Doing Business in 2015

Doing Business in Azerbaijan

2015

Baker & McKenzie - CIS, Limited Office The Landmark Building III 90A Baku AZ1010 Azerbaijan Telephone: + 994 12 497 18 01 Facsimile: + 994 12 497 18 05 [email protected] www.bakermckenzie.com

The information included in this brochure is for informational purposes only, and may not reflect the most current legal developments, judgments, or settlements. This information is not offered as legal or any other advice on any particular matter. The Firm and the contributing authors expressly disclaim all liability to any person in respect of anything, and in respect of the consequences of anything, done or omitted to be done wholly or partly in reliance upon the whole or any part of the contents of Baker & McKenzie’s Doing in Business in Azerbaijan brochure. No client or other reader should act or refrain from acting on the basis of any matter contained in this brochure without seeking the appropriate legal or other professional advice on the particular facts and circumstances.

Baker & McKenzie – CIS, Limited is a member of Baker & McKenzie International, a Swiss Verein with member law firms around the world. In accordance with the common terminology used in professional service organizations, reference to a “partner” means a person who is a partner, or equivalent, in such a law firm. Similarly, reference to an “office” means an office of any such law firm. Doing Business in Azerbaijan

Table of Contents 1. Republic of Azerbaijan – An Overview ...... 3 1.1 Location, Area, and Topography ...... 3 1.2 Demographics ...... 3 1.3 Government Organization ...... 3 1.4 Results of Elections and Political Considerations ..... 4 1.5 Foreign Relations and International Organizations ... 4 1.6 Economy ...... 5 2. Foreign Investment in Azerbaijan ...... 8 2.1 Introduction ...... 8 2.2 Foreign Investment ...... 8 2.3 Guarantees Available to Foreign Investors ...... 9 2.4 Bilateral Investment Treaties ...... 10 2.5 Foreign Investment under Privatization Programs .. 13 3. Establishing a Legal Presence ...... 15 3.1 Introduction ...... 15 3.2 Representative Offices and Branches ...... 15 3.3 Forming a Commercial Legal Entity ...... 18 3.4 Non-Commercial Organizations ...... 28 3.5 Subsidiaries and Dependent Companies ...... 31 3.6 Liquidation of a Legal Entity ...... 32 4. Issuance and Registration of Securities ...... 34 4.1 Introduction ...... 34 4.2 Regulation of the Securities Market ...... 36 5. Licenses ...... 38 5.1 Introduction ...... 38 5.2 Issuance of Licenses ...... 38 5.3 Application for a License ...... 44 5.4 Suspension and Termination of a License ...... 44 5.5 Consequences of Operating without an Appropriate License ...... 45

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6. Taxation ...... 46 6.1 Introduction ...... 46 6.2 Administration of Taxes ...... 48 6.3 Types of Tax ...... 48 6.4 Double Taxation Treaties ...... 53 6.5 Transfer Pricing ...... 55 6.6 Accounting ...... 56 7. Currency Regulation ...... 57 7.1 Introduction ...... 57 7.2 Foreign Exchange ...... 57 7.3 Import/Export of Foreign Currency in Cash by Individuals ...... 60 8. Employment ...... 61 8.1 Introduction ...... 61 8.2 Direct Employment ...... 61 8.3 Compensation in Foreign Currency...... 61 8.4 Work Books ...... 62 8.5 Probationary Period ...... 62 8.6 Minimum Wage ...... 62 8.7 Work Week...... 62 8.8 Holidays ...... 62 8.9 Sick Leave ...... 63 8.10 Maternity Leave ...... 63 8.11 Dismissal ...... 63 8.12 Cost of Employment ...... 64 8.13 Income Tax ...... 64 8.14 Foreign Workers in Azerbaijan ...... 64 9. Property Rights ...... 66 9.1 Introduction ...... 66 9.2 Limitations on Ownership ...... 66 9.3 Use of Land ...... 66 9.4 Land Transfers ...... 68 9.5 Registration of Immovable Property ...... 69

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9.6 Mortgages ...... 70 10. Language Policy ..