Snapshot of Azerbaijan
THE BUSINESS ENVIRONMENT
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ECONOMIC GROWS
GDP - 2012
NON-OIL GDP - 2012
Total: 69.2 bln USD
Total: 36.6 bln USD
Per capita: 7490 USD
Share in total GDP: 52.9%
Growth rate: 2.2%
Growth rate: 9.7%
Azerbaijan had the highest GDP real growth rate (World
Bank) in 2006 and 2007 with 34.5% and 35.0% respectively.
Azerbaijan was 2nd fastest growing economy among 179
countries for GDP per capita growth in 2001-2010
4
GDP SHARE IN THE SOUTH CAUCASUS
(%)
5
HOW AZERBAIJAN RANKS ON
DOING BUSINESS TOPICS
6
WELCOMING POLICY
• The Law on Protection of Foreign
Investments; (January 15, 1992/The Foreign
Investment Law)
• The Law on Investment Activity;
(January 13, 1995/The Investment Activity Law)
• The Privatization Law and the Second
Privatization Program
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INVESTMENTS: 2012
Total: 22.1 bln USD
Domestic: 13.3 bln
USD
Foreign: 8.8 bln USD
8
INVESTMENTS: 1995-2012
Domestic 71.2
bln USD
Foreign 73.2
bln USD
Total 144.4
bln USD
Non-oil sector
60%
Oil sector 40%
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PROTECTION OF FOREIGN
INVESTMENTS
• Guarantee against
adverse changes in
legislation;
• Guarantees against
nationalization and
requisition;
• Guarantee of
compensation of
damages;
• Guarantee of
repatriation of profits.
10
WIDE CHOISE OF
INVESTMENT FORMS
• Participation in enterprises and organizations
established with legal entities and citizens of the
Republic of Azerbaijan on a shared basis;
• Establishment of wholly-owned enterprises by
foreign investors;
• Purchase of enterprises, property, buildings,
structures, shares in enterprises, other shares, bonds,
securities, and certain other property, which may be
owned by foreign investors under the laws of the
Republic of Azerbaijan;
11
WIDE CHOISE OF
INVESTMENT FORMS
• Acquisition of rights to use land and other
natural resources, and also other property
rights; and
• Conclusion of agreements with legal entities
and citizens of the Republic of Azerbaijan
providing for other forms of foreign
investment.
12
INTERNATIONAL INSTRUMENTS FOR
PROTECTION OF INVESTMENTS
• UN Convention on Recognition and
Enforcement of Foreign Arbitral Awards
(1958)
• International Center for Settlement of
Investment Disputes - ICSID (Member of
World Bank Group).
13
LEGISLATIVE REFORMS FOR EASING
DOING BUSINESS IN AZERBAIJAN
• New Migration Code, effective since 1 August 2013
• New Law on Customs Tariffs effective since 2 October 2013
• City Planning and Construction Code, effective since 1
January 2013
• Law on Regulation of Audits of Enterprises and Protection of
Entrepreneurs' Interests, will come into effect on 1 March
2014.
• Exemplary regulation on Industrial Park, 24 April 2013
– Sumgait Chemical Industrial Park, 21 December 2011
– High Technologies Park (in Sumgait), 05 November 2012
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MIGRATION CODE
Easing to get Visa
• Extention of Visa period of foreigners
visiting Azerbaijan for business up to
sixty days
• Elimination of finger prints for applying visa
• Obtaining Electronic visa for tourists via Tourism
Companies
• Issuing Business and Employment visa based on
invitation of Representative Office and Branch of a
foreign company
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Migration Code
Exclusions for requirement of Work Permit
Obtaining a Permanent Residence
Having business in Azerbaijan
Seconded in Azerbaijan up to 90 days
during a year
Heads and deputies of Representative
Office and Branch of Foreign Companies
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LAW ON CUSTOMS TARIFFS
A tariff concession can be applied by
government for the import of raw materials
for production and machines providing modern
technology, if production of goods cannot be
supplied by local raw materials.
17
LAW ON REGULATION OF
AUDITS OF ENTERPRISES
The Law sets the goals and principles of audits
of enterprises in Azerbaijan, the rules for
conducting audits, the rights and obligations of
auditing authorities and their officials, and
requirements for the protection of entrepreneurs'
rights and interests.
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EXEMPLARY REGULATION
ON INDUSTRIAL PARKS
•
•
•
•
•
Stimulating measures on taxes and customs
Providing free infrastructure
Preferential credits
Simplifying administrative procedures
Low prices on land lease, gas, electricity, water
etc.
