In 2024, Azerbaijan’s business climate continued to face structural challenges, including a sizable informal economy, persistent corruption, and limited judicial independence in commercial and tax-related disputes. Regulatory decisions were often made without consistent consultation with the private sector, contributing to uncertainty for investors. Large holding companies maintained dominant positions in key non-oil industries, limiting competition and market access. According to Transparency International’s most recent Corruption Perceptions Index, Azerbaijan’s score declined to 22 out of 100, placing it 154th out of 180 countries, a drop from 23 out of 100 in 2023 and reflecting ongoing concerns about public sector integrity. U.S. companies working in the Azerbaijani market have reported pressure to localize production or establish joint ventures. In general, small- and medium-sized enterprises are often crowded out of the market by larger players who enjoy both economies of scale and privileged access to the government. 

U.S. companies have notified Embassy officials of challenges in resolving disputes with Azerbaijani private firms and government agencies, citing the lack of transparency and independence of the judiciary. While the government has made some judicial reforms, further progress is needed to foster true judicial independence. This lack of independence contributes to weak intellectual property rights (IPR) protection and enforcement. Azerbaijan’s Intellectual Property (IP) Agency has not made notable progress in institutionalizing IP protections. In fact, companies have notified the Embassy of widespread use of unlicensed software and applications in the public and private sector. Government and business leaders acknowledge that poor IPR protections are an issue for economic expansion, and the government is taking steps to increase enforcement capacity. There has been some improvement. The Business Software Alliance estimated in 2015 that the prevalence of software piracy was 84 percent, including government ministries. In 2022 that figure fell to 71 percent. 

Azerbaijan has continued to modernize its regulatory system through targeted reforms in tax and customs administration. New amendments to the Tax and Customs Codes were enacted to reduce fiscal burdens on micro-businesses, cultural institutions, and green energy projects, while also streamlining procedures for the construction and manufacturing sectors. The ASAN service centers remain central to the country’s e-government strategy, now fully integrated with digital document management and “single window” systems that simplify business registration, licensing, and property transactions.
 
Despite these improvements, business transparency remains a concern. Tendering processes lack clarity, and market concentration persists in several non-oil sectors. The Law on Commercial Secrets continues to permit companies to withhold key information about ownership and structure, complicating due diligence efforts. U.S. investors are strongly encouraged to engage with firms that undergo regular third-party audits and maintain compliance with international reporting standards.