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Doing Business and İnvesting in Azerbaijan 14 14 14 14 14 14 14 16 16 16 16 17 17 17 17 17 17 17 17 18 18 18 18 19 20 21 21 21 Doing Business and İnvesting in Azerbaijan 14 14 14 14 14 14 14 16 16 16 16 17 17 17 17 17 17 17 17 18 18 18 18 19 20 21 21 21 12 Why invest in Azerbaijan? Azerbaijan has substantial Azerbaijan boasts a highly educated hydrocarbon reserves and skillful workforce Azerbaijan has significant agricultural potential due to its fertile climate, which spans nine of the eleven existing climatic zones Azerbaijan lies at the heart of the international transport corridor between Europe and Asia Doing Business and Azerbaijan enjoys favored trade status under an EU Partnership and Investing in Azerbaijan Cooperation Agreement Our Doing Business Guide is intended to provide timely information about Azerbaijan’s business environment. For more in-depth information on doing business in Azerbaijan, please contact us directly at PwC Azerbaijan in Baku. PwC Azerbaijan The Landmark Office Plaza III, 12th Floor 90A Nizami Street, AZ1010 Baku, Azerbaijan www.pwc.com/az Email: pwc.az.com Telephone: +994 12 497 2515 Facebook: www.facebook.com/PwCAzerbaijan It is my great pleasure to present the 2014 PwC Guide on Doing Business and Investing in Azerbaijan, which describes the country’s geography, history, business and investment climate. I believe this guide will be helpful for everyone who is interested in doing business and investing in Azerbaijan. In this changing environment, our Guide aims to provide comprehensive and up-to-date information on conducting business in the country. This includes the commentary on the latest legal developments, audit and accounting changes, major tax and investment incentives, and general economic and business conditions. This publication is sure to be an invaluable tool for both domestic and foreign investors, regardless of the type, size and character of the investment. We hope this publication will make interesting reading for you and we welcome you to explore Azerbaijan business opportunities together with PwC Azerbaijan! From our office in Baku, PwC Azerbaijan has been serving clients in Azerbaijan since 1995. We currently have a staff of over 100 dedicated professionals working with our clients across three main lines of service: Assurance, Tax and Legal, and Advisory. PwC Azerbaijan in Baku offers the full spectrum of services which have been developed to meet the ever-growing expectations of our clients. This full service line has allowed us to take on and successfully complete some of the largest and most technically challenging projects in Azerbaijan to date. Good luck! Movlan Pashayev Managing Partner Introduction regular updates of this guide as time History Modern-day Azerbaijan is a paradox. unveils new changes in legal, tax and The roots of Azerbaijan stretch back to Although it has relatively sophisticated business issues in Azerbaijan. Please approximately the fourth century BC communication and transportation contact us if you would like to obtain and Caucasian Albania, intermittently infrastructure, as well as industrial, these updates. governed by the ancient Median and agricultural, educational, housing and Persian empires. Inhabitants of ancient healthcare sectors, the oil and gas Geography and climate Albania, also known as Arran in industry still accounts for the bulk of its Azerbaijan is located on the shore of Azerbaijani, adopted Zoroastrianism exports. Azerbaijan is continuing to the Caspian Sea in Southwestern Asia, before switching to Christianity prior to develop its market infrastructure, between Iran and Russia, with a small incursions by Muslim Arabs and, more including legal, tax and banking European portion north of the Caucasus importantly, Muslim Turks. As an systems and links to the international range. The Republic of Azerbaijan integral part of the Arabian Caliphate, business community. This paradox (including its non- contiguous exclave of the Seljuq Empire and the Persian presents a unique challenge to businesses Nakhchivan) shares common borders Safavid Empire, the population of entering Azerbaijan that wish to assess with the following countries: Armenia Azerbaijan underwent a mass the real business risks and make reality- – 787km (566km with Azerbaijan conversion to Islam. Turkish conquest based decisions rather than relying on proper and 221km with Nakhchivan); led to the Turkification of the nation and perceptions. Iran – 611km (432km with Azerbaijan the creation of the Azerbaijani language, proper and 179km with Nakhchivan); a close cousin of Turkish. Despite the after-effects of the global Georgia – 322km; Russia – 284km; and financial crisis, there now appears to be Turkey –9km (with Nakhchivan). Later, Azerbaijan was integrated into the a resurgence of interest in Azerbaijan Russian Empire