo.az AGRICULTURE

67 AMONG TOP 20 MAJOR CROPS MAJOR PRODUCTS GLOBAL PRODUCERS OF

SOUR CHERRIES WHEAT MEAT CHESTNUTS BARLEY MILK

CRANBERRIES SUGAR BEET EGGS SECTORS REVIEW CURRANTS COTTON WOOL FIGS POTATOES HONEY HAZELNUTS VEGETABLES PERSIMMONS QUINCES RASPBERRIES

INVESTMENT OPPORTUNITIES •• GREENHOUSE VEG AND FRUIT PRODUCTION •• MEDICINAL HERBS •• AQUACULTURE FARMS •• INTENSIVE FRUIT ORCHARDS •• ESSENTIAL (FLOWER) OILS •• APICULTURE •• VITICULTURE •• POULTRY FARMS •• SEED PRODUCTION •• TEA GROWING •• MEAT FARMS •• FEED PRODUCTION •• SAFFRON PRODUCTION •• DAIRY FARMS

Source: State Statistical Committee of Azerbaijan

www.azpromo.az FOOD PROCESSING

68 The Government’s efforts to diversify the its infrastructure to access untapped markets of economy include the development of the food the wider region, such as Iran and the Middle-East. processing industry. In the period of 2005-2015 The food industry is well located to supply these the production of foodstuffs increased by 2.3 markets. times, while beverage production showed 2.7 times growth. In Azerbaijan, the food processing The government has been working to improve industry consists of four main segments: meat international export standards. Azerbaijan is a

SECTORS REVIEW processing, production of dairy products, produc- member of the International Organization of tion of beverages, and the processing and canning Standardization (ISO). Azerbaijan has continued of fruits and vegetables. In 2017, total production preparation for accession to the WTO and the Co- of foodstuffs including beverages was over 3.5 dex Alimentarius, which includes an approxima- million tonnes. tion to EU rules. Moreover, sustainable improvement of quality infrastructure led to significant This sector is characterized by a large number improvement of food safety system. The new set of small businesses engaged in production, whilst of measures to be taken include creation of Food a few medium and large companies undertake the Safety Agency, new Law on Food Safety, new key processes of packaging and retail distribution. State Programme on Food Safety covering period of 2018-2025, enforecement of international Azerbaijan has free trade access to the 270 food safety standards including Codex Alimenta- million consumers of the CIS, and has improved rius.

FACTSHEET 2017

FOODSTUFF BEVERAGE PRODUCTION PRODUCTION 3.3 BLN AZN 241 M AZN

Source: State Statistical Committee of Azerbaijan

www.azpromo.az FOOD PROCESSING

69 FACTSHEET 2017 SECTORS REVIEW FOODSTUFF PRODUCTION BEVERAGE PRODUCTION IN MANUFACTURING IN MANUFACTURING 33.7% 2.5%

ENTERPRISES ENTERPRISES

366 111

MAJOR PRODUCTS •• PREPS. OF CEREALS •• MEAT AND MEAT PRODUCTS •• SALT •• DAIRY PRODUCTS •• TEA •• VEGETABLE OILS •• NON-ALCOHOLIC BEVERAGES •• CANNED FRUITS AND VEGS •• STILL AND SPARKLING WATER •• SUGAR •• WINE •• CONFECTIONARY •• OTHER ALCOHOLIC BEVERAGES •• FLOUR

Source: State Statistical Committee of Azerbaijan

www.azpromo.az FOOD PROCESSING

70 INVESTMENT OPPORTUNITIES •• DRIED FRUITS •• BEVERAGES •• CANNED FOODS •• HONEY •• FISH PRODUCTS •• BABY FOOD •• CONDIMENTS •• MEAT PRODUCTS •• FRUIT JAMS •• VEGETABLE OILS •• CONFECTIONARY •• BAKERY PRODUCTS •• SPICES SECTORS REVIEW •• DAIRY PRODUCTS •• SNACK FOODS

Source: State Statistical Committee of Azerbaijan

www.azpromo.az TEXTILES

Azerbaijan has a long tradition of textile pro- thousand tonnes per year by 2022. Silk is anoth- 71 duction, spinning and weaving. It has the neces- er prioritised production area spred in 30 regions sary climatic and soil conditions for reliable cot- of Azerbaijan. The intitial plan is to increase pro- ton production with high yields, and today, the duction of cocoons up to six thousand tonnes by industry is focused on cotton, silk and mulberry 2025. production. Cotton growing areas have generally been along the Kur River valley, including the To fulfill the potential of the sector several

Mil-Mugan and Shirvan plains, the Salyan-Mugan key reforms have been carried out. To improve SECTORS REVIEW plains, Mil-Karabakh, and Ganja-Qazakh regions. co-operation between entrepreneurs and the government, Association of Textile Producers Azerbaijan has significant potential to in- and Exporters was established. Secondly, the crease the production of cotton and silk nec- Government of Azerbaijan has created a package essary for the development of textile industry. of subsidies to stimulate production. Thirdly, the In 2016, country produced almost 90 thousand government is working to improve technical pro- tonnes of cotton increasing the production by 2.5 duction standards, in order to meet international times in comparison to 2015. With a new State standards to improve access to markets. More- Programme on the Development of Cotton Pro- over, Mingachevir Industrial Park provides nec- duction covering period of 2017-2022, the goal essary platform and conditions for creating new was set to increase cotton growing up to 500 manufacturing capacities in the textile industry.

FACTSHEET 2017

VOLUME OF TEXTILE AVERAGE MONTHLY ENTERPRISES PRODUCTS WAGES 171.8 M AZN 360.9 AZN 69

Source: State Statistical Committee of Azerbaijan

www.azpromo.az TEXTILES

72 MAJOR PRODUCTS •• CARPET WEAVING •• GINNED COTON •• SHOE PRODUCTION •• CLEAN SCOURED WOOL •• PRODUCTION OF UNDERWEAR •• CARPET AND CARPET PRODUCTS •• ESTABLISHMENT OF CLOTHING (INCLUDING •• COTTON FABRICS UNIFORM) MANUFACTURE •• SILK FABRICS •• ESTABLISHMENT OF WOOL PROCESSING •• BED LINEN OF COTTON MANUFACTURE SECTORS REVIEW •• COTTON YARN •• PRODUCTION OF LEATHER •• PRODUCTION OF NURSERY NAPPIES • ESTABLISHMENT OF WEAVING MILL INVESTMENT OPPORTUNITIES • •• PRODUCTION OF PROTECTIVE CLOTHING Source: State Statistical Committee of Azerbaijan

www.azpromo.az INFORMATION AND COMMUNICATION TECHNOLOGIES (ICT)

The ICT is one of the most attractive and dy- The government wants to encourage entre- 73 namic sectors of economy for investors. It is the preneurship in ICT. As a result, the ICT Develop- fastest growing non-oil sector in terms of in- ment Fund was established with financing in the creasing revenues. The number of consumers is form of soft loans and grants. The Fund started growing rapidly. Azerbaijan recognizes that high financing projects in 2014. technology is a key contributor to its future pros- perity. It has high ambitions to inspire the young- Azerbaijan announced a Strategic Road Map SECTORS REVIEW er generation that are the main users of technol- for the development of the telecommunication ogy. The Internet Penetration in Azerbaijan is and information technologies sector. The docu- 79%. Currently, there are four mobile operators ment was approved by a decree of President of in the country. Three of them provide mobile ser- the Republic of Azerbaijan dated December 6, vices in 2G, 3G and 4G frequencies. 3G technolo- 2016. According to the Road Map, the long-term gy has been operating in Azerbaijan since 2009. vision for the period up to 2025 in the informa- Azerbaijani consumers started using 4G technol- tion and communication technologies sector is ogy from 2012. Azerbaijan has 109 television to continue the innovation-driven reform in this stations and numerous radio stations. sector. This will increase the range and scope of modern services, to expand the coverage of Currently, there are 39 telecommunication broadband networks, and to ensure the country's service enterprises in the country, in addition to development through the standards of interna- 48 Internet providers. tional telecommunication standards, and improve the level of technical literacy of the society The ICT sector is pioneering the application to achieve the formation of a digital economy. of innovative technologies into Azerbaijan. The ‘ASAN’ services is a ‘one-stop-shop’ for the delivery of public services, which has been commend- ed by the Asian Development Bank for reducing corruption.

Azerbaijan owns two satellites, which provide communication services including digital broadcasting, the Internet access, data transmission and VSAT multi-service network to public and private sector representatives in Azerbaijan, Central Asia, Europe and Africa.

www.azpromo.az INFORMATION AND COMMUNICATION TECHNOLOGIES (ICT)

74 FACTSHEET 2017 SECTORS REVIEW INTERNET OF GDP USERS/100 POP. 1.6% 79

MOBILE TELEPHONE VALUE OF ICT SUBSCRIPTIONS/10 POP. SERVICES 104 966 MLN USD

GROWTH IN VOLUME PC USERS/100 POP. OF SERVICES 100.9% 72

Source: State Statistical Committee of Azerbaijan

www.azpromo.az INFORMATION AND COMMUNICATION TECHNOLOGIES (ICT)

75 STRUCTURE OF ICT SERVICES

49.5% MOBILE

11.2% FIXED

7.7% INTERNET SECTORS REVIEW

8.1% SOFTWARE

23.5% OTHER

GLOBAL INFORMATION TECHNOLOGY REPORT 2016

LAWS RELATING TO ICT 24/139

MOBILE NETWORK COVERAGE 1/139

GOVERNMENT SUCCESS IN ICT PROMOTION 8/139

IMPACT OF ICT ON ACCESS TO BASIC SERVICES 42/139

ICT USE FOR B2B TRANSACTIONS 38/139

FIXED BROADBAND INTERNET SUBSCRIPTIONS 45/139

ICT USE AND GOVERNMENT EFFICIENCY 12/139

CAPACITY FOR INNOVATION 53/139

Source: State Statistical Committee of Azerbaijan

www.azpromo.az CONSTRUCTION

76 Although the medium term prospects for the launched in Azerbaijan as part of the EU-funded construction industry are challenging, there are Innogate project. opportunities in the long term, due to the demo- graphic changes in Azerbaijan, and the need for The UK`s BREEAM system, a design and as- new technologies in building design. The ongoing, sessment method for sustainable building is rapid urbanization of Azerbaijan is a key driver of being increasingly applied. Accordingly, there is opportunities in the sector. The cities are growing significant demand for resource-efficient tech-

SECTORS REVIEW and this has driven growth in the sector. Value of nologies for insulation, heating, cooling, water construction works was more than 7 billion AZN supply, architectural and engineering services, in 2016, constituting 10.6% of the GDP. designs and methods following green building standards to local firms, development of smart The rapid growth of construction in the past complexes (including housing, offices and shop- decade has encouraged increased production of ping centres), and interior design consultancy. construction materials. Between 2006-2016, the total production of construction materials in ac- According to the targets set forth in the Stra- tual prices grew by more than 2 times. tegic Road Map on Provision of Affordable Hous- ing in the Republic of Azerbaijan, the construc- The next stage of development in the sector tion sector will attract over 900 million manats is the adoption of new technologies. The imple- of investment by 2020. This shall create an addi- mentation of EU technical standards is a key de- tional 10,000 jobs in the construction sector. This velopment in the industry. In 2012, the EU "En- will also stimulate the demand in construction ergy Saving Initiative in the Building sector" was materials to be supplied locally.

FACTSHEET 2017

VALUE OF PRODUCTION OF GDP CONSTRUCTION MATERIALS 9.5% 567.9 MLN AZN

Source: State Statistical Committee of Azerbaijan

www.azpromo.az CONSTRUCTION

77 FACTSHEET 2017 SECTORS REVIEW VALUE OF CONSTRUCTION ENTERPRISES IN WORKS CONSTRUCTION 7550.7 MLN AZN 1249

MAJOR PRODUCTS INVESTMENT OPPORTUNITIES •• CEMENT •• PRODUCTION OF BUILDING AND FINISHING •• RADY CONCRETE MIX MATERIALS •• ASPHALT •• PRODUCTION OF ARTIFICIAL MARBLE •• LIME •• PRODUCTION OF BUILDING MATERIALS •• CONSTRUCTION BRICK •• PRODUCTION OF CERAMIC COATING TILES •• BLOCKS •• PRODUCTION OF LIME •• GYPSUM •• CONSTRUCTION OF BRICK PRODUCTION •• CERAMIC PLATES •• PRODUCTION OF CONSTRUCTION GLASS •• SAND •• PRODUCTION OF ALUMINIUM •• GLASS •• CONSTRUCTION OF LOGISTICAL WAREHOUSES •• NON-ORE CONSTRUCTION •• PRODUCTION OF CEMENT AND CONCRETE •• MATERIALS BLOCKS •• PRODUCTION OF RELEVANT MACHINERY

Source: State Statistical Committee of Azerbaijan

www.azpromo.az MACHINERY AND EQUIPMENT

78 The opportunities for investment in to the lo- identified: mining, metallurgy, production of cal production of machinery and equipment have construction materials, machinery for oil and gas increased as imported goods have become more industries and agriculture, production of electric expensive. At the same time, the local oil and equipment, services in machinery industry. Ac- gas machinery (OGM) sector is well developed, cording to the Roadmap, Azerbaijan will decrease with more than 150 years of experience. Today imports of various products by increased their the OGM sector has growing export potential, to production locally, e.g. construction machinery

SECTORS REVIEW serve demand in neighbouring markets. and equipment, mining equipment, pumps and compressors, loading equipment, agriculture According to the Strategic Roadmap for the machinery and equipment, food industry equip- Development of Heavy Industry and Machin- ment, electric equipment and others. Production ery in the Republic of Azerbaijan, the following is stimulated by various incentive schemes of- priority sectors with high potential have been fered to local and foreign investors.