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ESTABLISHING LEGAL PRESENCE
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TYPES OF COMMERCIAL LEGAL
ENTITIES
•Open or Closed Joint Stock Company;
(OJSC/CJSC)
•Limited or Additional Liability Company;
(LLC/ALC)
•General or Limited Partnership
(GP/LP)
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JOINT STOCK COMPANY (JSC)
A company, where the charter capital is divided
into a certain number of shares.
OPEN JSC
CLOSED JSC
SHARES MAY BE DISTRIBUTED AMONG
any persons without any
restrictions
certain group of shareholders
and those shareholders have
pre-emptive rights to transfer
shares
MINIMUM LEVEL OF CHARTER CAPITAL
4000 AZN
2000 AZN
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LIMITED AND ADDITIONAL
LIABILITY COMPANY
LLC
ALC
May be founded by one or more individuals and/or legal
entities.
MINIMUM LEVEL OF CHARTER CAPITAL
In practice - 10 AZN.
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GENERAL AND LIMITED PARTNERSHIP
GP
LP
FOUNDERS
At least 2 partners
(individuals and/or legal
entities).
At least one general
partner and one limited
partner (individuals and/or
legal entities).
MINIMUM LEVEL OF CHARTER CAPITAL
No minimum amount
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BRANCHES AND
REPRESENTATIVE OFFICES
According to the legislation of Azerbaijan, neither representative
offices, nor branches of the foreign legal entities are considered
as legal entities. Both the representative office and the branch
are subdivisions of a legal entity located somewhere other than
the legal entity’s location.
The difference is that representative office only represents the
interests of the legal entity and protects such interests, while a
branch performs legal entity`s all functions or a part thereof,
including representation. It means that the scope of a branch`s
activities is wider than that of a representative office, because,
as opposed to a representative office, a branch may engage in
commercial or business activity.
The documents to be submitted to the Ministry of Taxes for
registration of a representative offices and branches are the
same, as is the amount of state duty which is 220 AZN.
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SUBSIDIARY
A subsidiary is an Azerbaijani legal entity with
foreign ownership, which can be registered as a
limited liability company or joint-stock
company. The parent Company contributes
property to its subsidiary, but is not liable for
obligations. In spite of the fact that a subsidiary
may be owned by foreign nationals, it is
considered as an Azerbaijani legal entity for tax,
currency accounting, reporting and other
requirements.
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TAXATION
All foreign legal entities doing business in Azerbaijan
through a “permanent establishment” must register with
the tax authorities regardless of whether its activities are
subject to profit tax payments.
Registration of a Representative Office or a Branch with
tax authorities should take place within one month from
start date of operations. Termination of a Representative
Office’s or a Branch’s activities should be reported to
the authorities one month prior the termination of
operations.
27
SIMPLIFIED TAX
• Individuals and legal entities involved in
entrepreneurial activity and are not registered VAT
payers have the right to register as taxpayers under a
simplified tax regime.
• The simplified tax is calculated from the revenue
obtained from the provision of goods, fulfilment of
works, rendering of services and non-sale profits at
the following rates:
•For Baku — 4 percent;
•For other regions — 2 percent.
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VAT
• Any legal entity or individual carrying out
entrepreneurial activities, whose taxable
turnover exceeds AZN 120,000 within any
month (months) of previous 12 month period,
is required to register for VAT purposes.
• The current rate of VAT is 18%.
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PERSONAL INCOME TAX
Employment income tax (monthly)
Up to 2500 AZN
14%
More than 2500 AZN
350 AZN plus 25 % of the portion more than
2500 AZN
Non Employment income tax (annual)
Up to 30.000 AZN
14%
More than 30.000 AZN
4200 AZN plus 25 % of the portion more
than 30.000 AZN
30
CORPORATE PROFIT TAX
• Resident Legal Entities and a non-resident
enterprise operating in Azerbaijan through its
permanent establishment are taxed on profit,
which is determined as gross income less
allowable deductions at a flat rate of 20%.
• The gross income of a non-resident enterprise
not connected with the permanent
establishment is taxed at the source of
payment without expenses being deducted.
