Doing Business in 2017 Azerbaijan Baker McKenzie Doing Business in Azerbaijan 2017 Doing Business in Azerbaijan 2017 Baker & McKenzie - CIS, Limited Baku Office The Landmark Building III 90A Nizami Street 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 .... 5 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 .................................... 11 2.5 Foreign Investment under Privatization Programs ... 13 3. Establishing a Legal Presence ............................................... 16 3.1 Introduction .............................................................. 16 3.2 Representative Offices and Branches ....................... 16 3.3 Forming a Commercial Legal Entity ........................ 19 3.4 Non-Commercial Organizations ............................... 29 3.5 Public Legal Entities ................................................ 31 3.6 Subsidiaries and Dependent Companies .................. 32 3.7 Liquidation of a Legal Entity ................................... 35 4. Securities Market ................................................................... 38 4.1 Introduction .............................................................. 38 4.2 Issuance and Placement of Investment Securities .... 39 4.3 Regulation of Securities Market ............................... 42 5. Licenses ................................................................................. 46 5.1 Introduction .............................................................. 46 Baker McKenzie | i 5.2 Issuance of Licenses ................................................. 47 5.3 Application for a License ......................................... 50 5.4 Suspension and Termination of a License ................ 50 5.5 Consequences of Operating without an Appropriate License ..................................................................... 51 6. Taxation ................................................................................. 52 6.1 Taxation Environment .............................................. 52 6.2 Administration of Taxes ........................................... 55 6.3 Types of Tax ............................................................. 55 6.4 Double Taxation Treaties ......................................... 61 6.5 Transfer Pricing ........................................................ 64 6.6 Accounting ............................................................... 65 7. Currency Regulation .............................................................. 66 7.1 Introduction .............................................................. 66 7.2 Foreign Exchange ..................................................... 66 7.3 Import/Export of Foreign Currency in Cash by Individuals ................................................................ 69 8. Employment .......................................................................... 70 8.1 Introduction .............................................................. 70 8.2 Direct Employment .................................................. 70 8.3 Compensation in Foreign Currency .......................... 70 8.4 Work Books .............................................................. 71 8.5 Probationary Period .................................................. 71 8.6 Minimum Wage ........................................................ 71 8.7 Working Week ......................................................... 71 8.8 Holidays ................................................................... 71 8.9 Sick Leave ................................................................ 72 8.10 Maternity Leave ....................................................... 72 8.11 Dismissal .................................................................. 72 8.12 Cost of Employment ................................................. 73 ii | Baker McKenzie Doing Business in Azerbaijan 8.13 Income Tax ............................................................... 73 8.14 Foreign Workers in Azerbaijan ................................ 73 9. Property Rights ...................................................................... 75 9.1 Introduction .............................................................. 75 9.2 Limitations on Ownership ........................................ 75 9.3 Use of Land .............................................................. 75 9.4 Land Transfers .......................................................... 77 9.5 Registration of Immovable Property ........................ 78 9.6 Mortgages ................................................................. 79 10. Language Policy .................................................................... 80 11. Civil Legislation .................................................................... 82 12. Banking ................................................................................. 84 12.1 Description of the Banking System .......................... 84 12.2 Licensing .................................................................. 86 12.3 Standards for Domestic Banks ................................. 86 12.4 Banks with Foreign Participation ............................. 86 12.5 Liquidation and Reorganization of Banks ................ 87 12.6 Non-Banking Activity of Banks ............................... 87 13. Intellectual Property .............................................................. 89 13.1 Introduction .............................................................. 89 13.2 State Patent Issuing Agencies ................................... 89 13.3 International Conventions ........................................ 90 13.4 Registration .............................................................. 90 13.5 Patent Protection, Utility Models, and Industrial Design ....................................................................... 90 13.6 Trademarks and Geographic Designations ............... 91 13.7 Domain Names ......................................................... 91 13.8 Copyright .................................................................. 92 13.9 Computer Programs and Databases .......................... 92 13.10 Anti-Piracy ............................................................... 92 Baker McKenzie | iii 14. Product Liability .................................................................... 94 14.1 Background .............................................................. 94 14.2 Product Quality......................................................... 95 14.3 Protection from Unfair Competition ........................ 95 15. Specific Industries ................................................................. 97 15.1 Oil and Gas ............................................................... 97 15.2 Power ...................................................................... 100 15.3 Telecommunications .............................................. 107 15.4 Construction ........................................................... 111 16. The Judicial System ............................................................. 115 16.1 Courts ..................................................................... 116 16.2 Judges ..................................................................... 117 16.3 Enforcement of foreign court judgments ................ 117 16.4 International arbitration .......................................... 118 17. Climate Change ................................................................... 119 17.1