FACTSHEET 2017

PRODUCTION CAPITAL VOLUME INVESTMENTS 192.5 M AZN 9.7 M AZN

ENTERPRISES EMPLOYEES

60 4.2 THS

Source: State Statistical Committee of Azerbaijan

www.azpromo.az MACHINERY AND EQUIPMENT

MAJOR PRODUCTS •• AIR CONDITIONERS 79 •• TV SETS •• REFRIGERATORS •• CASH REGISTERS •• TRACTORS •• ELECTRIC MOTORS •• PASSENGER CARS •• POWER TRANSFORMERS •• TRUCKS •• WELL-CONTROL EQUIPMENT •• CAR SPARE PARTS •• ROD WELL-PUMPS SECTORS REVIEW Source: State Statistical Committee of Azerbaijan

www.azpromo.az TRANSPORT & LOGISTICS

80 Azerbaijan has been at the centre of trade be- billion AZN. The Strategic Roadmap breaks down tween Asia and Europe for millennia, as the Silk the projected share of Azerbaijan in the interna- Road passed through Azerbaijan. Today, as trade tional transit of goods by 2020: Central Asia-Black flows increase between Europe and Asia, Azerbai- Sea route – 40%, Central Asia-Europe route - 25%, jan is emerging as a transport and logistics hub at China-Europe route - 3%, Russia-Iran route - 40%, the crossroad of Eurasia. Iran-Black Sea route - 25%.

Azerbaijan is a home for the “Transport Corri- To ensure Azerbaijan can meet this potential as SECTORS REVIEW dor Europe-Caucasus-Asia” TRACECA, the inter- a strategic location, investment has been made to national programme on creation of a transport upgrade the transport infrastructure to EU stand- corridor from Europe to Asia through the Cauca- ards, and to meet this increasing intercontinental sus. It involves the European Union and 14 states traffic. Significant investment has been made to of Eastern Europe, Caucasus and Central Asia. Its upgrade the transport infrastructure to EU stand- permanent secretariat is located in Baku, Azerbai- ards. This includes 10,185 km of constructed and jan. rehabilitated roads and highways; the Baku-Tbi- lisi-Kars railway line, to connect the Trans-Euro- It is no wonder that Azerbaijan hosts the Pro- pean and Trans-Asian railway networks; the new gramme, as the Trans-Caspian East-West Corridor Baku International Sea Trade Port with capacity of is considered to be the shortest linkage between 10-11.5 mln tons of cargo and 50 thsd TEU (to be China and Europe, both in distance and time. The increased up to 21-25 mln tons of cargo and 1 mln average length of the corridor is 4,200 km, and TEU); the new Heydar Aliyev terminal at Baku In- possible transit period is about 12 to 14 days which ternational Airport with its state of the art servic- enables cargo shippers to have 70% time saving in es and significant capacity for transit passengers, comparison with traditional ocean shipment. In as well as the new air cargo terminal. Moreover, the meantime this route provides plenty of oppor- Azerbaijan invests in creation of logistic centers in tunities for emerging economies of Central Asia to strategic markets. The first such center was estab- reach European markets. In addition, Azerbaijan is lished in Aktau, Kazakhstan in order to increase currently cooperating with its partners on the cre- export of Azerbaijani products into the Central ation of faster South-to-North transport corridor. Asian market. Theoretically, using both corridors Azerbaijan can attract additional trade volume of almost 230 mil- Government of Azerbaijan set high priority for lion tonnes. further improvement of country’s transit potential. The Coordinating Council of the Republic of According to the Strategic Roadmap for the De- Azerbaijan on Transit Freight was established in velopment of Logistics and Trade, Azerbaijan will 2015 with the aim to increase the competitiveness become a strategic international logistics hub by and effectiveness of the transit corridors passing 2025. This will require attraction of additional in- through its territory, involvement of addition- vestment in transport infrastructure, logistics and al transit flows to these corridors, including im- trade. The projection for investment into the men- provement of transportation quality, decreasing tioned sectors to be attracted by 2020 exceeds 3 delivery time and lowering transport expenses.

www.azpromo.az TRANSPORT & LOGISTICS

81 FACTSHEET 2017 SECTORS REVIEW TOTAL TRANSPORTED RAILWAY GOODS 226 417 THSD TONS 14 558 THSD TONS

PIPELINES ROAD 58 490 141 854 THSD TONS

SEA AIR 8 345 THSD TONS 171 THSD TONS

INVESTMENT OPPORTUNITIES •• WATER TRANSPORT •• OVERGROUND TRANSPORT •• AIR TRANSPORT •• RAILWAY TRANSPORT •• STOREHOUSES •• OTHER LAND TRANSPORT •• TRANSPORT SUPPORT ACTIVITIES •• PIPELINE Source: State Statistical Committee of Azerbaijan

www.azpromo.az TOURISM & HOSPITALITY

82 International events held in Baku, such as the ter-Summer Tourism Complex in Gusar was put 1st European Olympic Games 2015, the 4th Is- into operation. The complex includes two hotels lamic Solidarity Games, and the Formula 1 Grand (“Shahdagh” and “Peak Palace”), trade centers, Prix 2016-2017, are raising the international a restaurant, café, game hall, equestrian sports, profile of Azerbaijan as a tourist destination. skiing and other services. Continuously increas- The Government policy of hosting internation- ing volume of international visitors stimulates al business conferences and events, targeted on direct investment into the development of tour- SECTORS REVIEW key sectors continues this trend. As a result, Tr- ism industry and related services. A new incen- ipAdvisor announced Baku among top 10 world tive mechanism for investors was put in place in destinations on the rise in 2016, taking the top 2016. According to the World Travel & Tourism spot for Asia. Council, Azerbaijan is placed 17th in the world for the travel & tourism long-term growth forecast The Government of Azerbaijan has initiated 2017-2027 (Travel & Tourism Economic Impact some key improvements to the visa application 2017: Azerbaijan). process. As a result, tourists from most of the countries of the world can apply for a pre-entry The Strategic Roadmap for the Development visa through the special online ASAN e-visa sys- of the Tourism industry aims to push the sec- tem. Generally, visas are issued as fast as within tor into the next stage of development. This 3 working days. This has encouraged a tourism includes the promotion of tourism based on na- boom, with an 11% increase in tourists visiting tional values of Azerbaijan in the international from the Gulf, Middle East, and Europe in 2016. marketplace and locally. Moreover, it includes The improving transport links with Azerbaijan, improvements in the tourism communications resulted in Baku being attractive to 26 cities, with infrastructure (including signage), and inter- a population of more than 90 million. The World national hotel certification. This will create op- Economic Forum named Azerbaijan the most-im- portunities for companies with expertise in the proved country in the Travel & Tourism Competi- service industry, investing in human capital and tiveness Index 2017. practical know-how within the country.

To serve the demand created by international sports, business and political events, the tourism and hospitality infrastructure is developing quickly. A number of top class international hotel chains such as Four Seasons, Marriott, Pullman, Hilton, Excelsior, Rixos, Fairmont and others operate in Azerbaijan. In 2012, Shahdag Win-

www.azpromo.az TOURISM & HOSPITALITY

83 FACTSHEET 2017 SECTORS REVIEW FOREIGN TOURISTS TOURIST EXPENDITURES 2.5 MLN 2.7 MLN USD

TOURISM COMPANIES NUMBER OF BEDS 339 41 485

OVERNIGHT STAYS IN HOTELS HOTELS 563 2.6 MLN

Source: State Statistical Committee of Azerbaijan

www.azpromo.az TOURISM & HOSPITALITY

84 TOURISTS BY PURPOSE (%)

LEISURE, 34.2% RECREATION 34% BUSINESS VISIT TO SECTORS REVIEW 27.5% RELATIVES/FRIENDS HEALTH 2.0% TREATMENT 0.6% RELIGIOUS

1.7% OTHER TOURISM

TOURISTS BY COUNTRY (THSD. PERSONS) 854.3 RUSSIA FEDARATION 538.2 GEORGIA 363.5 IRAN 301.9 TURKEY 31.8 GREAT BRITAIN 57.8 UKRAINE 36.4 KAZAKHSTAN 18.8 UZBEKISTAN 17.6 PAKISTAN 17.0 TURKMENISTAN INVESTMENT OPPORTUNITIES •• ONLINE SERVICES •• HOTELS •• EVENTS AND CONFERENCES •• RECREATION ZONES •• RESTAURANTS AND CATERINGS •• ADVENTURE FACILITIES •• SOUVENIR PRODUCTION •• ENTERTAINMENT FACILITIES •• SHOPPING •• TRAVEL AGENCIES Source: State Statistical Committee of Azerbaijan

www.azpromo.az FINANCIAL SECTOR

The financial sector is undergoing regulatory quickly in Azerbaijan, and the alternative finance 85 reform to improve the stability and resilience of sector remains a segment with room for substan- the sector, and to assist the development of the tial growth. These non-bank financial institutions non-oil sectors. To this end, the Strategic Roadm- are just over 1% of GDP. ap for the Development of the Financial Services includes provisions for the development of trans- The Government supports entrepreneurs, parency, customer focused services, and digitiza- namely SMEs via the ”Aqrarkredit” CJSC, the tion. non-banking credit institution, and the National SECTORS REVIEW Fund for Support for Entrepreneurship Support. The Financial Markets Supervisory Board regulates the financial services sector, includ- Trade finance, and leasing are relatively new, ing banking and insurance. The industry is going but demand for these services is increasing as through a period of reforms to increase the capi- Azerbaijan diversifies its economy. This will cre- talization of the banks and stability of insurance ate opportunities for companies with expertise in companies. these areas. Financial consultancy is also growing to meet the demand for business plans and The demand for alternative forms of finance financial statements. has grown steadily. Microfinance has developed

FACTSHEET 2017

NON-BANK CREDIT BANKS ORGANIZATIONS 30 123

Source: Financial Market Supervisory Authority of The Republic of Azerbaijan

www.azpromo.az FINANCIAL SECTOR

86 FACTSHEET 2017 SECTORS REVIEW LOCAL BRANCHES OF TOTAL ASSETS FOREIGN BANKS OF BANK 2 27.9 BLN AZN

M M

VOLUME OF INSURANCE VOLUME OF INSURANCE PREMIMUS CLAIMS 609.3 MLN AZN 276.9 MLN AZN

INSURANCE The insurance industry is relatively new, but There are 48 types of insurance services in the increasing income of the population is play- Azerbaijani market: 16 of them are compulsory ing a significant role in the development of a vi- insurance and 32 are voluntary insurance prod- able insurance market. A major driver of growth ucts. At present, there are 37 insurance and re- in the insurance market is the newly enforced law insurance companies in the Azerbaijani market. on compulsory insurance. This is evidenced in the The low level of capitalization of local insurance companies is one of the major disadvantages af- increasing volume of car and mortgage credits, fecting the development of the insurance mar- because insurance for these loans is now obliga- ket. Many insurance companies depend on local tory. banks in terms of capital growth.

Source: Financial Market Supervisory Authority of The Republic of Azerbaijan

www.azpromo.az INDUSTRIAL PARKS

Azerbaijan is creating the infrastructure for and energy supply to the park residents. The Park 87 five industrial parks: in Sumgait, Balakhani, has already attracted investment worth of 15 Mingachevir, Pirallahi, and Garadagh. Industrial million USD. Parks reduce the costs of doing business through an attractive tax incentives mechanism (for more MINGACHEVIR information see the “Business Climate” Chapter), INDUSTRIAL PARK simpler customs procedures, and the integrated Mingachevir Industrial Park was established infrastructure facilities. There are 22 resident on February 26, 2015. Territory of the Park covers SECTORS REVIEW companies taking advantage of these benefits: 14.8 hectares. Mingachevir Industrial Park aims ten in Sumgait, seven in Balakhani, one in Min- to attract companies operating in light industries gachevir, three in Pirallahi and one in Garadagh. including manufacturing of textile, cotton and leather products. There are already 9 investment SUMGAIT CHEMICAL projects planned for realization in the Park in the INDUSTRIAL PARK field of production of shoes, yarn, dyeing, weav- The Sumgait Chemical Industrial Park (SCIP) ing, sewing, medical cosmetics and other. The was established on December 21, 2011 and lo- volume of already attracted investment reaches cated on 466,37 hectares. The mission of the 46 million USD. park is to attract investment for the production of agricultural, medical, consumer, construction PIRALLAHI industry, electronics and automotive chemicals, INDUSTRIAL PARK polymers and equipment. Its location has rail The Pirallahi Industrial Park was established access to the Alat Sea Port, giving market access on September 14, 2016. Territory of the Park to Central Asia. The European market is accessi- covers 30 hectares. Pirallahi Industrial Park fo- ble through the Baku-Tbilisi-Kars railway. SCIP cuses on companies operating in pharmaceutical already hosts 10 residents with investment pro- industry. Three projects are being implemented jects worth 1.2 billion USD. with attracted investment worth of almost 100 mln USD. BALAKHANI ECO-INDUSTRIAL PARK GARADAGH The Balakhani Industrial Park was established INDUSTRIAL PARK on December 19, 2012. Territory of the Park cov- The Garadagh Industrial park was established ers 7 hectares. The main purpose of the Park is on June 03, 2015. The Park has been developed to provide favorable conditions for investors in to the south of the Absheron peninsula, near the recycling industry. This industrial park was es- Garadagh district of the Baku-Astara highway. In tablished close to Balakhany waste landfill and total, 72 hectares of land has been allocated to Waste-to-Energy Plant providing raw materials

www.azpromo.az INDUSTRIAL PARKS

88 the territory of the Garadagh Industrial Park. The There are already three industrial zones es- Park hosts one resident, namely Baku Shipyard, tablished in Neftchala, Masally and Hajigabul. the most modern shipbuilding and ship-repair The Neftchala Industrial Zone was established in facility in the Caspian Sea. The attracted invest- 2015 and covers territory of 10 ha. Nine residents ment reaches 470 million USD. operate in the Zone with investment projects in the areas of automobile industry, production of Like the other parks, the government is de- agricultural equipment, fish feed, paper goods,

SECTORS REVIEW veloping the physical infrastructure to enable construction materials and foodstuffs worth of businesses to operate in the park. It is focused on over 45 million AZN. the production of competitive products for shipbuilding industry, utilising modern production The Masally Industrial Zone was established techniques and practices. in 2016 and covers territory of 10 ha. It is under construction. The Zone is projected to attract in- INDUSTRIAL ZONES vestment in the areas of production of furniture, Industrial zones are designated industrial construction materials, car spareparts, packag- compounds where SMEs are provided with nec- ing, light industry and foodstuffs. essary infrastructure enabling them to produce and offer goods and services. The Ministry of The latest industrial zone was established in Economy is creating the internal and outer infra- 2017 in Hajigabul. structure, including power, water, gas, heating, sanitation, communications, transport, administrative, industrial, and social areas.

www.azpromo.az AGRO-PARKS

Azerbaijan, with its advantageous climatic Investors in the agropark are free of income 89 conditions to develop the agrarian sector, has tax and VAT and will have infrastructure already defined the establishment of agro-parks among provided. its priorities to boost the development of agriculture. In 2015, the President Ilham Aliyev inau- YALAMA AGROPARK gurated the Garabagh Agrarian Industrial Park in The Yalama Agropark occupies 523 hectares Barda. The facility includes a 5,000 tonne logistic of land in the town of Yalama, in the Kachmaz

center, cattle-breeding complexes, a meat cut- region. A modern gravity-powered irrigation sys- SECTORS REVIEW ting and processing factory, and a fodder plant. tem has been installed. This has allowed for 335 Building on this initiative, the agro-parks in hectares of spring corn to be sowed. The park Shamkir and Khacmaz are nearing completion. is served by a water supply with a capacity of 50,000 cubic meters of concrete irrigation canal. SHAMKIR AGROPARK The Shamkir Agropark covers 604 hectares of Investors in the agropark are free of income land, and includes a logistics center, a cold stor- tax and VAT. age center and a calibration hall for fruit and vegetables. These facilities use the latest technology in calibration, packaging, and labeling.