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•
•
•
•
•
•
•
•
INCOME FROM
AZERBAIJANI SOURCES TAX RATE
Dividends 10%
Interest 10%
Royalties 14%
Income received from performing works and
rendering services 10%
International communication and transportation
services 6%
Interest on financial leasing 10%
Risk insurance and re-insurance fees 4%
Other items of income from Azerbaijani sources
10%
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BHM
BAKU LAW CENTRE
WHO WE ARE
BHM Baku Law Centre was founded in
2001 and since then has established itself
as one of the most reputable and
respected law firms in the Republic of
Azerbaijan. In over 12 years of
successful legal practice, the firm has
managed to build a large client base from
all over Azerbaijan as well as
internationally.
We offer local expertise with strong
international connections.
The company has rapidly expanded in
recent years and has a subsidiary, BHM
Consulting Law Company,
in Aktau, Kazakhstan.
PRACTICE AREAS
Banking and Finance
At BHM, our lawyers` in-depth knowledge of
domestic and international practice and
experience in banking and finance help us to
provide full range of legal services on various
kinds of activities, starting from complex
international transactions to regular financial
matters. Apart from acting for large banks, insurance companies and other
financial institutions operating in Azerbaijan and advising them on various
legal issues, BHM also provides local and foreign companies in drafting loan,
lease and franchise agreements, and offering consulting services on legal
aspects of the sale and purchase of securities and other structures and
mechanisms of capital markets.
Trade finance, project finance, and financial restructuring are also among our
services.
CORPORATE
BHM advises a large number of local and foreign companies on various
aspects of their business activities.
Our services cover a broad range of corporate transactions, including mergers
and acquisitions, establishment of joint ventures, incorporation of
subsidiaries, branches and representation offices of foreign companies and
corporate restructuring.
We have an extensive experience in the establishment and incorporation of
new legal entities, whether local and foreign. Our lawyers advise companies
on the drafting of different types of commercial agreements and provide the
best legal solutions relating to the international business transactions of our
clients. We also take part in different projects and assist foreign companies in
their investments in Azerbaijan.
EMPLOYMENT
BHM advises local and foreign companies
on various employment and labor law
matters in Azerbaijan. Our services include
drafting
employment
contracts
in
compliance with local legislation, advising
newly established branches and representative offices of foreign
companies on all aspects of employment issues, preparing legal
opinions and memos about labor legislation, consultation on
immigration, residence and work permit issues required for
expatriates and representing business in employment-related disputes.
ENERGY & INFRASTRUCTURE
Our lawyers have extensive expertise in a wide range of legal issues
affecting the energy and electricity sector and we offer our services to
energy and utility companies operating in this highly regulated industry.
Our team of energy lawyers has an in-depth understanding of the energy
industry and its regulatory and competitive framework. We offer
comprehensive legal advice to oil & gas, construction and engineering
companies throughout all stages of a project, starting from project inception,
through procurement and construction to operation and maintenance.
We focus on large-scale projects and regularly act on major real estate
developments, substantial transport projects, accommodation, education and
healthcare projects and large-scale energy and industrial projects.
INTELLECTUAL PROPERTY AND INFORMATION
TECHNOLOGY & COMMUNICATIONS
We provide up to date and experienced
insight into IP issues in Azerbaijan and
offer a broad range of legal services,
including registration, management and
protection of copyrights, trademarks,
brands and patents.
Our lawyers understand the technical aspects and complexities of the
information technology and communication sector and each sub-sector
within it (technology, media and telecoms) and provide companies in
these sectors with high quality legal services.
Among others, our clients include major mobile operator companies, a
leading television channel and international advertising agencies.
LITIGATION
BHM has one of the top litigation
practices in Baku. Our top litigation
lawyers effectively represent our clients
before the national courts of Azerbaijan.
We have demonstrated our strength in
litigation and successful court practice
even in the most difficult cases and thereby built a very strong
reputation in this area. For this reason, we represent many top
companies before the courts. We have a strong team of 8 lawyers who
are members of the Bar, highly qualified to represent our clients
before the Supreme Court of the Republic of Azerbaijan.
We can also offer representative services in enforcement trials.
PRIVATE CLIENTS
BHM provides legal services to private individuals in various
different areas of law.
We can offer assistance on all family law matters, including
divorce law, alimony and child custody issues. We also advise on
property rights, and wills and probate matters.
If you need any legal help regarding marriage, divorce, alimony,
inheritance or any other issue, you can consult with our skilled
lawyers, who can offer legal advice and court representation.
REAL ESTATE
BHM provides legal advice related
to acquisitions and disposals,
leasing, construction and all
surrounding issues relevant to real
estate transactions. Our highly
skilled lawyers provide advising,
drafting, negotiating and where necessary, litigation, expertise for
various types of real estate agreements for individuals, local and
international companies.
