AZERBAIJAN PEO & EOR
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DID YOU KNOW
- Azerbaijan is known for its unique and vibrant architecture. Because of this, the nation is often likened to Dubai.
- Azerbaijan was the first Muslim nation to enfranchise women after universal suffrage was introduced in 1919.
- Rich in natural resources, Azerbaijan is one of the world’s most oil-rich nations. It is home to a large number of volcanoes, particularly mud volcanoes, with over 400 found in the country.
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Azerbaijan PEO Services
Rich natural resources and agricultural opportunities
Azerbaijan, officially the Republic of Azerbaijan, is located on the boundary of Eastern Europe and Western Asia. This country is in a highly strategic location, and is a part of the South Caucasus region. Azerbaijan is bounded by the Caspian Sea to the east, Russia to the north, Georgia to the northwest, Armenia and Turkey to the west, and Iran to the south. Baku is the capital and largest city.
Two-thirds of Azerbaijan is rich in oil and natural gas, and the nation also has the largest agricultural basin in the region (with around 57% of the country hosting agricultural land). Tourism is also an important aspect of the Azerbaijani economy. The nation’s Government is dedicated on developing Azerbaijan into an elite tourist destination.
While expanding a business into Azerbaijan can present some challenges, partnering with an Azerbaijan PEO partner like Gibson Watts Global can simplify and expedite the process.
Working in Azerbaijan
Employment Information
Azerbaijan’s working hours generally equate to 40 hours per week, on a normal pattern of Monday to Friday. Employees are entitled to 21 or 30 working days of annual leave per year, 14 days of sick leave (paid by the employer), and any other absences covered by the Social Security system. Sick employees have the right to take sick leave for up to six months.
Maternity leave in Azerbaijan is usually 70 days before the time of birth, and 56 days following the birth.
If a company chooses to hire a non-Azerbaijani worker, then they must obtain a Work Permit for them before signing the labour contract.
Taxation
- Azerbaijan has a standard VAT tax rate of 18%.
- Azerbaijan corporation tax rate stands at 20%.
- Azerbaijan currently has two taxations for Personal Income Tax (PIT) & Social Security.
Companies operating in the oil and gas sector and related to the public sector must consider the below:
Personal Income Tax (PIT)
| Monthly Taxable Income | Tax rate |
| Up to 2500 AZN or 1 470 USD | 14 % |
| Over 2500 AZN or 1 470 USD | 350 AZN or 206 USD + 25 % of the amount
exceeding 2,500 AZN or 1,470 USD |
Social Security
- The company must pay 3% of the employee’s gross salary
- Employees must pay 22% from their gross salary as a monthly Social Security contribution
Companies operating in the non-oil and gas sector and not related to the public sector must consider the below:
Personal Income Tax (PIT)
| Monthly Taxable Income | Tax rate |
| Up to 8000 AZN or 4 705 USD | 0 % |
| Over 8000 AZN or 4 705 USD | 14% of the amount exceeding 8,000 AZN or 4,705 USD |
Social Security
- The company must pay 15% of the employee’s gross salary
- Employees must pay 10% from their gross salary as a monthly Social Security contribution
Additionally, for both systems – unemployment insurance & compulsory insurance is applicable:
Unemployment insurance
- The company must pay 0.5% of the employee’s gross salary as a monthly contribution
- Employees must pay 0.5% from their gross salary as a monthly contribution
Compulsory insurance
- The company must pay 2% of the employee’s gross salary as a monthly contribution
- Employees must pay 2% from their gross salary as a monthly contribution
Cultural Information
The vast majority of the country’s population (97%) is Muslim, 85% of the Muslims are Shia and 15% Sunni, but the constitution does not declare an official religion and all major political forces in the country are non-religious.
The official language is Azerbaijani, which is a Turkic language. Azerbaijani is spoken by approximately 92% of the population as a mother tongue. Most residents speak Russian as a second language with some viewing it as the language of culture.
Impacts from COVID-19
Azerbaijan was initially hit hard by the COVID-19 pandemic, and it continues to have restrictions in each province, in cities and surrounding areas. In 2021, some of the restrictions started lifting and the nation began returning to normality.
Because of the pandemic, Azerbaijan has progressed significantly in digital transformation and the Internet of Things. Like other countries across the globe, Azerbaijan also took measures to promote remote working practices during the COVID-19 pandemic. Since the pandemic, ‘hybrid’ working patterns have been largely adopted, with many staff working some days at home, and some days in their offices.