during 1813-1918, until among foreign investors. Given the Baku is the capital of Azerbaijan. It is the fall of Romanov Tsarist rule. region’s significant potential, many located on the Absheron peninsula at Azerbaijan enjoyed a brief spell of around the world seem to be focusing the easternmost point of Azerbaijan, on independence until 1920, when it was more closely on the Caspian region as a the shore of the Caspian Sea. Azerbaijan overwhelmed by the Soviet forces and whole. falls within the Central European incorporated into the USSR. Time zone (GMT+4). Investors, whether they are Azerbaijan proclaimed its independence multinational oil companies or small The country covers an area of 86,600 sq on 18 October 1991. On 12 November trading companies, continue to weigh km and falls within nine climatic zones. 1995, the Constitution of independent the risks associated with investments Azerbaijan was adopted and received in Azerbaijan and are mindful of the The large flat Kura-Araz Lowland forms nationwide support in a referendum. impact that fluctuating commodity the approximate center of the country, prices, particularly for gas, can have with the Caucasus Mountains to the While ethnic Azerbaijanis are in the on this emerging economy that is north and Karabakh Upland to the west. majority, the country is home to many heavily dependent on natural resources. other nationalities. All minorities in The most populous cities in Azerbaijan Azerbaijan have the constitutional right This Doing Business guide outlines the are: to education, media and cultural various factors that foreign companies activities in their own language. should consider when looking at Minorities include Russians, Talysh, possible investments in Azerbaijan. Lezgins, Kurds, Mountain Jews, Rather than providing detailed coverage Georgians and Udines. of any topic, the details of which are constantly in flux, this guide strives to cover a spectrum of key issues that investors would include in their ”mission checklist” when going to Azerbaijan. We hope you will enjoy the guide and 1 Source: Azerbaijan State Statistical Committee, fi n d t h e c o n t e n t i n f o r m a t i v e . W e i s s u e 01.01.2012 People The President is also the Supreme The Constitutional Court also considers According to the Government of Commander-in-Chief of Azerbaijan’s international treaties to which Azerbajan Azerbaijan statistics, the population of armed forces. is a signatory as a source of law. Azerbaijan was estimated at 9,356 Thus, international agreements take million as of 01.01.2013 The National Assembly of precedence over national law in case Azerbaijan (Milli Majlis) they contradict. Ethnic compostion The National Assembly (Milli Majlis) is the legislative branch of the government International time in Azerbaijan. The unicameral assembly Azerbaijan operates within a single time currently consists of 125 deputies zone. It is four hours (+4) ahead of elected for five-year term from GMT. International time in Azerbaijan is single seat constituencies. also subject to Daylight Savings Time alterations during the summer. The most recent legislative election was held in November 2010. The New Business hours Azerbaijan Party (YAP) currently holds Business offices are generally open from the majority of seats in Milli Majlis. 9:00 am to 6:00 pm, Monday through Friday. The Azerbaijani Labor Code Among the responsibilities of the Milli stipulates an eight-hour working day. Languages Majlis are composition of the Central Election Committee, the Accounts Chamber and the Auditing Chamber. Economy Legal system Major industrial products The legal system of Azerbaijan is broadly • Oil and natural gas petroleum based on the civil law. products Religion The highest judicial authority in • Oilfield equipment Azerbaijan is the Constitutional Court. • Steel The Constitutional Court resolves • Iron ore disputes between the legislative, executive and judicial branches of • Chemicals/petrochemicals government and gives formal • Cement interpretations of the Constitution and other laws. • Textiles • Metal Government structure Unlike the common law-based judicial Azerbaijan is a presidential republic, systems of the United States and Great • Rubbor and plastic products with the President as the head of state Britain, Azerbaijan’s civil law-based and the Prime Minister as the head of system does not extensively or Major agricultural products government. Executive power rests with exclusively rely on case law or judicial • Cotton the President, the Prime Minister and precedent. The civil law of Azerbaijan the Cabinet of Ministers. Legislative considers the 1995 Constitution, acts • Grain power is vested in the parliament, the adopted via referendum, and legislation • Rice National Assembly (Milli Majlis) of passed by the Milli Majlis as the primary
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