HIGH TECHNOLOGY PARKS

High Technology Parks in Azerbaijan create a Companies operating in the park benefit for 7 business-friendly environment for the commer- years from no income tax, no profits tax, no im- cial development of innovative and new tech- port VAT for equipment to be used in production nologies. The locations in Baku and Mingechevir facilities or research and development, no prop- are developing the necessary infrastructure and erty tax, and no land tax in respect of land in the logistics to enable talented engineers to conduct technology park. research in ICT, space, energy efficiency, and the development of new technologies into commer- cially viable businesses.

www.azpromo.az OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS THE REGIONS OVERVIEW OF OF THE THE REGIONS OVERVIEW OF

OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONSOVERVIEW OF THE REGIONS OF THE THE REGIONS OVERVIEW OF OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONSOF THE OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONSOVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONSOVERVIEW OF THE REGIONS OVERVIEWOVERVIEW OF THE REGIONS OF THE REGIONS OVERVIEW OF THE REGIONS

OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS THE REGIONS OVERVIEW OF OF THE THE REGIONS OVERVIEW OF

OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONSOVERVIEW OF THE REGIONS OF THE THE REGIONS OVERVIEW OF OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONSOF THE 91 OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONSOVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONSOVERVIEW OF THE REGIONS OVERVIEWOVERVIEW OF THE REGIONS OF THE REGIONS OVERVIEW OF THE REGIONS

OVERVIEW OF THE REGIONS OVERVIEW OF THE REGIONS ABSHERON ARAN

92 Agdash, Aghjabadi, Barda, Beylagan, Bilasuvar, Goychay, Hajigabul, Imishli, Kurdamir, ADMINISTRATIVE Sumgait city, Absheron and Khizi Neftchala, Saatli, Sabirabad, UNITS districts Salyan, Ujar, Zardab districts, Mingachevir, Yevlakh and Shirvan cities

AREA 3.73 thousand sq.km 21,277 thousand sq.km OVERVIEW OF THE REGIONS OF OVERVIEW

POPULATION 568 thousand 2006 thousand

KEY ECONOMIC Industry and agro-industrial Industry, agriculture SECTORS complex, tourism

Olives, cattle breeding, poultry Fishery, cattle breeding, poultry MAJOR PRODUCTS farming, construction raw farming, cotton, grain, wine- materials, balneological resources making, subtropical fruits

GENERAL OUTPUT 1900 mln AZN 5031,5 mln AZN

INDUSTRY 1284,2mln AZN 1425,9 mln AZN

AGRICULTURE 175 mln AZN 2028,2 mln AZN

INVESTMENTS INTO 339,2 mln AZN 762,7 mln AZN FIXED CAPITAL

www.azpromo.az GANJA-GAZAKH GUBA-KHACHMAZ

Agstafa, Dashkasan, Gadabay, ADMINISTRATIVE Goranboy, Goygol, Gazakh, Shabran, Khachmaz, Guba, Gusar UNITS Samukh, Shamkir,Tovuz districts and Siyazan districts and Ganja, Naftalan cities

AREA 12.30 thousand sq.km 6.96 thousand sq.km OVERVIEW OF THE REGIONS OF OVERVIEW

POPULATION 1274,8 thousand 544,8 thousand

KEY ECONOMIC Agriculture, industry, tourism and Manufacturing, agriculture, SECTORS handicraft industry, tourism and handicraft

Potatoes, viticulture, grain, fruits, Vegetables, fruits, grain, fishery, MAJOR PRODUCTS apiculture, animal husbandry viticulture

GENERAL OUTPUT 2965,9 mln AZN 1327,8 mln AZN

INDUSTRY 625,6 mln AZN 138,2 mln AZN

AGRICULTURE 1062,8 mln AZN 705,7 mln AZN

INVESTMENTS INTO 535,8 mln AZN 327,2 mln AZN FIXED CAPITAL

www.azpromo.az DAGLIG SHIRVAN SHEKI-ZAGATALA

ADMINISTRATIVE Agsu, Ismailli, Gobustan and Shaki, Zagatala, Gabala, Oguz, UNITS Shamakhi distrcits Gakh and Balakan districts

AREA 6 thousand sq.km 8,96 thousand sq.km OVERVIEW OF THE REGIONS OF OVERVIEW

POPULATION 315,3 thousand 616,8 thousand

KEY ECONOMIC Agriculture, industry, tourism and Agriculture, tourism, food and SECTORS handicraft light industry

Viticulture, vegetables, Tobacco, silkworm, fruits, grain, MAJOR PRODUCTS wine-making, fruits, animal viticulture, meat and dairy husbandry and apiculture production

GENERAL OUTPUT 642 mln AZN 1211,1 mln AZN

INDUSTRY 22,8 mln AZN 244 mln AZN

AGRICULTURE 281,6 mln AZN 558,5 mln AZN

INVESTMENTS INTO 178,8 mln AZN 159,4 mln AZN FIXED CAPITAL

www.azpromo.az LANKARAN NAKHCHIVAN

Nakhchivan city, Sharur, Babek, ADMINISTRATIVE Astara, Jalilabad, Lerik, Masalli, Julfa, Ordubad, Kangarli, Shahbuz UNITS Yardimli and Lankaran districts and Sadarak districts

AREA 6.07 thousand sq.km 5.5 thousand sq.km OVERVIEW OF THE REGIONS OF OVERVIEW

POPULATION 927.7 thousand 452.6 thousand

KEY ECONOMIC Manufacturing, construction, Agro-industrial complex, tourism SECTORS agriculture and food production

Fruits and vegetables, Grain, fruit and vegetables, animal MAJOR PRODUCTS tea-growing, citruses, viticulture, husbandry, fishery animal husbandry

GENERAL OUTPUT 1626,6 mln AZN 2 701,7 mln AZN

INDUSTRY 127,5 mln AZN 967 060 thousand AZN

AGRICULTURE 657,8 mln AZN 453 364 thousand AZN

INVESTMENTS INTO 433,7 mln AZN 1 005,7 mln AZN FIXED CAPITAL

www.azpromo.az YUXARI GARABAGH* KALBAJAR-LACHIN**

Agdam, Tartar, Khojavand, Khojali, ADMINISTRATIVE Kalbajar, Lachin, Zengilan and Shusha, Jabrayil, Fuzuli districts UNITS Gubadli districts and Khankandi city

AREA 3.5 thousand sq.km 6.42 thousand sq.km OVERVIEW OF THE REGIONS OF OVERVIEW

POPULATION 433,7 thousand 251.4 thousand

KEY ECONOMIC Agriculture, industry, tourism Agriculture, industry and tourism SECTORS

Grain, fruits, meat and dairy Ores, grain, meat and dairy MAJOR PRODUCTS products, viticulture products

GENERAL OUTPUT 471,7 mln AZN 66,6 AZN

INDUSTRY 42,3 mln AZN -

AGRICULTURE 229,5 mln AZN -

INVESTMENTS INTO 138,5 mln AZN - FIXED CAPITAL

* Territories of Khojavand, Khojaly, Shusha, Jabrail regions and Khankandi city of this economic region are under complete and areas of Aghdam and Fuzuli regions are under partly Armenian occupation.

** All administrative regions within the economic region are under Armenian occupation.

www.azpromo.az 97 OVERVIEW OF THE REGIONS OF OVERVIEW

www.azpromo.az GENERAL INFORMATION GENERAL INFORMATION GENERAL INFORMATION

GENERAL INFORMATION GENERAL INFORMATIONGENERAL GENERAL INFORMATION INFORMATION GENERALGENERAL INFORMATION INFORMATION GENERAL INFORMATION GENERAL INFORMATIONGENERAL GENERAL INFORMATION INFORMATION GENERAL INFORMATION GENERAL INFORMATION

GENERAL INFORMATION GENERAL INFORMATIONGENERAL GENERAL INFORMATION INFORMATION GENERAL INFORMATION GENERAL INFORMATION GENERAL INFORMATION

GENERAL INFORMATION GENERAL INFORMATION GENERAL INFORMATION GENERALGENERAL INFORMATION INFORMATION GENERAL INFORMATION GENERAL INFORMATION GENERAL INFORMATION GENERALGENERAL INFORMATION INFORMATION GENERAL INFORMATION GENERAL INFORMATION GENERAL INFORMATION

GENERAL INFORMATION GENERALGENERAL INFORMATION INFORMATION GENERAL INFORMATION GENERAL INFORMATION GENERAL INFORMATION GENERAL INFORMATION GENERAL INFORMATION

GENERAL INFORMATION GENERAL INFORMATIONGENERAL GENERAL INFORMATION INFORMATION GENERAL INFORMATION GENERAL INFORMATION GENERAL INFORMATION 99 GENERAL INFORMATION GENERAL INFORMATION GENERAL INFORMATION GENERALGENERAL INFORMATION INFORMATION GENERAL INFORMATION GENERAL INFORMATION GENERAL INFORMATION GENERALGENERAL INFORMATION INFORMATION GENERAL INFORMATION GENERAL INFORMATION GENERAL INFORMATION

GENERAL INFORMATION GENERALGENERAL INFORMATION INFORMATION GENERAL INFORMATION GENERAL INFORMATION BUSINESS ETIQUETTE

100 APPOINTMENT AND MEETINGS FACTORS AND EVENTS AFFECTING Arrange appointments in advance. Try to do THE WORKING ROUTINE so via telephone and confirm it with a letter or Azerbaijan is a secular state but approximate- an e-mail. It is a very good idea to call on the day ly 80% of Azerbaijanis follow Is-lam. Muslim or the day before to follow up. The dynamics of prayer times impinge relatively little on the typi- business life means that people at senior level cal working day. However, during the Holy month might change their schedule at short notice. of Ramadan (the date of which changes every year) many Azerbaijanis fast from dawn to sun- If you do arrive on time you might be request- set and then break their fast immediately after GENERAL INFORMATION GENERAL ed to wait a little bit while a previous meeting is sunset by having a meal (iftar). Managers need to wrapped up or a telephone conversation is taking be aware of this as it can affect the normal work- place. Flexibility is very much appreciated. So try ing routine and staff may be ea-ger to leave the not to overbook your day. office in time to have their first food and drink since dawn. Fasting is growing in popularity each As a dynamic and vivid city, Baku can some- year, especially among young adults. times experience traffic jams. However, if you factor this into your plans, your trip will be a Avoid travelling to Azerbaijan on business pleasant adven-ture. The city center’s streets are during July and August since many Azerbaija- narrow, and therefore, finding a parking slot can ni business people take extended vacations to be a challenge. But, Baku is quite compact and spend time with family in their holiday homes or, the centre in particular is well suited to walking. increasingly, abroad.

Business hours are 9:00 a.m. to 1:00 p.m. and Azerbaijan has many secular and Islamic hol- 2:00 p.m. to 6:00 p.m., Mon-day to Friday. Gov- idays and one day of mourning. The 2017 calen- ernment departments and agencies usually work dar is: Satur-days too, at least until lunch time. Shops and restaurants are generally open seven days a •• January 1-2 - New Year week. •• January 20 - Martyr’s day (Day of Mourning) •• March 8 - Women’s day The business community tends to work quite •• March 20-24 - Novruz Bayram long and rather variable hours. Lunch can be tak- •• May 9 - Victory day en as early as 12:00 pm (mainly by the oil sector) •• May 28 - Republic day and as late as 3:00 p.m. Many managers work lat- •• June 15 - Salvation day er than 6:00 p.m. Most Azerbaijanis eat early in •• June 26 - Army day the evening rather than late. •• Ramazan Bayram (Ramadan Celebrations)

www.azpromo.az BUSINESS ETIQUETTE

(to be confirmed by Cabinet of Ministers) BUSINESS COMMUNICATION 101 •• Gurban Bayram (Sacrifice Feast) (to be con- Azerbaijan’s official language is Azerbaijani firmed by Cabinet of Ministers) and all state documentation is in the Azerbaija- •• October 18 - Independence Day ni language. Russian is widely known and spoken •• November 9 - State Flag Day but most offi-cial meetings will be conducted •• November 12 - Constitution Day in Azerbaijani. Many Azerbaijani business-peo- •• November 17 - The Day of Revival ple have a good command of English and the •• December 31 - Solidarity Day vast majority of young peo-ple speak English to some degree, especially those who work in for-

