Azerbaijan, formally the Republic of Azerbaijan, is a transcontinental republic bordering Eastern Europe and Western Asia. It is part of the South Caucasus area and is limited to the east by the Caspian Sea, to the north by Russia (Republic of Dagestan), to the northwest by Georgia, to the west by Armenia and Turkey, and to the south by Iran. Baku is the country's capital and biggest city.
In 1918, the Azerbaijan Democratic Republic declared independence from the Transcaucasian Democratic Federative Republic, becoming the first secular democratic Muslim-majority state in the world. The nation was absorbed into the Soviet Union as the Azerbaijan SSR in 1920. The present Republic of Azerbaijan declared independence on August 30, 1991, just before the disintegration of the Soviet Union later that year. The ethnic Armenian majority in the Nagorno-Karabakh area created the self-proclaimed Republic of Artsakh in September 1991. The region and seven surrounding districts are internationally recognized as part of Azerbaijan, pending a solution to the status of Nagorno-Karabakh through negotiations facilitated by the OSCE. The region and seven surrounding districts became de facto independent with the end of the First Nagorno-Karabakh War in 1994. Following the 2020 Nagorno-Karabakh conflict, Azerbaijan regained control of the seven districts and sections of Nagorno-Karabakh.
Azerbaijan is a semi-presidential unitary republic. It is one of six sovereign Turkic nations and a member of the Organization of Turkic States as well as the TÜRKSOY community. Azerbaijan has diplomatic ties with 182 countries and is a member of 38 international organizations, including the UN, the Council of Europe, the Non-Aligned Movement, the OSCE, and the NATO Partnership for Peace program. It is a founding member of the GUAM, the CIS, and the OPCW. Azerbaijan is also a WTO observer state.
The great majority of the country's population (97 percent) is officially Muslim, although the constitution does not proclaim an official religion, and the country's main political groups are all secularists. Azerbaijan is a developing nation with a Human Development Index ranking of 88th. It has a high level of economic development, literacy, and unemployment. However, the governing New Azerbaijan Party, which has been in office since 1993, has been accused of authoritarian leadership and a worsening in the country's human rights record, including increased limitations on civil freedoms, notably press freedom and political persecution.
Employees above the age of 18 in Azerbaijan are entitled to a minimum of 21 days of paid leave. In addition, an employee is entitled to extra leave based on the number of years of employment:
Employees who have been employed for five to ten years are entitled to two more days of leave.
Employees who have been employed for ten to fifteen years are entitled to four more days of leave.
Employees who have been employed for more than fifteen are entitled to six more days of leave.
Annual leave can be divided into several leave cycles, but at least one of them must be two weeks long.
In Azerbaijan, there are fourteen public holidays.
Employers are responsible for paying sick leave payments for the first 14 days of absence. Sick leave is compensated by the State Social Protection Fund after 14 days. Employees must be able to provide a medical card to claim this privilege, which can be extended in 3-6 day intervals.
Women are entitled to a total of 126 days of maternity leave, which can begin as early as 70 days before the due date. Maternity leave will be extended for an extra 14 days if the mother had a traumatic delivery or had more than one child. The State Social Protection Fund pays for maternity leave.
Compensation is equal to 100 percent of the previous year's gross monthly wage.
Fathers are enttitled to fourteen days of unpaid paternity leave following the birth of their child.
In Azerbaijan, there are different rules for different parental rights:
A mother who is pregnant or who has a child under the age of three cannot be terminated.
A pregnant woman or a mother with an infant under the age of 18 months is entitled to a workweek reduction. The highest number of hours that can be worked in a day is 36.
Night shifts are not permitted for pregnant women or mothers of children under the age of three.
A woman who has two children under the age of 16 is entitled to two additional pay days, and a woman who has three or more children under the age of 16 is entitled to five additional paid days.
A single mother or parent with children under the age of 16 has the right to 14 days of unpaid leave.
In general, termination of an employment contract is strictly regulated in Azerbaijan and must be handled with extreme caution. Labor rules governing termination are stacked in favor of the employee, and any error by the employer can have severe consequences.
Severance compensation of three months is needed for employees who are laid off due to redundancy.
When terminating an employment agreement due to downsizing, two months' notice is necessary. During this two-month period, the employee is authorized to take one day of paid time off per week to seek new employment. Employees with less than a year of service will be given a two-week notice period. A four-week notice period is necessary for employees with one to five years of service. For employees who have worked for the company for five to ten years, a six-week notice period will be provided. A nine-week notice period is granted to employees with more than ten years of service. If an employee initiates the employment agreement's termination, the employee must offer one month's written notice.
Probation can last up to three months. During this time period, either the employee or the employer may terminate the employment agreement with three days' notice.
Severance pay is determined by the length of the employee's employment. If the employee has worked for the company for less than a year, the severance pay is equal to one month's salary. If the employee has worked for the company for between one and five years, the severance pay is 1.4 times the monthly salary. If the employee has worked for the company for five to ten years, the severance pay is equal to 1.7 times the monthly salary. If the employee has worked for the company for more than ten years, the severance pay is equal to two times the monthly salary. In addition to severance pay, the employer must pay an additional two months' salary if the employee's employment terms change, the employee is called to military service, or the employee is unable to perform their duties due to a permanent disability. If an employee's employment is terminated due to death, their family members receive a three-month allowance.
