Azerbaijan - Country Commercial Guide
Market Challenges

Learn about barriers to market entry and local requirements, i.e., things to be aware of when entering the market for this country.

Last published date: 2021-09-29

Azerbaijan’s business climate suffers from a large informal economy, widespread corruption, and holding companies that dominate significant portions of the non-oil economy.  U.S. companies working in the Azerbaijani market have reported pressure to localize production or establish joint ventures with these companies.  Small and medium enterprises are often crowded out of the market by larger players who enjoy both economies of scale and privileged access to the government.  Azerbaijan’s ranking on Transparency International’s Corruption Perceptions Index fell from 126 to 129 in 2020.

Various companies have notified Embassy officials of challenges in resolving disputes with Azerbaijani private firms and government agencies, citing in particular the lack of transparency and independence of the judiciary.  Additionally, companies have notified the Embassy of widespread use of unlicensed software and applications in the public and private sector.

Azerbaijan has worked to improve its regulatory system over the past several years, adopting a series of reforms to the tax, customs, and regulatory systems.  While the government made a number of judicial reforms in 2019, further progress is needed to foster judicial independence.  Azerbaijan’s business community reports significant improvements in customs declarations and collections following customs reforms implemented in 2018.  The introduction of “one-stop” public service centers, known as “ASAN” (“Easy”) e-government service centers, has increased efficiency and transparency for many basic business needs, such as registering companies, property titles, and receiving licenses.

Business transparency is an ongoing concern.  Tender procedures are opaque, and a small number of businesses dominate certain sectors of the economy.  The Law on Commercial Secrets allows companies to withhold information about their registration, ownership, and structure.  U.S. citizens considering doing business in Azerbaijan are advised to conduct due diligence carefully and seek out businesses that regularly comply with third party audits through reputable international firms.