Initial steps for starting a business in Azerbaijan
Initial steps for starting a business in the Republic of Azerbaijan consist of the following stages:
Company registration; Obtaining a temporary residence permit (TRP) for a director, if he is a foreign citizen; Registration of “ASAN Imza” (literal translation: “Simple Signature”); Registration of a director as an employer in the electronic information system (through the “e-gov.az” portal); Opening a bank account.
Company registration
There are following types of commercial legal entities in Azerbaijan:
Business partnerships (general partnership and limited partnership); Business companies (limited liability company, additional liability company, joint-stock company); Co-operative societies.
After determining the type of legal entity, entrepreneurs apply for registration to the Department of State Registration of Legal Entities of the Main Department for National Revenues of the State Tax Service under the Ministry of Economy of the Republic of Azerbaijan.
In Azerbaijan, a limited liability company (LLC) is a widespread, i.e. preferred type of legal entities by entrepreneurs.
To register an LLC, the following documents are required:
Application; Decision (on the establishment of an LLC, approval of its charter and formation of management bodies); Charter;
4) If the founder is a legal entity - a notarized copy of its constituent documents (constituent documents of a foreign legal entity are subject to relevant legalization);
5) If the founder is a natural person - a copy of its identity document;
6) A copy of the identity document of a legal representative (director);
7) Document confirming the payment of the state duty.
The application is considered within 2 (two) business days.
Obtaining a TRP for a director, if he is a foreign citizen
I would like to inform you that for foreign citizens who require a visa before traveling to the Republic of Azerbaijan, when applying for a visa through the “evisa.gov.az” portal, in the purpose of the trip section, you must select “business trip”. And in relation to foreign citizens for whom a visa is not required, after arriving in the Republic of Azerbaijan, when registering at the place of stay, “the reason for arrival in the Republic of Azerbaijan” must be selected as “business”.
The following documents are required to obtain a TRP:
Application form (when submitting an electronic application, an additional submission of an application form is not required); Passport (the validity of the passport must be at least 3 (three) months from the date of expiration of the requested TRP) Constituent (corporate) documents of LLC.
* If the founder of the LLC is a legal entity - in addition, it is also necessary to provide its constituent documents, and if the founder is a natural person - a document proving its identity;
Decision on the appointment of a director; A reference paper certifying that he is not a carrier of the virus of dangerous infectious diseases (medical certificate); 2 (two) photos 3.5 x 4.5 cm in size (when submitting an electronic application, 1 (one) photo is sufficient); A document of the residential area where he/she will be registered (an extract from the State register of real estate, an order, a lease (rental) agreement or other document provided for by the legislation of the Republic of Azerbaijan); Application of the person providing the residential area to a director (except for cases when director is an owner of the residential area); A copy of the identity document of the person providing the residential area to a director (except for cases when director is an owner of the residential area).
In accordance with the state duty, the application can be considered within 15 (fifteen) and 20 (twenty) business days.
Please note that obtaining a work permit for a director is not required, only a TRP is required.
Registration of “ASAN Imza”
“ASAN Imza” is a service provided by the State Tax Service and a mobile operator (“Azercell”, “Bakcell”, “Nar”), which provides authentication of the user of an electronic service, electronic signature of a document and identification of the signatory. “ASAN Imza” is a mobile authentication for identity verification when entering electronic services and using digital signatures, and with “ASAN Imza” you can use all available electronic services.
I would like to note that for registration of “ASAN Imza”, a SIM card supporting “ASAN Imza” is first purchased, and then a director with the constituent documents of the LLC and the SIM card applies to the State Tax Service.
I also note that the registration of “ASAN Imza” is possible after the director receives a TRP.
In practice, I am faced with the fact that an LLC is being established, but registration of “ASAN Imza” becomes impossible until the director has received a temporary residence permit, as a result of which the LLC cannot temporarily function (for example, banking operations electronically, hiring employees and using other electronic services).
What to do in this case?
During this time, it is considered appropriate to register a citizen of the Republic of Azerbaijan or a foreigner who has received a temporary or permanent residence permit as an “E-representative” (electronic representative). Until a director receives a TRP, all management powers are transferred to this person on the basis of a notarized power of attorney, on the basis of which an “E-representative” is issued, as a result of which it becomes possible to use “ASAN Imza”. Registration of an “E-representative” is also carried out by the State Tax Service.
Registration of the director as an employer in the electronic information system (through the “e-gov.az” portal)
After receiving the TRP and registration of “ASAN Imza”, a director is registered as an employer through the “e-gov.az” portal and an employment contract is concluded with him/her.
Signing, amendment or termination of an employment contract in the Republic of Azerbaijan enters into legal force after the registration of a notice of an employment contract in the “e-gov.az” portal with ASAN Imza.
Opening a bank account
I want to inform you that entrepreneurs apply to the tax authorities through the “e-taxes.gov.az” portal to open a bank account, the application is processed by the tax authority within 2 (two) days and the tax authority sends a duplicate certificate to the bank to open an account if the entrepreneur does not have a tax debt to the state budget, and if there is a debt, he is denied opening a bank account. If for any reason the bank account is not opened within 10 (ten) days, the duplicate certificate sent to the bank by the tax authority is considered invalid.
However, according to the amendments made to the Tax Code of the Republic of Azerbaijan, the procedure for opening a bank account will be simplified from October 2023. Thus, the requirement to obtain a duplicate certificate is canceled, and the opening of a bank account will be carried out on the basis of an entrepreneur's request directly to the bank.
About the author:
Emin Musayev graduated from the Faculty of Law at the Baku State University with a bachelor's degree in 2019 and from the Faculty of Intellectual Property Law at the Baku State University with a master's degree in 2022. He is a lawyer with over 2 years of experience in the area of law and specializes in contracts, intellectual property, corporate law, migration, public procurement. He is a lawyer at “Legalize” Law Firm. For more information about the author please see the following link:
https://www.legalize.az/en/team/emin-musayev
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