Our clients include construction and engineering companies
involved in major real estate projects in Azerbaijan including the
construction of hotels, commercial use premises, plants, roads and
many other developments.
TAX
Our experienced lawyers at BHM
provide the full package of taxation
advice to local and foreign companies
doing business in Azerbaijan.
The tax advice services that we provide
cover a broad range of business
transactions, including mergers & acquisitions, joint ventures,
financial restructuring and tax planning.
Thanks to our vast knowledge of domestic and international practice
taxation issues, we will offer you the best possible solution for your
tax problems related to both local and international transactions.
The General Assembly of the
European Olympic Committees has
adopted a decision on 8th of
December 2012 regarding holding
of the I European Games organized
for the first time in the European
history in 2015 in Baku.
BHM became the official legal services provider to Baku
European Games Operation Committee (BEGOC) and is
to provide all kind of legal services in connection with
organization of the I European Games to be hold in Baku
during June-July of 2015 and full legal accompaniment
of the Games.
PROFESSIONAL
LEGAL SERVICES AT
“ASAN SERVICE” CENTERS
BHM Baku Law Centre provides legal assistance to citizens
approaching “ASAN service” centers in Baku, Sumgayit and
Ganja. Such legal assistance includes provision of both oral and
written legal consultation to citizens, provision of explanations on
legal matters, issuance of references, assistance in submission of
claims to courts of all instances, compilation of complaints and
applications as per request of the citizens, in other words, provision
of legal assistance on all matters that “ASAN service” centers have
been entrusted.
MR. ANAR BAGHIROV
MANAGING PARTNER
Main practice areas are corporate law, commercial
law, dispute resolution, banking and finance,
sports law and real estate issues. He is a leading
litigation lawyer representing many corporations,
including national energy providers,
banks and large international organizations, engineering and
construction companies. He is the chairman of Azerbaijan Law
Reform Centre, a co-founder and member of the Azerbaijan Lawyers
Confederation, a member of Judges Selection Committee, Chief
Editor of “Azerbaijan lawyer” journal and is on the editorial board
of the Southern Caucasus Law Journal.
Mr.Baghirov has been a member of the Azerbaijan Bar Association
since 2005 and was elected to the Presidium of the Bar Association
in 2012. (for more info: http://bhm.az/index.php?page=staff&id=3)
MR.FARIZ MAMMADOV
MANAGING PARTNER
Fariz Mammadov is the managing partner
at BHM. Mr.Mammadov's practice areas
are corporate law, commercial law, energy
law, banking and finance. He also
specializes in real estate issues.
Mr.Mammadov has been a member of the Azerbaijan Bar
Association since 2007. He is Advisor to the Presidium of the
Bar Association in International Relations since 2013.
PARTNER
MR.MEHMAN SULTANOV
Has been working for the Company for 12 years.
Mehman Sultanov is a partner at BHM.
Mr.Sultanov's main practice areas are
corporate law, banking and finance, competition law, private
international law, sports law, employment and tax issues. He also
has extensive experience in litigation.
He has been a member of the Azerbaijan Bar Association since
2007.
PARTNER
MS.GULNAR GURBANOVA
Has been working for BHM Baku Law Centre
for 12 years.
She is specialized in corporate law, commercial law, contract law,
sports law, employment, dispute resolution and litigation.
She has been a member of the Azerbaijan Bar Association since
2007.
Gulnar graduated from the National Aviation Academy, the faculty of
International Law where she carried out teaching activity for the last
7 years.
ACHIEVEMENTS:
The Legal 500 EMEA 2013, the international rating company
which is considered to be the most competent international
legal publication providing the most comprehensive worldwide
coverage currently available on legal services providers, in over
100 countries recommends BHM Baku Law Centre in 14 areas of
Law.
BHM Baku Law Centre is ranked as one of the leading law firms
in 2014 edition of the International Financial Law Review’s
Guide to the World’s Leading Financial Law Firms: IFLR1000.
CONTACT INFORMATION:
“Baku Law Centre” (BHM) LLC
SKS PLAZA, 7th floor
49 Fuzuli Street
AZ1014, Baku, Azerbaijan
Phone: +99412 492 03 57;
+99412 492 28 83
+99412 480 00 88
Email: office@bhm.az
Web: www.bhm.az
BHM Consulting Law Company
Grand NurPlaza Business Centre, office15
Aktau, Kazakhstan
Phone: +7 (7292) 20 32 97
Fax: +7 (7292) 40 56 49
Email: assel.spataeva@bhm.kz