Business Environment in Azerbaijan and Trade Links with Turkey
Azerbaijan is an important hub for investors seeking to establish regional operations thanks to its strategic location between Europe and Asia, competitive tax system, and fast company incorporation processes. Azerbaijan is frequently preferred by Turkey-based companies for their overseas operations due to strong trade relations with Turkey, a similar business culture, and geographical proximity.
For groups operating in Turkey, Azerbaijan can be considered an operational center in terms of trade, logistics, energy, and regional expansion strategies.
Country Overview
- Official Name: Republic of Azerbaijan (Azerbaycan Respublikası)
- Capital: Baku (Bakü)
- Population: Approximately 10.4 million (2026 estimate)
- Official Language: Azerbaijani (Azerbaijani Turkish)
- Religion: Predominantly Islam, secular state structure
- Climate: Various climate zones; temperate continental interior, semi-arid and subtropical regions, and the Caspian coastal climate around Baku
- Time Zone: UTC+04:00
- Country Code: +994
- Currency: Azerbaijani Manat (AZN)
How to Set Up a Company in Azerbaijan?
Main Types of Companies
- Limited Liability Company (LLC)
- Joint Stock Company (JSC)
- Branch
- Representative Office
The LLC model, which has similar characteristics to the Limited Company structure in Turkey, is the most preferred type of company by foreign investors.
Establishment Process
- Determination and reservation of the company name
- Preparation of the articles of association
- Appointment of directors and partners
- Determination of the legal address
- Registration procedures with the State Tax Service
- Obtaining a Tax Identification Number
- Opening a bank account
Compared to trade registry processes in Turkey, registration procedures in Azerbaijan can be completed more quickly; however, bank compliance processes can be decisive in time planning.
Documents Required for Company Formation
For natural person partners:
- Passport copies
- Address verification documents
- Company articles of association
- Director appointment decision
- Power of attorney (if required)
For corporate partners:
- Certificate of Incorporation
- Trade registry record sample
- Articles of association
- Board of directors decision
- Apostilled company documents
Apostille and translation processes may affect time planning in structures where Turkey-based companies are partners.
Is a Local Partner or Local Manager Required?
In Azerbaijan, foreign investors can own 100% of company shares. As in Turkey, there is no requirement for a local partner. Although a local manager is not mandatory, it can provide practical advantages in terms of banking and operational processes.
Azerbaijan Tax System and Tax Comparison with Turkey
Corporate Tax
- Azerbaijan: 20
- Turkey: Different rates may apply depending on current legislation.
Value Added Tax
- Azerbaijan: 18
- Turkey: The standard VAT rate is applied at different levels.
Withholding Taxes
- Dividend payments: approximately 10
Advantages may be available for certain payments under the Turkey-Azerbaijan Double Taxation Agreement. Dividend flows, transfer pricing, and financing transactions for Turkey-based companies should be analyzed in detail during the structuring phase.
Accounting System and Operational Compliance with Turkey
The Azerbaijani accounting system is IFRS-compliant. Similar to the e-ledger and e-invoice systems in Turkey, digital tax platforms are also widely used in Azerbaijan.
Legal Compliance Processes
- Monthly or quarterly declarations
- Payroll notifications
- VAT reporting
For investors accustomed to accounting processes in Turkey, adaptation to the Azerbaijani system is relatively quick.
Opening a Bank Account and Turkey-Affiliated Companies
Turkey-based groups should pay attention to the following issues when opening a bank account in Azerbaijan:
- Transparency of the ultimate beneficial ownership structure
- Intra-group transaction volume
- Clarity of the business activity plan
Banks can conduct detailed compliance reviews, especially for Turkey-linked international groups.
Azerbaijan Tax Residency Assessment
If the actual management of a company established in Azerbaijan is conducted from Turkey, this may require assessment in terms of tax residency. Therefore:
- Where management decisions are made
- Actual place of business of the manager
- Intra-group contracts
such elements should be planned during the establishment phase.
Procedures Required to Start a Company in Azerbaijan
- Determination of legal address
- Completion of manager appointment
- Tax registration
- Activation of bank account
- Establishment of accounting system
- Payroll and social security records
- Digital tax portal access
- Planning financial flows with Turkey
Social Security and Labor Legislation
Employers in Azerbaijan are required to register their employees in the social security system. Similar to the SGK system in Turkey, employer and employee contributions are calculated based on salary.
Company Formation Timeframe in Azerbaijan and Planning Perspective with Turkey
Average Timeframes
- Documentation preparation: 2–5 business days
- Company registration: 1–2 business days
- Bank compliance process: 3–10 business days
- Operational activation: 3–5 business days
Average total process: 1–3 weeks
Compared to the incorporation processes in Turkey, although official registration is faster, the banking and structuring stages are decisive in time planning.
Common Timing Mistakes Made by Investors
- Assuming that company registration and the start of operations are the same
- Ignoring banking processes
- Assuming that the structure managed in Turkey will provide tax advantages in Azerbaijan
- Conducting tax regime analysis after incorporation
As the OzbekCPA team, we provide support in company incorporation, tax compliance, accounting organization, and corporate governance processes for investments to be structured between Turkey and Azerbaijan. Contact us.