Major holidays are December 31 to January eign com-panies. Other international languages INFORMATION GENERAL 2 (inclusive) to celebrate the In-ternational Soli- spoken include French, Italian and German, espe- darity of Azerbaijanis and the international New cially if there is some connection to a particular country. If you are unsure as to your counterpart's Year, and Novruz Bayram over March 20-24 (tra- linguistic capability, it may be worth in-vesting in ditional New Year). an interpreter. Speak slowly and clearly and make sure that you are not misunderstood. In addition to these, Azerbaijan has one day of mourning on January 20 in remembrance of Rather than getting straight down to busi- hundreds of Azerbaijanis massacred by Soviet ness, engage in some small talk and always wait troops in 1990. All businesses, shops and even for your host to initiate a change in topic. At most TV and radio will be closed down or with sombre meetings the person you are visiting will offer programming for at least the first half of the day. you tea or sometimes coffee. Often tea (chai) will (This is an offi-cial day of mourning; it should not be served routinely by an assistant and delivered be referred to as a holiday). to the table. It is usually served in pear-shaped glasses with lemon slices and wrapped sweets Ramadan ends with the festival known as or chocolates. Sugar may not be offered as many Ramazan Bayramı. Families visit each other and Azerbaijanis prefer to sip their tea and eat some- children receive presents, sweets or money. thing sweet to accompany the drink. If sugar cubes are of-fered you may find your host places This Islamic festival of the "Sacrifice Feat" is one in his mouth and drinks his tea through the known in Azerbaijan as Qurban Bayramı and falls sugar cube. You are not expected to follow suit. on different dates each year due to the lunar cy- cle. It marks the end of the pilgrimage in Mecca, BUSINESS DRESS CODE Saudi Arabia, and is based upon the Quranic story Business dress is always conservative but of Abraham's willingness to sacrifice his son for varies slightly with the seasons. Men generally God. wear suits or jackets and ties. Similarly, women

www.azpromo.az BUSINESS ETIQUETTE

102 should wear smart professional outfits. In the Azerbaijanis are proud of their country and hotter weather (and temperatures can regu-lar- will enjoy answering questions about their cul- ly reach over 30 degrees in summer months), ture, countryside and history. They follow inter- men usually switch to short-sleeved shirts with national cur-rent affairs and will feel free to ex- or without ties. Light coloured summer suits are press their views. also ac-ceptable. The oil sector, especially foreign companies, adopts rather more in-formal stand- TOPICS TO AVOID ards. Never wear shorts. Avoid offering opinions on issues involving Outside Baku, men’s dress code remains the Armenia, especially the war over Nagorny Karab- GENERAL INFORMATION GENERAL same. Women should dress more conservatively. akh and the protracted efforts by the OSCE Minsk Long skirts or trousers are appropriate. Shorts Group to find a solution to the conflict. Azerbai- never. jan has had a turbulent political history. Avoid this subject. At the beach, normal beach wear is worn by Azerbaijanis and foreigners alike. Topless bath- Avoid discussing religion. Islamic values vary ing is not allowed. from person to person. In gen-eral, discretion is advised. When visiting a mosque, bear in mind that it is a place of worship. Always remove your shoes FIRST NAME OR TITLE? and put them on the rack provided. Men should not wear shorts and must wear a shirt or t-shirt. When addressing an Azerbaijani, especial- Women should be covered fully, es-pecially their ly middle-aged or older men, the most common

method is to call a man by his first name followed hair. If you do not have a head scarf, ask an atten- e dant for one. by Mü llim [pronounced mallim]. So, Emil Hasa- nov would be Emil Mallim. Similarly, a woman's If you are invited to someone’s home, you will first name would be followed by Xanım [pro- be offered slippers in place of your shoes. nounced hanum]. Mal-lim and Hanum are Azer- baijani for Teacher/Mister and Madam/Miss/Mrs WELCOME TOPICS OF respectively. CONVERSATION At initial meetings, try to get to know your In official letters men should be addressed Azerbaijani counterpart on a per-sonal level. Ask as Canab and women as Xanım. For example, about his or her family, especially the children. Hormetli Canab Emil Hasanov or Hormetli Xanım Find out about their work and their role in their Aygun Hasanova. Hormetli means "respected". company.

www.azpromo.az BUSINESS ETIQUETTE

GIFT-GIVING Azerbaijanis will want to do business with 103 Gift-giving is never necessary in business. Re- those they trust. If you do not in-spire this, you lationship building and the like will usually place will get nowhere. while dining or sightseeing rather than throught gift-giving. However, if a gift is given it will be Building a relationship with your Azerbaija- accepted graciously. Small handicraft items from ni counterparts is therefore cru-cial. It may take your own country will always be well received. several meetings to achieve this.

Azerbaijan is a Muslim country. Many people Azerbaijanis are also astute businesspeople. eschew alcohol. Before offering alcohol to any- Your proposal should clearly demonstrate mu- INFORMATION GENERAL one, make certain that it will be accepted. tual benefit and profitability. Do not underesti- mate the busi-ness acumen of your counterparts. If invited to an Azerbaijani’s home for dinner, Remember, you may need them a lot more than feel free to bring a small gift. Decorative items they need you. for the home such as ornaments, vases or small pictures are acceptable. Flowers are not usually Azerbaijanis are primarily verbal and visual offered, but ask a florist’s advice if you want to communicators. In addition to written statistics, bring them. If the host has children, take some projections and the like, try to present informa- sweets or biscuits. tion orally and visually.

MAKING A DEAL Decision making can be slow. It is often the In Azerbaijan, bear two things in mind. First, case that you will be asked to ne-gotiate with your success will depend on building effective lower-ranking members of staff. Don’t read an- personal relationships. Second, you will need ything negative in-to this. Once senior manage- to have a well-defined goal and the means to ment finds out that you are trustworthy and that achieve it. your proposal is financially viable, you will meet them in person. Almost all decisions in business Business remains personal in Azerbaijan, al- in Azerbaijan are made at the very highest levels though a more corporate culture is developing led of the company (or government structure). by the foreign oil companies. But even in those companies whom you know is more important Azerbaijan has a long history of trade dating than what you know. Many smaller Azerbaijani back to ancient times. They are canny negotia- businesses are family-owned and run. It is not tors. They may be very demanding at first. Gauge unusual to find several relatives on the payroll. your re-sponse. Know your goal but be prepared

www.azpromo.az BUSINESS ETIQUETTE

104 to make concessions. Make it clear that you re- Meals may be accompanied by alcohol, de- spect and value them both professionally and pending on your dining compan-ions’ attitude. personally. Drinks will usually be wine or vodka or both. If vodka is served there may be toasts. You will not Do not use deadlines or pressure tactics. They be expected to make a toast. Toasts are usu-ally won’t get you very far. Indeed, you are much drunk to the business, family or friendship. You more likely to be the victim of such tactics. Re- will not be considered anti-social if you do not main calm and be patient. drink the entire shot. Taking a sip at each toast is ac-ceptable. An empty vodka glass might be refilled! GENERAL INFORMATION GENERAL It may not always be necessary to focus only on financial benefits when nego-tiating. Power, A traditional Azerbaijani meal will comprise influence, honour, respect and other non-mone- several courses. Salads and cheese usually start tary incentives are also valued in the bargaining the meal, followed by various chicken, fish and process. However, profit usually overrides all at lamb ke-babs. Caspian sturgeon and other fish the end of the day. are popular and traditionally eaten with a sauce made from pomegranates. Bread is always ENTERTAINING served. Azerbaijanis smoke during meals and Most business entertaining will take place in will often take breaks between courses to have a restaurants. Azerbaijanis enjoy food and meals cig-arette and a few drinks. Tea or coffee is often are a time for relaxing and diversion. served at the end of a meal, usually with some- thing sweet. Azerbaijani hospitality dictates that the host always pays for the meal. The concept of sharing CONDUCTING YOURSELF IN PUBLIC a bill is completely alien to their culture. The best When greeting someone, shake hands firm- policy is to thank the host and later to reciprocate ly, but note that Azerbaijanis will resist shaking by inviting the host to dinner at a restaurant of hands while standing over the threshold of a door. This can lead to some confusion on arrival your choice. It may be a good idea to inform the unless you are aware of the tradition. When de- restaurant manager that under no circumstances parting, it is generally customary to shake hands are they to accept payment from your guests. again.

Your choice of restaurant is important. Top Friends and relatives will greet each other with hotels and restaurants are fine, and many have either one or two kisses on the cheek, even men. separate dining rooms for private meetings, a It is better to avoid kisses as part of any greeting feature that is very much valued in Azerbaijan. or farewell until you are familiar with the custom. Meeting informally for a drink is rarely done. Women especially may be of-fended.

www.azpromo.az BUSINESS ETIQUETTE

When entering a room, if you are not met LANGUAGE POLICY 105 by someone, greet the most senior person first. All state bodies, local authorities, state agen- Greet the person closest to you, then work your cies, political parties, non-governmental organ- way around the room or table anti-clockwise. izations (funds and public associations), trade If you want to adopt local custom, greet people unions, and legal entities (including their repre- with the Islamic greeting of Assalamu alaykum sentative or branch offices) are re-quired to use [peace be upon you]. Azerbaijani in their official interactions and transactions. Any notarization, legalization, registration or other forms of documentation in a foreign Many Azerbaijanis smoke. There are some

language require translation into Azerbaijani INFORMATION GENERAL legal controls on where people can smoke but it with subsequent nota-rization of the translation. is generally accepted that one does not smoke in confined places such as lifts and buses. Many taxi Seals and stamps of entities operating in the drivers smoke but will sometimes ask if passen- Republic of Azerbaijan must be in Azerbaijani. gers mind. Smoking is permitted in restaurants, Letterheads, signage, announcements, adver- but, restaurants usual-ly have smoking and tisements, price lists, price tags, labels, and cer- non-smoking areas. Azerbaijanis do not usually tifications and instructions applying to goods wait for others to finish eating before they start produced in Azerbaijan (and all other visual in- to smoke. formation) must be in Azerbai-jani and, additionally, may be in other languages where necessary or desira-ble. For services rendered to foreigners, When seated opposite someone, try not to sit a foreign language may be used to-gether with with your legs apart. Keep them together or cross Azerbaijani. your legs. Also try not to allow your feet to touch someone else’s.

Holding hands with someone of the opposite sex is acceptable in Baku and beaches but less so in rural areas. Kissing (other than as a greeting) in public should be avoided.

To wave down a taxi or bus, stretch out your right arm and move your wrist inwards repeated- ly. To avoid frustration you should note that taxis usually have their taxi signs illuminated whether they are carrying passengers or not.

www.azpromo.az USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS

USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTSUSEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL USEFULCONTACTS CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTSUSEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTSUSEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTSUSEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS

USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTSUSEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL USEFULCONTACTS CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL107 CONTACTS USEFUL CONTACTSUSEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTSUSEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTSUSEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS USEFUL CONTACTS PUBLIC INSTITUTIONS

108 ORGANIZATION ADDRESS/CONTACTS ORGANIZATION ADDRESS/CONTACTS

Z.Aliyeva st.77, AZ1000, Baku Administration Istiglaliyyat st.19, The President Ministry of Palace, AZ1066, Baku Tel.: +99412 498 58 38 of the President Transport , Fax: +99412 492 35 43/ 492 06 25 Fax: +99412 498 79 12 of the Republic of Communication and E-mail: [email protected] E-mail: [email protected] Azerbaijan URL: www.president.az High Technologies URL: www.mincom.gov.az USEFUL CONTACTS Sabail distr., U.Hajibayov st.80, The Lermontov st.68, AZ1066, Baku Government House, AZ1000, Baku Tel.: +99412 498 08 44/ 498 21 59/ 498 Tel.: +99412 492 41 61 Ministry of Cabinet of Ministers Fax: +99412 498 97 86 66 18/ 493 20 70 Agriculture E-mail: [email protected] Fax: +99412 498 64 49 URL: www.cabmin.gov.az E-mail: [email protected] URL: www.agro.gov.az

Parlament ave.1, AZ1152, Baku H.Aliyev ave.121, AZ1029, Baku Tel.: +99412 498 97 48 State Oil Company Tel.: +99412 521 02 82 National Assembly Fax: +99412 498 97 22 of the Republic of Fax: +99412 521 03 83 (Milli Majlis) E-mail: [email protected] Azerbaijan (SOCAR) E-mail: [email protected] URL: www.meclis.gov.az URL: www.socar.az

U.Hajibeyov st.84, The Government Inshaatchilar ave.2, AZ1073, Baku House, AZ1000, Baku Tel.: +99412 404 22 00 Ministry of Tel.: +99412 493 88 67 State Customs Fax: +99412 404 22 17 Fax: +99412 492 58 95 Committee Economy E-mail: [email protected] E-mail: [email protected] URL: www.customs.gov.az URL: www.economy.gov.az

Baku, S.Gurbanov st.50, AZ1009 Inshaatchilar ave.81, AZ1136, Baku Tel.: +99412 596 90 00 Tel.: +99412 538 52 48 Ministry of Foreign State Statistical Fax: +99412 596 90 01 Fax: +99412 538 24 42 Affairs Committee E-mail: [email protected] E-mail: [email protected] URL: www.mfa.gov.az URL: www.stat.gov.az

Landau st.16, AZ1073, Baku H.Aliyev ave.165, AZ1029, Baku Tel.: +99412 403 89 70 Tel.: +99412 498 77 53 Ministry of Taxes Fax: +99412 403 89 71 State Oil Fund E-mail: [email protected] E-mail: [email protected] URL: www.oilfund.az URL: www.taxes.gov.az

www.azpromo.az PUBLIC INSTITUTIONS

109 ORGANIZATION ADDRESS/CONTACTS ORGANIZATION ADDRESS/CONTACTS

Binagadi distr., Block 3123, 202 Sharifzade st.172, AZ1122, Baku Binagadi Highway, AZ1114, Baku National Fund for Tel.: +99412 565 61 18/ 565 61 19/ 565 Tel.: +99412 433 63 65 State Migration Entrepreneurship Fax: +99412 432 37 17 61 20/ 565 61 21/ 565 61 22 Service Support E-mail: [email protected] Fax: +99412 562 37 02 URL: www.anfes.gov.az E-mail: [email protected] URL: www.migration.gov.az USEFUL CONTACTS Khojaly ave.37, Damirchi Tower, 20th The State Agency Yasamal distr., H.Zerdabi ave.88A, AZ1011, Baku floor, AZ1025, Baku for Antimonopoly Tel.: +99412 498 15 01/ 498 15 04 Azerbaijan Invest- Tel.: +99412 488 80 10 Policy and Supervi- Fax: +99412 497 24 08 ment Company Fax: +99412 488 80 12 sion of the Consum- E-mail: [email protected] E-mail: [email protected] er Market URL: www.consumer.gov.az URL: www.aic.az

State Agency for S.Y.Bakuvi st.35, AZ1072, Baku H.Aliyev st.36, AZ1078, Baku Public Service and Tel.: +99412 465 65 48/ 465 65 35/ 464 Tel.: +99412 108 Social Innovations Chamber of Audi- 80 62 Fax: +99412 541 76 63 under the President tors Tel./Fax: +99412 465 65 45/ 498 28 55 E-mail: [email protected] E-mail: [email protected] of the Republic of URL: www.asan.gov.az Azerbaijan URL: www.audit.gov.az

U.Hajibayov st.84, The Government Khojaly ave.55, AGA Business Centre, State Agency on House, AZ1000, Baku AZ1025, Baku Alternative and Tel.: +99412 493 72 75 Tel.: +99412 464 41 11 “Tamiz Shahar” JSC Renewable Energy Fax: +99412 493 16 97 Fax: +99412 464 41 12 Sources E-mail: [email protected] E-mail: [email protected] URL: www.area.gov.az URL: www.tamizshahar.az

