Setting up a branch in Azerbaijan implies that the parent company is responsible for the debts and obligations of the branch. According to the local legislation, a branch in Azerbaijan is not considered to be a separate legal entity, however, it is taxed as one. As follows, our company formation advisors in Azerbaijan explain how to establish a branch in this country.
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The branch office – characteristics and particularities
The first and most important thing to consider when deciding to enter a new market is the legal form of the feature enterprise. Luckily, foreign companies seeking to establish their presences in Azerbaijan can choose between the subsidiary and the branch office.
The branch office has several characteristics, but also a few particularities, among which we present the most important below:
- it is not a legal entity itself, but an extension of another company;
- its activity will be limited to that of the parent company, thus ensuring better control of the latter;
- it has no responsibility for debts and liabilities which will be incurred by the parent business; our Azerbaijan lawyers can give you more details on liability;
- it must bear the same name as the company that established it.
The branch office is simpler to register compared to the subsidiary and can be employed by both foreign and local companies in Azerbaijan.
In most cases, the branch office is preferred by companies operating in well-regulated industries, such as the financial one, as these do not engage in activities from multiple sectors. This helps them benefit from stricter, yet more unified regulations making the licensing procedure easier.
If you want to set up a branch in Azerbaijan, our local consultants are at your service with detailed information about this business form.
Formalities to complete before incorporating an Azeri branch
We recommend foreign companies interested in entering the Azeri market to first complete a thorough study of the services and/or products available here and compare them to the ones they provide in their home countries or even in other states they operate. Then, the trading name of the company must also be verified in order to make sure it is available for registration. However, there should be no problem for those who have registered their brands as trademarks, as these can be easily recognized here.
It is also advisable to check the licensing requirements before registering the branch in Azerbaijan in order to prevent possible delays in the procedure. If aiming at obtaining financing for various projects, a foreign company should also verify the conditions imposed by Azeri banks.
If you want to expand your activity by establishing a branch, do not hesitate to ask for complete information from our company registration advisors in Azerbaijan. They will explain in detail all the known and less known aspects of operating such an entity.
Registration procedure for branches in Azerbaijan in 2021
Branches of foreign commercial companies have to register with the Ministry of Taxes, whilst branches of non-commercial companies must register with the Ministry of Justice.
The Ministry of Taxes has the responsibility of effectuating the registration in maximum two business days from the date the necessary documents have been filed. The Ministry of Justice is required to effectuate this registration in maximum 40 business days.
The documents needed to register a branch in Azerbaijan in 2021 are:
• The charter of the parent company certified by a notary or legalized in the Embassy of Azerbaijan in the parent company’s country of origin;
• The registration certificate of the parent company, certified by a notary or legalized in the Embassy of Azerbaijan in the parent company’s country of origin;
• The decision related to setting up the branch in Azerbaijan, certified by a notary or legalized in the Embassy of Azerbaijan in the parent company’s country of origin;
• Other documents: our Azerbaijan company formation consultants can provide further details on what these documents consist of. We can also help in setting up a company in Azerbaijan.
You can rely on us if you want to open an Azeri branch in 2021.
Opening a branch in Azerbaijan from abroad
Establishing a branch in Azerbaijan from abroad is a quite straightforward procedure. The parent company should have a legal address and appoint a representative authorized person through a power of attorney who can complete the incorporation process.
The procedure involving setting up a branch in this country is a little more complex than that of opening a regular legal entity, because additional documents are required.
However, the time frame involving such a procedure is not much longer. Getting ready the documentation and notarizing it does not take more than one day. Our company registration agents in Azerbaijan can provide guidance through the entire process of setting up a branch here in 2021.
The branch office has many advantages, and in 2021 it is often employed by foreign companies in Azerbaijan. Among these, the quick setup process and the cheap registration costs are among the most important.
Setting up a bank account for a branch in Azerbaijan
Even if the branch will be linked to the parent company, it must have a bank account in Azerbaijan. Foreign companies can use local banks or establishments of overseas one, including banks in their home countries that operate in Azerbaijan. All financial operations of the branch will be completed through the local bank account.
We offer complete company formation services in Azerbaijan which also include bank account opening.
Applying for licenses for a branch office in Azerbaijan
The parent company is required to handle the entire licensing procedure when opening a branch in Azerbaijan. It must prepare the necessary documents of the Azeri entity, but it must also submit information about itself with the authority in charge of the industry to operate in.
It should be noted that each governmental agency has its own requirements which is why the representative of the parent company must pay attention.
Hiring employees in Azerbaijan
While a branch office can transfer employees from its parent company’s home country, it can equally hire personnel from Azerbaijan, as the workforce here is well prepared and can be cheaper compared to those of Western countries, for example.
If you want to create a branch in Azerbaijan and are interested in the local employment regulations, you can rely on our consultants who can provide you with valuable information.
Taxation of branches in Azerbaijan
Branch offices in Azerbaijan must comply with the regulations imposed by the Ministry of Taxes. However, there are a few particularities that need to be considered, among which is the fact that they will pay the corporate tax on the profits they make in this country.
Here are the main taxes that need to be paid by Azeri branches:
- the corporate tax rate is 20% and it is levied on the net profits of a company;
- a simplified tax levied at rates of 2%, 6% or 8% also applies to companies under certain conditions;
- profits repatriated by branch offices are taxed at source and are imposed at a rate of 10%;
- profit taxes can be reduced under one of Azerbaijan’s more than 50 double taxation agreements.
If you need to know more about branches in Azerbaijan or for help in setting up a company in Azerbaijan, please get in touch with our representatives.