The usual workweek is 40 hours, spread out over five days, with an eight-hour day. It is possible to create a workweek with six working days in specific conditions. A six-day workweek can be structured into either a 40-hour workweek with no more than seven working hours per day, or a 36-hour workweek with no more than six working hours per day.
Employees under the age of 16 work for a maximum of 24 hours per week, while employees aged 16 to 18 work for a maximum of 36 hours per week. Workers with specific disabilities, pregnant women, mothers with children under the age of 18 months, and single parents with children under the age of three are also all subject to the 36-hour limit. Pregnant women, women with children under the age of three, and adults under the age of 18 should avoid working between the hours of 10 p.m. and 6 a.m.
Only in exceptional cases is overtime permitted, and it is usually limited to two hours for employees in dangerous jobs and a maximum of four hours over two working days for all others. Overtime and holiday work are paid at 200 percent of the regular wage, whereas labor scheduled at night may be paid more. Overtime hours cannot be replaced with additional time off.
There is a minimum wage in Azerbaijan. Employers may pay performance bonuses at their discretion.
At the moment, the monthly minimum wage is 250 AZN (147.06 USD).
Azerbaijan has a functioning national health insurance system. Employers will sometimes offer private health insurance. Azerbaijan, on the other hand, is presently revamping its obligatory health insurance system.
Employers in Azerbaijan often provide private medical insurance to complement the little free care available.
Legal entities in Azerbaijan are imposed a corporate tax rate of 20 percent.
In Azerbaijan, income taxes are levied at a progressive rate. For residents, the taxable basis is income generated in or outside of Azerbaijan. Non-residents are taxed on income that is both related to and unrelated to work, as well as any other types of income that are not tax-exempt or resulted through asset revaluation. The tax rate on income of natural people earning less than 2500 AZN is 14%; if income exceeds 2500 AZN, a 25% tax is imposed on the part that exceeds 2500 AZN.
The rate of Value Added Tax (VAT) is 18%. The basis for taxes consists of all works, commodities, services supplied, and taxable imports. In addition, there is a zero (0) percent VAT in the nation for financial assistance, diplomacy, transport, and precious items.
The Azerbaijan Visa Policy outlines the requirements for visiting this country based on the traveler's country of origin.
Azerbaijan provides various types of visas. The available visa options are determined by the traveler's nationality, the length of stay in the country, and the purpose of the trip.
This country uses the ASAN Visa system, which allows it to offer a variety of travel permits electronically. This is fantastic news for many nationalities, as approximately 100 of them can easily enter the country by completing an online application form. This system was put in place to improve the visa application process as well as to speed up border checks.
To enter Azerbaijan, citizens of over 140 countries must obtain a consular visa (according to the Azerbaijan Visa Policy). This visa is only available at diplomatic missions (embassies and consulates).
In addition, for a limited time, about ten countries may enter Azerbaijan without a visa. If these visa-exempt citizens wish to stay in the country for an extended period of time, they must obtain the necessary visa.
Another point worth mentioning is that Azerbaijan has banned two countries due to a territorial dispute. Furthermore, any foreign traveler found to have entered the disputed nations will be barred from entering for the rest of their lives.
Written employment contracts are legally required in Azerbaijan. Contracts can be for a fixed term of up to five years or an indefinite term. Contracts must contain the following information:
The full name and address of the employee and employer
The employee’s position and place of work
The date from which the contract becomes valid and the employee’s first day of work
How long the contract is valid for
Employees’ duties
General labour terms and conditions: salary, working hours and break times, annual leave, labour protection and social insurance
Details of any other insurance provided
Obligations the employer and employee must adhere to
Any other agreed terms and conditions
A fixed-term employment contract may last up to five years, including renewals. The contract must include the set term. Probation terms of up to three months are allowed.
Azerbaijani Manat (AZN)
Before addressing any other duties, companies who are developing on their own should understand how to establish up an Azerbaijan subsidiary. We propose initially meeting with other corporate leaders to discuss a few incorporation aspects, such as where you should form a subsidiary, what kind of subsidiary is ideal for your business objectives, and other similar considerations.
Various areas or localities in Azerbaijan may have different Azerbaijan subsidiary laws that make incorporation easier or more complex. If you are unfamiliar with the area around your preferred office space, you should speak with a lawyer or consultant who can assist you in selecting a location that is welcoming to foreign investment.
Another critical aspect of the incorporation procedure is your subsidiary structure. Companies in Azerbaijan may form themselves as a limited liability company (LLC), a branch, a representative office, or a joint-stock corporation. Each entity grants firms certain freedoms inside Azerbaijan, therefore you should choose the form that best suits your company objectives. Companies often opt to establish as an LLC since the structure is tax-efficient and enables them to provide a broad variety of services in Azerbaijan.
The following actions are required to establish your Azerbaijan subsidiary as an LLC:
1. Opening a bank account in the nation
2. Making a minimum share capital deposit
3. Creating the articles of incorporation
4. Using a power of attorney to sign the articles of incorporation
5. Drafting any other relevant paperwork, including specific forms issued by Azerbaijan's Company Registration Office
6. Setting up public notary processes
7. Getting your office space registered
8. Hiring an accountant to assist with the registration of a new company
To prevent penalties or delays, your firm must adhere to Azerbaijan's subsidiary legislation. These rules, however, are not the same for every business. LLCs, for example, need one or more founding persons or legal entities who are restricted in responsibility by the amount of money invested. Although it is not possible to freely transfer participation interests, partners may buy the interest of departing participants.