Khojaly ave.37, Damirchi Tower, 20th Heydar Aliyev ave 152, AZ1029, Baku floor, AZ1025, Baku Phone: +99412 377-00-77 Sumgait Chemical Tel.: +99412 488 80 65 Food Safety Agency E-mail: [email protected] Industrial Park Fax: +99412 488 80 64 URL: www.afsa.gov.az E-mail: [email protected] URL: www.scip.az

U.Hajibeyli 84, The Goverment House, Nizami st.203-B, AF Business House, AZ1000, Baku 3rd floor, AZ1000, Baku Intellectual Property Phone : +99412 493-39-44/ 493-66-87/ High Technologies Tel.: +99412 493 14 00 Agency 493-33-89 Park Fax: +99412 493 41 00 Fax: +99412 498-10-28 E-mail: [email protected] E-mail: [email protected] URL: www.hightech.az

www.azpromo.az PUBLIC INSTITUTIONS

110 ORGANIZATION ADDRESS/CONTACTS ORGANIZATION ADDRESS/CONTACTS

Azerbaijan Export Neftchilar ave.32, Baku Business Ganja - Shamkir highway, 12th km, AZ Center, AZ1000, Baku 5700, Shamkir and Investment Tel.: +994125980147 / 48 Shamkir Agropark Tel: + 99422 305 37 37; + 99412 585 Promotion Fax: +994125980152 MMC 24 05 Foundation E-mail: [email protected] E-mail: [email protected] (AZPROMO) URL: www.azpromo.az URL: shamkiragropark.az USEFUL CONTACTS The Republic of The National Academician Hasan Aliyev str. 57, 3rd Azerbaijan Ministry A.Sharifzadeh st.172, AZ1122, Baku Confederation of floor, AZ 1110, Baku Tel.: +99412 433 63 65 of Economy Entrepreneurs (Em- Tel: (+994 12) 465 72 42/43 Fax: +99412 432 37 17 National Fund for ployers’) Organisa- Fax: (+994 12) 465 72 42 E-mail: [email protected] Entrepreneurship URL: www.anfes.gov.az tions of Azerbaijan E-mail: [email protected] Support Republic URL: ask.org.az

Khojali ave. 37, Damirchi Tower, 20th floor, AZ1025, Baku Parlament ave. 36, AZ1000, Baku Azerbaijan Tel.: +99412 488 80 10 Azerbaijan Tourism T:+99450 645 9988 İnvestment Fax: +99412 488 80 12 LLC F:+99412 510 1988 Company E-mail: [email protected] URL: azerbaijantourism.az URL: www.aic.az

Uzeyir Hajibayov st.72, AZ1010, Baku Tel.: +99412 599 00 03 Samur-Yalama, Khachmaz Port of Baku Fax: +99412 599 00 04 Yalama Agropark URL: www.agroparkyalama.az E-mail: [email protected] URL: www.portofbaku.com

Mikayil Mushfig st. 2H, AZ1004, Baku Agency for Devel- Tel.: +99412 505 02 02 opment of Small Haydar Aliyev ave. 152, AZ 1029, Baku Azergold Fax: +99412 505 02 02/ 4455 and Medium-Sized E-mail: [email protected] E-mail: [email protected] URL: www.azergold.az Enterprises

Jalil Mammadguluzadeh 85Z, AZ1000 Tel.: +99412 505 65 37/38 State Housing Con- Fax: +99412 505 65 39 struction Agency E-mail: [email protected] URL: www.mida.gov.az

www.azpromo.az EMBASSY

111 COOUNTRY ADDRESS/CONTACTS COOUNTRY ADDRESS/CONTACTS

ISR Plaza, 69 Nizami st., AZ 1005, Baku 111 Azadlig ave., AZ 1007, Baku Tel.: (+99412) 437 37 70 Mob: (+99450) 301 85 59 Tel.: (+99412) 488 33 00 KINGDOM OF US Fax: (+99412) 437 37 71 BELGIUM Fax: (+99412) 488 33 30 Email: [email protected] URL: www.az.usembassy.gov URL: www.azerbaijan.diplomatie. belgium.be USEFUL CONTACTS 90 Nizami st., The Landmark III, 7th 13 Javid Huseynov st., AZ1073, Baku Floor, AZ1010, Baku Tel.: (+99412) 5386971/ 5386972 Tel.: (+99412) 465 99 33 AUSTRIA BULGARIA Fax: (+99412) 538 09 85 Fax: (+99412) 465 99 94 Email: [email protected] Email: [email protected] URL: www.mfa.bg URL: www.bmeia.gv.at

44 Jafar Jabarlı st., Caspian Plaza, AZ Address: 67 Khagani st., AZ1010, Baku 1065, Baku Tel.: (+99412) 498 62 57/ 493 65 87 Tel.: (+99412) 436 85 56 CZECH REPUBLIC CHINA Fax: (+99412) 498 00 10 Fax: (+99412) 436 85 57 Email: [email protected] Email: [email protected] URL: www.az.china-embassy.org URL: www.mzv.cz

69 Nizami st., ISR-Plaza, 7th and 10th 45 Khagani st., AZ1010, Baku THE UNITED floor, AZ-1005, Baku Tel.: (+99412) 4377878 KINGDOM OF Tel.: (+99412) 465 41 00 Fax: (+99412) 497 74 34 GERMANY GREAT BRITAIN Fax: (+99412) 465 41 28 Email: generalenquiries.baku@fco. AND NORTHERN Email: [email protected] gov.az IRELAND URL: www.baku.diplo.de URL: www.gov.uk

8 Najafgulu Rafiyev st., AZ1025, Baku, Nasib bay Yusifbayli st., 144/108A, Tel: (+99412) 489 56 80 / 71 AZ1078, Baku UNITED ARAB BELARUS Fax.: (+99412) 489 56 77 Tel.: (+99412) 594 70 31/ 594 70 32 EMIRATES Email: [email protected] Fax: (+99412) 594 7 034 URL: www.azerbaijan.mfa.gov.by Email: [email protected]

7 R.Rza st., AZ 1000, Baku 7 Bulbul ave., apt.12/13, AZ 1095, Tel.: (+99412) 490 81 00 Baku Fax: (+99412) 490 81 28 BRAZIL Tel.: (+99412) 598 20 38/39/46/47/49/ FRANCE Email: presse.bakou-amba@ Fax: (+99412) 598 20 37 diplomatie.gouv.fr Email: [email protected] URL: www.az.ambafrance.org

www.azpromo.az EMBASSY

112 COOUNTRY ADDRESS/CONTACTS COOUNTRY ADDRESS/CONTACTS

N15 Yashar Huseynov st., Narimanov No.4 Bunyad Safarov district, AZ1069, Baku Tel.: (+99412) 492 61 43/ 4928006/ Tel.: (+99412) 497 45 60 49261321 GEORGIA IRAN Fax: (+99412) 497 45 61 Fax: (+99412) 498 07 33 Email: [email protected] Email: iranemba@azerian. URL: www.azerbaijan.mfa.gov.ge com USEFUL CONTACTS 302 Jeyhun Hajibeyli st., Ganjlik, Academician Hasan Aliyev st., apt. 2c Narimanov Dist.,rict, AZ1069, Baku Tel.: (+99412) 596 21 82/ 49/ 1724 Tel.:(+99412) 564 63 44/54 INDIA IRAQ Fax: (+99412) 596 17 25 Fax: (+99412) 447 25 72 Email: [email protected] Email: [email protected] URL: www.mofamission.gov.iq URL: www.indianembassybaku.gov.in

Izmir st., 1033, Hyatt Tower 3, Baku Hasan Aliyev st., 2/180 Tel.: (+99412) 490 78 81, 82 INDONESIA Tel.: (+99412) 596-21-58 ISRAEL Fax: (+99412) 490 78 92 Fax: (+99412) 596-01-50 Email: [email protected] URL: www.baku.mfa.gov.il

ISR Plaza 11th floor, 69 Nizami st., Address: J.Jabbarli st., 44, Caspian AZ1005, Baku Plaza 2, 16th floor HASHEMITE KING- Tel: (+99412) 5052576 Tel.:(+99412) 437 31 21/22 SWEDEN DOM OF JORDAN Fax: (+99412) 5052567 Fax: (+99412) 437 31 23 Email: [email protected] Email: [email protected] URL: www.swedenabroad.se

Suleyman Dadashov st., 523, h.27, Icheri Shahar, Boyuk Gala 9, AZ1004, AZ1073, Baku Baku Tel.: (+99412) 5395451/4975424 Tel.: +(994 12) 437 38 50 AFGANISTAN SWITZERLAND Fax: (+99412) 5395452 Fax: +(994 12) 437 38 51 Email: [email protected] URL: www.eda.admin.ch URL: www.afgemb-baku.com Email: [email protected]

Icherisheher, Mirza Mansur st., 72, 44 Kichik Gala st., Icheri Shahar, AZ AZ1004, Baku 1004, Baku Tel.: (+99412) 497 45 81/ 497 45 82 Tel.: (+99412) 497 51 33, 35 HUNGARY ITALY Fax: (+99412) 492 12 73 Fax: (+99412) 497 52 02 Email: [email protected] Email:ambasciata.baku@est.,eri.it URL: www.baku.mfa.gov.hu URL: www.ambbaku.est.eri.it

www.azpromo.az EMBASSY

113 COOUNTRY ADDRESS/CONTACTS COOUNTRY ADDRESS/CONTACTS

Hasan Aliyev st., crossing 1, apt. 12, 23 Izmir pr, Baku AZ 1009, Baku Tel.: (+99412) 537 04 07/ 537 04 08 Tel.: (+99412) 596 7901/ 02/03 Fax: (+99412) 539 22 97 KOREA LITHUANIA Fax: (+99412) 596 7904 Email: [email protected] Email: [email protected] URL: www.az.mfa.lt URL: www.overseas.mofa.go.kr USEFUL CONTACTS Jafar Khandan 10c, AZ1130, Binagadi, Huseyn Javid avenue 12, 520 Block, Baku AZ1073, Baku Tel.: (+99412) 569 24 74 Tel.: (+99412) 510-15-38/ 510-52-91 CUBA Fax: (+99412) 568 07 21 MOLDOVA Fax: (+99412) 4975252 Email: [email protected] Email: [email protected] emb.moldova. URL: www.cubadiplomatica.cu/ [email protected] azerbaijan URL: www.azerbaidjan.mfa.md

37 Khojaly ave., Damirchi Tower, 24th Jeyhun Hajibeyli, Dalan 2, Ev. floor, AZ1025, Baku 1,AZ1069Baku Tel.: (+994) 12 404 7551/ 2 Tel.: (+99412) 4657388/ 4657389 COLUMBIA MALAYSIA Fax: (+994) 12 404 8353 Fax: (+99412) 465 7386 Email: [email protected] Email: [email protected] URL: www.azerbaiyan.embajada.gov.co URL: www.kln.gov.my

6 Azer Aliyev st., Baku Tel.: (+99412) 596 81 72/73/74 Nizami st., Isr Plaza 69, AZ1005, Baku KUWAIT Fax: (+99412) 596 81 75 NETHERLANDS Tel.: (+99412) 496 88 33 Email: [email protected] URL: www.netherlandsandyou.nl URL: www.kuwaitembassy.az

Caspian Plaza, 44 J.Jabbarli st., Alleyway 15, 7. H.Aliyev st., AZ1078, AZ1065, Baku Baku Tel.: (+99412) 498 79 06 Tel.: (+99412) 436 67 78 LATVIA EGYPT Fax: (+99412) 498 79 54 Fax: (+99412) 436 67 79 Email: egyptembassybaku@yahoo. Email: [email protected] com URL: www.mfa.gov.lv URL: www.egyptembassy.org

ISR Plaza, 340 Nizami st., 11 floor, Husein Javid ave. 520, apt. 20, Baku AZ1000, Baku LIBYAN JAMAHIRI- Tel.: (+99412) 505 25 66 Tel.: (+99412) 493 23 65/ 493 85 48 NORWAY YA Fax: (+99412) 505 25 67 Fax: (+99412) 498 97 70 Email: [email protected] Email: [email protected] URL site: www.norway.no

www.azpromo.az EMBASSY

114 COOUNTRY ADDRESS/CONTACTS COOUNTRY ADDRESS/CONTACTS

House 437, 9th turn, 1st., highway, 125A Academician Hasan Aliyev, Badamdar settlement, AZ1000, Baku Narimanov district., AZ-1110, Baku Tel.: (+99412) 497 25 49 / 52 Tel.: (+99412) 465 63 78 UZBEKISTAN ROMANIA Fax: (+99412) 497 25 48 Fax: (+99412) 465 60 76 Email: [email protected] Email: [email protected] URL: www.uzembassy.az URL: www.baku.mae.ro USEFUL CONTACTS

17 Bakikhanov st., Baku 30 Ataturk ave., Baku Tel.: (+99412) 597 0870 Tel.: (+99412) 436 08 39/ 40 PAKISTAN RUSSIA Fax: (+99412) 597 1673 Fax: (+99412) 436 08 41 Email:[email protected] Email: [email protected] URL: www.embrus-az.com

Caspian Plaza, J.Jabbarli 44, 5th floor, Seyffatdin Daghli st., 37, AZ1073, AZ1065, Baku Baku Tel.: (+99412) 436 74 26/ 436 74 28 THE KINGDOM OF PALESTINE Tel.: (+99412) 497 23 05/ 497 23 12 Fax: (+99412) 436 74 27 SAUDI ARABIA Fax: (+99412) 497 23 02 Email: [email protected] Email: [email protected] URL: www.embassyofpalest.,ine.az

2 Kichik Gala st., Icheri Shahar, Gesr st., 6A. Icheri Shahar, AZ1004, AZ1000, Baku Baku Tel.:(+99412) 492 01 14 Tel.: (+99412) 492-50-80/ 492-51-25 POLAND Fax: (+99412) 492 02 14 SERBIA Fax: (+99412) 492-51-72 Email: baku.amb.sekretariat@msz. Email: serbianembassy.baku@ gov.pl azeurotel.com URL: www.www.baku.msz.gov.pl URL: www.baku.mfa.gov.rs

37 Shamsi Rahimov st., AZ 1069, Baku Svetlana Mammadova st., 107, Tel.:(+99412) 564 58 24/ 565 58 22/ AZ1113, Baku 564 58 44 QATAR SLOVENIA Tel.: (+99412) 310 50 44 Fax: (+99412) 564 58 25/ 564 58 26 Mob: (+99450) 270 62 30 Email: [email protected] Email: [email protected] URL: www.baku.embassy.qa

Najafgulu Rafiyev st., 14, Baku 134 Samad Vurghun st., Baku Tel.: (+99412) 489-23-55 Tel.: (+99412) 444 73 20 KAZAKHSTAN Fax: (+99412) 489-23-77 TURKEY Fax: (+99412) 444 73 55 URL: www.mfa.gov.kz Email: [email protected] Email: [email protected]

www.azpromo.az EMBASSY

115 COOUNTRY ADDRESS/CONTACTS

Mammedgulzade Jalil st., 85/266, AZ1078, Baku Tel.: (+99412) 596 3527 TURKMENISTAN Fax: (+99412) 596 3527 Email: [email protected] URL: www.azerbaijan.tmembassy.gov.tm USEFUL CONTACTS Address: Baghlar 2 st., B-20, Badamdar, AZ1021, Baku Tel.: (+99412) 502 14 32 TAJIKISTAN Fax: (+99412) 502 14 32 Email: [email protected] URL: www.tajembaz.tj

Address: 49 Y.Vezirov st., Baku Tel.: (+99412) 441 27 06 UKRAINE Fax: (+99412) 449 40 96 Email: [email protected] URL: azerbaijan.mfa.gov.ua

Address: Hyatt Tower 3, 1033 Izmir st., Baku Tel.: (+99412) 490 78 18/ 19 JAPAN Fax: (+99412) 490 78 20 Email: [email protected] URL: www.az.emb-japan.go.jp

Address: Hasan Aliyev st., 2, apt. 228, AZ1078, Baku MOROCCO Tel.: (+99412) 596 5130 Fax: (+99412) 480 25 42 Email: [email protected]

Caspian Plaza III, 9th floor, 44 Jafar Jabbarli st., Baku GREECE Tel.: (+99412) 492 01 19 Fax: (+99412) 492 48 35 Email: [email protected]

www.azpromo.az ANNEXESANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & MAP ANNEXES &ANNEXES MAP ANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP & MAP

ANNEXESANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & MAP ANNEXES &ANNEXES MAP ANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP & MAP

ANNEXES & MAP ANNEXESANNEXES & MAP & MAP ANNEXES & MAP ANNEXES & MAP ANNEXES & MAP ANNEXESANNEXES & MAP ANNEXES & MAP ANNEXES & MAP & MAP ANNEXES & MAP ANNEXES & MAP

ANNEXES & MAP ANNEXES & MAP ANNEXES & MAP ANNEXES & MAP ANNEXES & MAP ANNEXES & MAP

ANNEXESANNEXES & MAPANNEXES & MAPANNEXES & MAP & MAP

ANNEXES & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP & MAP ANNEXESANNEXES & MAPANNEXES & MAPANNEXES & MAP & MAP

ANNEXES & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP & MAP ANNEXES & MAPANNEXESANNEXES & MAP & MAPANNEXES & MAP

ANNEXES & MAP ANNEXES & MAP ANNEXESANNEXES ANNEXES & MAP ANNEXES & & MAP MAPANNEXES ANNEXES & MAP & MAP ANNEXES & MAP & MAP ANNEXES & MAP

ANNEXES & MAP ANNEXES & MAP ANNEXES & MAP ANNEXES & MAP ANNEXESANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & MAP ANNEXES &ANNEXES MAP ANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP & MAP

ANNEXESANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & MAP ANNEXES &ANNEXES MAP ANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP & MAP

ANNEXES & MAP ANNEXESANNEXES & MAP & MAP ANNEXES & MAP ANNEXES & MAP ANNEXES & MAP ANNEXESANNEXES & MAP ANNEXES & MAP ANNEXES & MAP & MAP ANNEXES & MAP ANNEXES & MAP

ANNEXES & MAP117 ANNEXES & MAP ANNEXES & MAP ANNEXES & MAP ANNEXES & MAP ANNEXES & MAP

ANNEXESANNEXES & MAPANNEXES & MAPANNEXES & MAP & MAP

ANNEXES & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP & MAP ANNEXESANNEXES & MAPANNEXES & MAPANNEXES & MAP & MAP

ANNEXES & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP ANNEXES & MAP & ANNEXES MAP & MAP ANNEXES & MAPANNEXESANNEXES & MAP & MAPANNEXES & MAP

ANNEXES & MAP ANNEXES & MAP ANNEXESANNEXES ANNEXES & MAP ANNEXES & & MAP MAPANNEXES ANNEXES & MAP & MAP ANNEXES & MAP & MAP ANNEXES & MAP

ANNEXES & MAP ANNEXES & MAP ANNEXES & MAP ANNEXES & MAP ANNEX 1. BILATERAL INVESTMENT TREATIES

118 COUNTRY DATE OF SIGNATURE COUNTRY DATE OF SIGNATURE

Albania 09.02.2012 Finland 26.02.2003

Germany 22.12.1995 France 01.09.1998 ANNEXES & MAP

United States of America 01.08.1997 Georgia 08.03.1996

Hashemite Kingdom of Austria 04.07.2000 05.05.2008 Jordan

Belarus 03.06.2010 Israel 20.02.2007

Belgium-Luxembourg 18.05.2004 Islamic Republic of Iran 28.10.1996 Economic Union

United Arab Emirates 20.11.2006 Switzerland 23.02.2006

United Kingdom 04.01.1996 Korea 23.04.2007

Bulgaria 07.10.2004 Kuwait 10.02.2009

Czech Republic 17.05.2011 Latvia 03.10.2005

China 08.03.1994 Lebanon 11.02.1998

Estonia 07.04.2010 Lithuania 08.06.2006

www.azpromo.az ANNEX 1. BILATERAL INVESTMENT TREATIES

119 COUNTRY DATE OF SIGNATURE COUNTRY DATE OF SIGNATURE

Macedonia 19.04.2013 Romania 29.10.2002

Hungary 18.05.2007 Russian Federation 29.09.2014 ANNEXES & MAP

Montenegro 16.09.2011 San Marino 25.09.2016

Egypt 24.10.2002 Serbia 08.06.2011

Moldova 27.11.1997 Syria 08.07.2009

Norway 25.09.1996 Saudi Arabia 09.03.2005

Uzbekistan 27.05.1996 Tajikistan 15.03.2007

Pakistan 09.10.1995 Turkey 25.10.2011

Poland 26.08.1997 Ukraine 24.03.1997

Kyrgyzstan 28.08.1997 Greece 21.06.2004

Qatar 28.08.2007 Croatia 02.10.2007

Kazakhstan 16.11.1996 Afghanistan 01.12.2017

www.azpromo.az ANNEX 2. BRIEF COMPARATIVE ANALYSIS OF LLC AND JSC UNDER AZERBAIJANI LAW

120 JSC LLC

At least one founder (legal entity or individual). Closed JSC - maximum number of shareholders At least one founder (legal entity or individual). 1. Minimum number of may not exceed fifty. If this limit is exceeded, a However, there is not a statutory limit on the Founders closed JSC must be either reorganized into an number of participants. open JSC, or liquidated. ANNEXES & MAP

The participants/shareholders are not personally liable for the obligations/liabilities of a JSC/LLC. 2. Liability of Founders The liability of founders is limited to the amount of their equity (capital) contribution.

Open JSC – AZN 4,000 (about USD 2,360)/ Closed JSC – AZN 2,000 (circa USD 1,180). Share capital must be paid in full prior to state There is no specified minimum capital require- registration. ment. Charter capital must be paid in full prior to state registration, unless the charter of an Contributions to the charter capital of a JSC LLC specifies that the payment of the charter 3.Capital Requirements may be made in cash or in kind. The value capital be made within a certain period in the of the contributions made in kind must be future, but no longer than 3 months after reg- confirmed by the founders’ meeting. In-kind istration. In-kind capital contributions must be capital contributions must be valued by an valued by an independent appraiser. independent appraiser. Payment for publicly placed shares must be made in cash.

Shares must be registered by the Financial Markets Supervision Chamber. Placement of securities can be public (offered to the public at large) or private (offered to a limited group of investors). Paid-in capital of participants is not considered to be a security. Therefore, there are no regis- 4. Securities Open joint-stock companies can place securi- tration requirements with the Financial Markets ties only through public placement (except for Supervision Chamber. establishment and reorganization of a company and conversion of shares) while closed joint-stock companies place their securities only through private placement.

www.azpromo.az ANNEX 2. BRIEF COMPARATIVE ANALYSIS OF LLC AND JSC UNDER AZERBAIJANI LAW

121 JSC LLC

Unless provided otherwise in the Charter, a 5. Transferability of Open – no restriction on the transfer of one’s participant may alienate (sell/transfer) his Shares/ participatory shares to another. Closed – shareholders have participating interest to third parties. However, interests the right of first refusal. other participants have the right of first refusal, if the Charter does not provide otherwise. ANNEXES & MAP The General Meeting of Shareholders (GMS) is the supreme governing body, which has exclusive competence in fundamental matters (such as amendments to the Charter and to the Share Capital, any decision on liquidation, reorganization, etc.). The law does not allow delegation of such powers to other inferior Same as JSC. Still there is no requirement to governing bodies. create a Supervisory Board, which can though

be established if so desired by the participants A JSC which has more than 50 shareholders and indicated in the charter. 6. Management structure must create a Supervisory Board. An internal audit commission is mandatory for The management body can be either in the LLCs with more than 50 shareholders. form of a board of directors or an individual director.

An internal audit commission is mandatory for JSCs with more than 50 shareholders. An audit commission is established by the Supervisory Board

An Open JSC must make public its annual 7. Accountability report and balance sheet.

A voluntary liquidation or reorganization is A voluntary liquidation or reorganization is 8. Liquidation & Reor- performed by a decision of the shareholders’ performed by a decision of the general meeting ganization general meeting. A JSC may be reorganized of participants. An LLC may be reorganized into into an LLC. a JSC.

8. Tax Identical tax treatment (except in case of distribution of net profits).

www.azpromo.az ANNEX 3. LIST OF ACTIVITIES REQUIRING LICENSES

122 EXECUTIVE ORGAN TO LICENSE FEE No: NAME OF ACTIVITY ISSUE THE LICENSE (IN MANATS)

State Security Service (to ensure the safety of legal entities formed on the territory of the Republic of Azer- baijan by foreign legal entities or foreigners or stateless 1 PRIVATE SECURITY ACTIVITY 1500 persons, including legal entities established with direct

ANNEXES & MAP or indirect participation of the foreign capital); Ministry of Internal Affairs (in other cases) ACTIVITIES IN THE FIELD OF THE DE- 2 SIGNING AND PRODUCTION OF DATA State Security Service 1100 PROTECTION FACILITIES

DEVELOPMENT OF BIOMETRIC TECH- 3 NOLOGIES AND MAINTENANCE OF 1100 SUCH TECHNOLOGIES

CREATION OF INFORMATION RE- Ministry of Transport, Communication and High Tech- SOURCES ON PERSONAL DATA AND nologies 4 1100 DEVELOPMENT OF INFORMATION SYSTEMS, THEIR SERVICING

CELLULAR (MOBILE) COMMUNICA- 5 1000000 TIONS SERVICES

6 BROADCASTING ACTIVITIES:

6.1 Republican TV broadcasting 50000

6.2 Baku city TV broadcasting 2250

6.3 Regional TV broadcasting National Television and Radio Council of the Republic 1500 of Azerbaijan 6.4 Republican radio broadcasting 2500

6.5 Baku city radio broadcasting 1250

6.6 regional radio broadcasting 500

National Television and Radio Council of the Republic 6.7 auxiliary information broadcasting 500 of Azerbaijan

www.azpromo.az ANNEX 3. LIST OF ACTIVITIES REQUIRING LICENSES

123 EXECUTIVE ORGAN TO LICENSE FEE No: NAME OF ACTIVITY ISSUE THE LICENSE (IN MANATS)

cable network broadcasting with up to 6.8 1500 5000 subscribers cable network broadcasting with over 6.9 2500 5000 subscribers National Television and Radio Council of the Republic ANNEXES & MAP of Azerbaijan 6.10 satellite broadcasting 500

activity on ensuring satellite broad- 6.11 casting of foreign radio and television 500 channels by means of coding devices

7. TOXIC WASTE:

7.1 utilization 550

7.2 Neutralization Ministry of Economy 550

8. PRIVATE MEDICAL ACTIVITIES 2250

9. PHARMACEUTICAL ACTIVITIES:

9.1 Manufacture of medicines Ministry of Economy 2250

9.2 Wholesale of medicines 20000

9.3 Retail sale of medicines 1000

10 PRECURSORS:

10.1 Production Ministry of Economy 250

10.2 Import 250

10.3 Export 250

www.azpromo.az ANNEX 3. LIST OF ACTIVITIES REQUIRING LICENSES

124 EXECUTIVE ORGAN TO LICENSE FEE No: NAME OF ACTIVITY ISSUE THE LICENSE (IN MANATS)

10.4 transit transportation 250

11. EDUCATION ACTIVITIES: ANNEXES & MAP

11.1 pre-school education institutions Ministry of Economy 1250

general education (including lyceums 11.2 10000 and gymnasiums) primary vocational education (vocation- 11.3 2000 al schools and vocational lyceums) specialized secondary education insti- 11.4 2000 tutions

11.5 higher education institutions 13750

11.6 additional education institutions 1500

secondary-special religious education 11.7 2000 institutions

11.8 higher religious education institutions 13750

12 COMMUNICATION SERVICES:

12.1 telephony (wire) Ministry of Economy 2500

12.2 radio trunk and wireless 2500

12.3 IP-telephony 50000

arranging of internal telecommunica- 12.4 2500 tion channels arranging of international telecommu- 12.5 5500 nication channels

www.azpromo.az ANNEX 3. LIST OF ACTIVITIES REQUIRING LICENSES

125 EXECUTIVE ORGAN TO LICENSE FEE No: NAME OF ACTIVITY ISSUE THE LICENSE (IN MANATS)

12.6 data communication 3000

12.7 express post services 1250 ANNEXES & MAP Storage and disposal of radioactive and 13 Ministry of Economy 550 ionized waste Transportation of hazardous cargo by 14 Ministry of Economy 250 transport facilities

15 LIQUID AND NATURAL GAS FACILITIES:

15.1 Installation 1100

15.2 Exploitation 1100

Field operations, mining and drilling 16 1100 works

17 Installation and repair of elevators 250 Ministry of Economy 18 Exploitation of attractions 1250

Installation and repair of hoisting facil- 19 ities, metallurgical plants, boilers and 1250 tanks operating under pressure Diagnostics and other maintenance inspection of the equipment and techni- 20 1250 cal installations used at the potentially hazardous facilities

21 Fire protection activities:

Fire protection on the basis of the 21.1 agreement of enterprises and settle- Ministry of Economy 1800 ments Production, sale and testing of firefight- 21.2 Ministry of Economy 1800 ing equipment

www.azpromo.az ANNEX 3. LIST OF ACTIVITIES REQUIRING LICENSES

126 EXECUTIVE ORGAN TO LICENSE FEE No: NAME OF ACTIVITY ISSUE THE LICENSE (IN MANATS)

Installation of fire protection systems 21.3 and facilities, their repair and mainte- Ministry of Economy 1800 nance Repair and servicing of fire protec- ANNEXES & MAP tion equipment, primary firefighting 21.4 Ministry of Economy 1800 appliances, restoration of firefighting appliances performance ENGINEERING AND EXPLORATION WORKS OF BUILDINGS AND FACIL- 22 Ministry of Economy 550 ITIES REQUIRING PERMISSION FOR CONSTRUCTION CONSTRUCTION AND INSTALLATION WORKS OF BUILDINGS AND FACIL- 23 Ministry of Economy 550 ITIES REQUIRING PERMISSION FOR CONSTRUCTION DESIGNING BUILDINGS AND FACIL- ITIES REQUIRING PERMISSION FOR 24 Ministry of Economy 550 CONSTRUCTION OR SUBJECT TO INFORMATION PROCEDURES PRIVATE VETERINARY MEDICINE 25 Ministry of Economy 220 ACTIVITIES

26 VETERINARY DRUGS:

26.1 Production Ministry of Economy 1500

26.2 Sale Ministry of Economy 220

27 PLANT PROTECTION REMEDIES AND AGROCHEMICALS:

27.1 Production Ministry of Economy 1000

27.2 Import Ministry of Economy 500

www.azpromo.az ANNEX 3. LIST OF ACTIVITIES REQUIRING LICENSES

127 EXECUTIVE ORGAN TO LICENSE FEE No: NAME OF ACTIVITY ISSUE THE LICENSE (IN MANATS)

ORGANIZATION OF INDIVIDUAL 28 Ministry of Economy 550 HUNTING FARMS

SUPPLY OF RAW WILD MEDICINAL

29 Ministry of Economy 250 ANNEXES & MAP PLANTS FOR PRODUCTION

PREPARATION OF VARIOUS SEALS 30 Ministry of Economy 1100 AND STAMPS

31 ACTIVITIES OF STOCK EXCHANGE Financial Markets Supervision Chamber 5500

ACTIVITIES OF INVESTMENT COM- 32 Financial Markets Supervision Chamber 2750 PANY

33 CLEARING ORGANIZATION ACTIVITY Financial Markets Supervision Chamber 2750

INVESTMENT FUND DEPOSITARY 34 Financial Markets Supervision Chamber 2750 ACTIVITY

ACTIVITIES OF STOCK INVESTMENT 35 Financial Markets Supervision Chamber 5500 FUND

ACTIVITIES ON THE PRODUCTION 36 AND SALE OF ALL TYPES OF SECURI- Financial Markets Supervision Chamber 2750 TIES FORMS

37 CREDIT INSTITUTIONS:

37.1 bank, local branch of a foreign bank Financial Markets Supervision Chamber 11000

37.2 non-bank credit institutions 550

37.3 national postal operator 500

www.azpromo.az ANNEX 3. LIST OF ACTIVITIES REQUIRING LICENSES

128 EXECUTIVE ORGAN TO LICENSE FEE No: NAME OF ACTIVITY ISSUE THE LICENSE (IN MANATS)

38 ACTIVITIES IN THE INSURANCE SECTOR:

ANNEXES & MAP 38.1 insurance activities Financial Markets Supervision Chamber 11000

38.2 reinsurance activities 11000

39 INSURANCE BROKER ACTIVITIES:

39.1 insurance brokers – legal entities 11000

39.2 insurance brokers - natural persons 500

40 INSURANCE AGENT ACTIVITIES:

40.1 insurance agents - legal entities 500

40.2 insurance agents - natural persons 220

LIST OF ACTIVITIES REQURING LICENSES BY THE EXECUTIVE AUTHORITIES OF THE NAKHCHIVAN AUTONOMOUS REPUBLIC

No: NAME OF ACTIVITY No: NAME OF ACTIVITY

1. Private medical activities 3.2 cellular (mobile) 2. Pharmaceutical activities 3.3 radio trunk and wireless 3. Communication services: 3.4 IP-telephony 3.1 telephony (wire) 3.5 data communications

www.azpromo.az ANNEX 3. LIST OF ACTIVITIES REQUIRING LICENSES

129 No: NAME OF ACTIVITY No: NAME OF ACTIVITY

3.6 express post services 16.1 Production, sale and testing of firefighting equipment Installation of fire protection systems and facilities, 4. Education activities: 16.2 their repair and maintenance 4.1 Pre-school education institutions Repair and servicing of fire protection equipment, pri- general education (including lyceums and gymnasi- 4.2 16.3 mary firefighting appliances, restoration of firefighting ums) appliances performance ANNEXES & MAP primary vocational education (vocational schools and Engineering and exploration works of buildings and 4.3 17. vocational lyceums) facilities requiring permission for construction 4.4 specialized secondary education institutions Construction and installation works of buildings and 18. 4.5 higher education institutions facilities requiring permission for construction Designing buildings and facilities requiring permission 4.6 additional education institutions 19. for construction or subject to information procedures 4.7 secondary-special religious education institutions 20. Private veterinary medicine activities 4.8 higher religious education institutions 21. Veterinary drugs: 5. Preparation of various seals and stamps 21.1 production Broadcasting activities (TV and radio broadcasting, 21.2 sale auxiliary information broadcasting, cable network Development of biometric technologies and mainte- 6. broadcasting, satellite broadcasting, activity on 22. ensuring satellite broadcasting of foreign radio and nance of such technologies television channels by means of coding devices) 7. Supply of raw wild medicinal plants for production Production, export-import, transit transportation of 8. precursors Transportation of hazardous cargo by transport facil- 9. ities Installation and exploitation of liquid and natural gas 10. facilities 11. Field operations, mining and drilling works 12. Installation and repair of elevators 13. Exploitation of attractions Installation and repair of hoisting facilities, metallurgi- 14. cal plants, boilers and tanks operating under pressure Diagnostics and other maintenance inspection of the 15. equipment and technical installations used at the potentially hazardous facilities 16. Fire protection activities:

www.azpromo.az ANNEX 4. DOUBLE TAXATION AVOIDANCE TREATIES

130 COUNTRY DATE OF SIGNATURE COUNTRY DATE OF SIGNATURE

Hashemite Kingdom of Germany 25.08.2004 05.05.2008 Jordan

Austria 04.07.2000 Islamic Republic of Iran 10.03.2009 ANNEXES & MAP

Belarus 08.08.2001 Israel 13.12.2016

Belgium 18.05.2004 Sweden 10.02.2016

United Arab Emirates 20.11.2006 Switzerland 23.02.2006

Bosnia and Herzegovina 18.10.2012 Spain 23.04.2014

United Kingdom 23.02.1994 Italy 21.07.2004

Bulgaria 12.11.2007 Canada 07.09.2004

Czech Republic 24.11.2005 Korea 19.05.2008

China 17.03.2005 Kuwait 10.02.2009

Estonia 30.10.2007 Latvia 03.10.2005

Finland 29.09.2005 Lithuania 02.04.2004

France 20.12.2001 Luxembourg 16.06.2006

Georgia 18.02.1997 Macedonia 19.04.2013

www.azpromo.az ANNEX 4. DOUBLE TAXATION AVOIDANCE TREATIES

131 COUNTRY DATE OF SIGNATURE COUNTRY DATE OF SIGNATURE

Hungary 18.02.2008 Slovenia 09.06.2011

Malta 29.04.2016 Serbia 13.05.2010 ANNEXES & MAP

Montenegro 12.03.2013 Saudi Arabia 13.05.2014

Moldova 27.11.1997 Tajikistan 13.08.2007

Netherlands 22.09.2008 Turkey 09.02.1994

Norway 24.04.1996 Ukraine 30.07.1999

Uzbekistan 27.05.1996 Vietnam 19.05.2014

Pakistan 10.04.1996 Japan 30.05.2005

Poland 26.08.1997 Greece 16.02.2009

Qatar 28.08.2007 Croatia 12.03.2012

Kazakhstan 16.09.1996 Denmark 17.02.2017

Romania 29.10.2002

Russian Federation 03.07.1997

San Marino 08.09.2015

www.azpromo.az ANNEX 5. FREE TRADE AGREEMENTS

132 No: COUNTRIES DATE PLACE OF SIGNING

Agreement on Free Trade between the Republic of 1. 30 September 1992 Baku Azerbaijan and the Russian Federation ANNEXES & MAP

Agreement on Free Trade between the Republic of 2. 26 May 1995 Minsk Azerbaijan and Moldova

Agreement on Free Trade between the Republic of 3. 28 July 1995 Baku Azerbaijan and Ukraine

Agreement on Free Trade between the Republic of 4. 8 March 1996 Tbilisi Azerbaijan and Georgia

Agreement on Free Trade between the Republic of 5. 18 March 1996 Baku Azerbaijan and Turkmenistan

Agreement on Free Trade between the Republic of 6. 27 May 1996 Baku Azerbaijan and Uzbekistan

Agreement on Free Trade between the Republic of 7. 10 June 1997 Almaty Azerbaijan and Kazakhstan

Agreement on Free Trade between the Republic of 8. 12 January 2004 Moscow Azerbaijan and Kyrgyzstan

Agreement on Free Trade between the Republic of 9. 31 March 2004 Minsk Azerbaijan and Belarus

www.azpromo.az ANNEX 6. TABLE OF APPLICABLE TAXES

133 TAX PAYERS TAXABLE BASE EXEMPTIONS 1. Corporate All enterprises Difference between Tax code provides 17 cases of exemption from Corporate Profit Tax (resident and non-res- total gross income Profit Tax. The following exemptions applicable for business ident). Resident (excluding the income activity: Generally - 20% enterprises are subject exempted from to tax on their total tax) and deductible 1. received insurance payments (with exception of profit. Non- resident expenses. In case of a amounts of losses connected with each insurance case);

enterprises operating PE, total gross income 2. income from writing-off tax debts to the state budget in ANNEXES & MAP in Azerbaijan through generated from accordance with legislation of the Republic of Azerbaijan; permanent establish- Azerbaijani sources 3. value of assets donated free of charge by the decision of ments (‘PE’) are subject through a PE less the a legal entity from its own balance or one of a resident to tax on profit from amount of expenses subsidiaries under its full ownership to the balance of an- such operations. incurred with respect other entity in cases stipulated by the relevant executive Non-residents are to such income. authority; taxable only on profits 4. value of the fixed assets donated free of charge by the from activities per- decision of the relevant executive authority from the bal- formed in Azerbaijan. ance of one legal entity to the balance of another entity; 5. operations on the provision in any form of fixed assets, movable property and other assets, in accordance with the agreements on exploration, development and production sharing of oil and gas resources, export pipelines and other similar agreements to the party representing the Republic of Azerbaijan in the production sharing agreements; 6. part of the income of management companies or operators of industrial or technological parks, which they aim to build and maintain infrastructure of industrial and technology parks; 7. income of the industrial or technological parks residents derived from activities in the industrial or technological parks -within 7 years from the reporting year of registration in the industrial or technological park; 8. income of legal entities involved in the production of agricultural products (including by industrial method), obtained from this activity for a 5-years period beginning from January 1st, 2014 9. income of nurseries, nursery-kindergartens, kindergartens, special kindergartens and orphanages received from this activity for a 10-years period beginning from January 1st, 2014; 10. compensation payable to legal entities under the Law of Azerbaijan Republic "On land acquisition for state needs" 11. 50% of the profit of entities that have obtained an In- vestment Promotion Certificate is exempt from income tax for 7 years

www.azpromo.az ANNEX 6. TABLE OF APPLICABLE TAXES

134 TAX PAYERS TAXABLE BASE EXEMPTIONS 2. Withhold- Enterprises or en- The gross income of ing Tax from trepreneurs making a non-resident from the income of payments to non- res- an Azerbaijani source non-residents idents. not attributable to a PE of a non-resident 4%, 6%, 10% Payments made by the on the territory of

ANNEXES & MAP and 14% depend- PE of non-residents are Azerbaijan is subject ing on type of treated the same as the to taxation at the income payments of resident source of payment, enterprises. without deduction of expenses.

The remittance of profits, derived from a permanent establishment in Azerbaijan, to the head office is subject to a branch remittance tax of 10%.

3. Income Tax of Resident and non-res- Any salaries, pay- Income of diplomats or consular employees who are not Natural Persons ident physical persons ments or benefits citizens of Azerbaijan; working in Azerbaijan. received by a natural 14% for up to Payments made by the person Employment income from the work-place of a person who 2500 AZN (1480 PE of non-residents are is not a resident of the Republic of Azerbaijan - if this in- USD) treated the same as the come is paid by an employer or in the name of an employer payments of resident who is not a resident of Azerbaijan and is not paid by or 25% for over enterprises. Residents on behalf of a PE of a non-resident; gifts, material aid and 2500 AZN (350 are taxed on their inheritance up. AZN+ 25% of worldwide income, the amount of while non-residents are Other Exemptions and privileges on income tax stipulated exceeding 2500 taxed only on Azerbai- in the tax code. AZN) jani source income.

www.azpromo.az ANNEX 6. TABLE OF APPLICABLE TAXES

135 TAX PAYERS TAXABLE BASE EXEMPTIONS 4. Value- Added Any person registered Value of goods, works, Tax code provides 38 cases of exemption from VAT. Tax (‘VAT’) or required to register and services provid- as a VAT payer (there is ed, value of taxable There are some of them: 18% a requirement to regis- import and trade The cost of property purchased from state enterprises ter for VAT purposes if addition during the during privatization; turnover of a taxpayer retail sale of agricul- The provision of financial services etc.00

exceeds a certain tural goods produced The following are subject to ‘0’ (zero) rate: ANNEXES & MAP threshold); on the territory of The purchase of goods or services, Azerbaijan. or importation thereof, with the Persons importing proceeds of foreign grants; goods to which VAT VAT payer are entitled Exports, etc. applies are considered to recover the amount payers of VAT on goods of VAT paid on pur- Any entity or individual entrepreneur having obtained an so imported; chases (input VAT) Investment Promotion Certificate will be exempt, for the by offsetting it with period of seven years, from VAT upon confirmed import of A non-resident person its output tax or any equipment, technological equipment and devices performing work or other taxes providing service, with- Goods that are intended for re-export and secured under a out registration for VAT pledge etc. purposes and being subject to tax on such works or services;

Producers of the excise goods and those who are involved in residential housing construction and not using the right to be the simplified tax payer.

www.azpromo.az ANNEX 6. TABLE OF APPLICABLE TAXES

136 TAX PAYERS TAXABLE BASE EXEMPTIONS 5. Excise Tax All persons engaged Release of excise Transit transportation of goods through the territory of in the production of goods produced in Azerbaijan; Various rates excisable goods in Azerbaijan and import temporary imports of goods into Azerbaijan, except for (per unit, vol- Azerbaijan or importa- of excisable goods goods intended for re-export; ume, etc.) tion of such goods into into Azerbaijan. Azerbaijan. Goods that are intended for re-export and secured under a

ANNEXES & MAP Excisable goods are pledge etc. spirits, beer and all kinds of alcohol, tobacco products, petroleum products, vehicles, yachts for sports and leisure, platinum, gold and jewelry products made from them, fur-leather products.

6. Property Tax All persons and legal For individuals, Facilities that are used for environmental preservation, fire entities having assets buildings owned by protection or civil defense purposes; Different rates (buildings or their resident and non-resi- pipelines carrying products, rail and motorways, com- depending on parts, fixed assets etc.) dent individualsin the munication, power transmission lines, irrigation system type of assets. in ownership. Republic of Azerbai- facilities, satellites and other space objects, mechanical Individuals – de- Resident enterprises, jan, plus watercraft vehicles etc. pending on the as well as non-resident and aircraft owned by region where the enterprises carrying resident individuals; Any entity or individual entrepreneur that has obtained an property is locat- our business activity Investment Promotion Certificate is exempt from property ed between AZN through its For resident enter- tax for seven years. 0.1-0.4 for each permanent establish- prises average annual square meter of ment in the Republic of value of fixed assets Residents of industrial and technology parks for the proper- the property; Azerbaijan, are subject on the balance sheet ty used in the parks. legal entities – to property tax. of the enterprise; 1% of the value of fixed assets ; For legal entities Other rates are carrying out business applicable for activities in Azerbaijan possession of through a permanent watercrafts and establishment annual aircrafts average value of only those fixed assets which are related to the PE.

www.azpromo.az ANNEX 6. TABLE OF APPLICABLE TAXES

137 TAX PAYERS TAXABLE BASE EXEMPTIONS 7. Land Tax All persons owning or Land plots granted for Common use residential land plots; using land in Azerbai- use or ownership. National border zones and land designated for defense Different rates jan. purposes etc. depending on location and type Any entity or individual entrepreneur that has obtained an of land plots Investment Promotion Certificate is exempt from land tax

for seven years. ANNEXES & MAP

Residents of industrial and technology parks for land used in the parks.

8. Mining Tax All individuals and legal Commercial minerals (Royalty) entities engaged in extracted from subsoil extraction of com- strata in the territory 3% - 26% mercial minerals from of Azerbaijan (includ- subsoil strata of the ing in the Azerbaijani earth within the terri- sector of the Caspian tory of the Azerbaijan Sea). Republic, (including in the Azerbaijani sector of the Caspian Sea)

www.azpromo.az ANNEX 6. TABLE OF APPLICABLE TAXES

138 TAX PAYERS TAXABLE BASE EXEMPTIONS 9. Simplified Enterprises and indi- Total proceeds System Tax viduals with a yearly realized by a taxpayer turnover not exceeding from the sale of goods 4% for taxpayers a certain limit (cur- or services and from operating in rently 200,000 AZN – non-sales related Baku and around USD 118,000); activity.

ANNEXES & MAP whose taxable turnover 2% for taxpayers exceeds AZN 200,000 operating in in any month within other regions consecutive twelve months are entitled to 6% for trading a simplified tax activities and 8% for catering Persons engaged in activities with trading and catering more than AZN activities; 200,000 turnover Persons engaged in the passengers and cargo 6% for operators transportation on terri- of sports betting tory of the Republic of Azerbaijan 4% for commissioners of sports Persons engaged in the betting construction of buildings are also entitled to register as simplified taxpayers voluntarily;

Operators and commissioners of sports betting etc.

www.azpromo.az ANNEX 6. TABLE OF APPLICABLE TAXES

139 TAX PAYERS TAXABLE BASE EXEMPTIONS 10. Social Azerbaijani and foreign Employer is re- Foreign Employees providing services under PSA regime are insurance fund employees sponsible for Social exempted from Social Protection Fund Contributions contributions Insurance Fund Con- payable by the tribution on behalf employee of employees at the rate of 22% paid by

employer on top of ANNEXES & MAP the gross wages, and 3% Contribution (pension fund) and 0.5% (unemployment contribution) to State Pension fund, with- held from employee’s gross salary

www.azpromo.az INTERNATIONAL EXHIBITIONS AND CONFERENCES IN AZERBAIJAN PROFESSIONAL EVENT ORGANISER 2018 2018 2019 2019 1st AZERBAIJAN INTERNATIONAL GIFTS AND PROMOTIONAL PRODUCTS FAIR 20 - 22 September 2018 | www.giftfair.az 24th AZERBAIJAN INTERNATIONAL 13th CAUCASUS INTERNATIONAL 26th INTERNATIONAL CASPIAN OIL & st CONSTRUCTION EXHIBITION HOSPITALITY EXHIBITION GAS CONFERENCE 1 AZERBAIJAN INTERNATIONAL 30 - 31 May 2019 ADVERTISING AND PRINTING EXHIBITION 23 - 26 October 2018 15 - 17 May 2019 20 - 22 September 2018 | www.adprint.az www.bakubuild.az www.horex.az www.oilgasconference.az 3rd AZERBAIJAN INTERNATIONAL th DEFENCE EXHIBITION 11 INTERNATIONAL EXHIBITION FOR 25th AZERBAIJAN INTERNATIONAL th 25 - 27 September 2018 | www.adex.az HEATING, VENTILATION, FOOD INDUSTRY EXHIBITION 18 CASPIAN INTERNATIONAL th AIR-CONDITIONING, WATER SUPPLY, 15 - 17 May 2019 TRANSPORT, TRANSIT AND LOGISTICS 12 AZERBAIJAN INTERNATIONAL EDUCATION EXHIBITION SANITARY AND SWIMMING POOL www.worldfood.az EXHIBITION 11 - 13 October 2018 | www.eduexpo.az 23 - 26 October 2018 11 - 13 June 2019 12th AZERBAIJAN INTERNATIONAL www.aquatherm.az www.transcaspian.az CAREER EXHIBITION CASPIAN INTERNATIONAL PACKAGING, 11 - 13 October 2018 | www.careerexpo.az 11th CASPIAN INTERNATIONAL PROTECTION, TARE, LABEL AND PRINTING 9th AZERBAIJAN INTERNATIONAL SECURITY AND RESCUE EXHIBITION EXHIBITION 9th CASPIAN INTERNATIONAL ROAD ENVIRONMENTAL EXHIBITION 23 - 26 October 2018 15 - 17 May 2019 INFRASTRUCTURE AND PUBLIC 14 - 16 November 2018 | www.caspianecology.az www.securika.az www.ipack.iteca.az TRANSPORT EXHIBITION 24th AZERBAIJAN INTERNATIONAL CASPIAN INTERNATIONAL FURNITURE, 11 - 13 June 2019 TELECOMMUNICATIONS, INNOVATIONS AND HIGH 26th INTERNATIONAL CASPIAN OIL & www.roadtraffic.az TECHNOLOGIES EXHIBITION AND CONFERENCE INTERIORS AND DESIGN EXHIBITION 4 - 7 December 2018 | www.bakutel.az 23 - 26 October 2018 GAS EXHIBITION www.caspianmebelexpo.az 29 - 31 May 2019 2019 www.caspianoilgas.az th 6 CASPIAN INTERNATIONAL BOAT AND 1st CASPIAN INTERNATIONAL YACHT SHOW REALTY AND INVESTMENT FAIR 2019 th 20 - 22 February 2019 | www.caspianrealty.az 9 CASPIAN INTERNATIONAL POWER 11 - 13 June 2019 www.cibs.az 18th AZERBAIJAN INTERNATIONAL AND ALTERNATIVE ENERGY EXHIBITION 2nd AZERBAIJAN INTERNATIONAL FRANCHISE FORUM 1 March 2019 | www.franchiseexpo.az TRAVEL AND TOURISM FAIR 29 - 31 May 2019 www.caspianpower.az 4 - 6 April 2019 13th AZERBAIJAN INTERNATIONAL www.aitf.az AGRICULTURE EXHIBITION 15 - 17 May 2019 | www.caspianagro.az

ORGANISERS ORGANISER Tel.: +99412 404 1000; Tel.: +99412 447 4774; www.ceo.az Fax: +99412 404 1001 *Dates are subjects to change www.iteca.az #ItecaCaspian Fax: +99412 447 8558 E-mail: [email protected] E-mail: [email protected] #CaspianEventOrganisers INTERNATIONAL EXHIBITIONS AND CONFERENCES IN AZERBAIJAN PROFESSIONAL EVENT ORGANISER 2018 2018 2019 2019 1st AZERBAIJAN INTERNATIONAL GIFTS AND PROMOTIONAL PRODUCTS FAIR 20 - 22 September 2018 | www.giftfair.az 24th AZERBAIJAN INTERNATIONAL 13th CAUCASUS INTERNATIONAL 26th INTERNATIONAL CASPIAN OIL & st CONSTRUCTION EXHIBITION HOSPITALITY EXHIBITION GAS CONFERENCE 1 AZERBAIJAN INTERNATIONAL 30 - 31 May 2019 ADVERTISING AND PRINTING EXHIBITION 23 - 26 October 2018 15 - 17 May 2019 20 - 22 September 2018 | www.adprint.az www.bakubuild.az www.horex.az www.oilgasconference.az 3rd AZERBAIJAN INTERNATIONAL th DEFENCE EXHIBITION 11 INTERNATIONAL EXHIBITION FOR 25th AZERBAIJAN INTERNATIONAL th 25 - 27 September 2018 | www.adex.az HEATING, VENTILATION, FOOD INDUSTRY EXHIBITION 18 CASPIAN INTERNATIONAL th AIR-CONDITIONING, WATER SUPPLY, 15 - 17 May 2019 TRANSPORT, TRANSIT AND LOGISTICS 12 AZERBAIJAN INTERNATIONAL EDUCATION EXHIBITION SANITARY AND SWIMMING POOL www.worldfood.az EXHIBITION 11 - 13 October 2018 | www.eduexpo.az 23 - 26 October 2018 11 - 13 June 2019 12th AZERBAIJAN INTERNATIONAL www.aquatherm.az www.transcaspian.az CAREER EXHIBITION CASPIAN INTERNATIONAL PACKAGING, 11 - 13 October 2018 | www.careerexpo.az 11th CASPIAN INTERNATIONAL PROTECTION, TARE, LABEL AND PRINTING 9th AZERBAIJAN INTERNATIONAL SECURITY AND RESCUE EXHIBITION EXHIBITION 9th CASPIAN INTERNATIONAL ROAD ENVIRONMENTAL EXHIBITION 23 - 26 October 2018 15 - 17 May 2019 INFRASTRUCTURE AND PUBLIC 14 - 16 November 2018 | www.caspianecology.az www.securika.az www.ipack.iteca.az TRANSPORT EXHIBITION 24th AZERBAIJAN INTERNATIONAL CASPIAN INTERNATIONAL FURNITURE, 11 - 13 June 2019 TELECOMMUNICATIONS, INNOVATIONS AND HIGH 26th INTERNATIONAL CASPIAN OIL & www.roadtraffic.az TECHNOLOGIES EXHIBITION AND CONFERENCE INTERIORS AND DESIGN EXHIBITION 4 - 7 December 2018 | www.bakutel.az 23 - 26 October 2018 GAS EXHIBITION www.caspianmebelexpo.az 29 - 31 May 2019 2019 www.caspianoilgas.az th 6 CASPIAN INTERNATIONAL BOAT AND 1st CASPIAN INTERNATIONAL YACHT SHOW REALTY AND INVESTMENT FAIR 2019 th 20 - 22 February 2019 | www.caspianrealty.az 9 CASPIAN INTERNATIONAL POWER 11 - 13 June 2019 www.cibs.az 18th AZERBAIJAN INTERNATIONAL AND ALTERNATIVE ENERGY EXHIBITION 2nd AZERBAIJAN INTERNATIONAL FRANCHISE FORUM 1 March 2019 | www.franchiseexpo.az TRAVEL AND TOURISM FAIR 29 - 31 May 2019 www.caspianpower.az 4 - 6 April 2019 13th AZERBAIJAN INTERNATIONAL www.aitf.az AGRICULTURE EXHIBITION 15 - 17 May 2019 | www.caspianagro.az

DOING BUSINESS IN AZERBAIJAN 2018

v o asad f i s a v by gned i des TION A OUND N F TIO O M O T PR : ESTMEN V 7 IN ed by 6

z T & a R . epar 3 88 v z n pr y.go tio m mo.a o ono zpr AIJAN EXPO publica +994 12 598 01 52 +994 12 492 58 95 w.a w.ec x: x: w w a a This AZERB AZPROMO established by: OF AZERBAIJAN MINISTRY OF ECONOMY OF THE REPUBLIC House”, Baku, Azerbaijan, AZ1000 84 U.Hajibayov str., “The Government phone: +994 12 49 ave., Baku, Azerbaijan, AZ1000 Baku Business Center, 32 Neftchiler 01 48 phone: +994 12 598 01 47, +994 12 598 f e-mail: o[email protected] w f e-mail: o[email protected] w www.export.az