Starting a Business in Azerbaijan: Main Findings and Practices

1. Starting a Business • in Azerbaijan Analyst, Doing Business Unit

2. What does it measure – and what does it not? Main findings and Good practices Starting a Business in Azerbaijan

3. Operates in the economy’s largest business city Is a limited liability company or its legal equivalent Case study assumptions about the company Has at least 10 and up to 50 employees Performs general industrial or commercial activities 100% domestically owned Does not qualify for investment incentives Has a start-up capital of 10 times income per capita

4. What does Starting a Business measure? Rankings are based on distance to best performance for 7 indicators: • Procedure Women (12.5%) • Procedure Men (12.5%) • Cost Women (12.5%) • Cost Men (12.5%) • Time Women (12.5%) • Time Men (12.5%) • Paid-in minimum capital (25%)

5. Components of Starting a Business

6. Three stages of Starting a Business

7. What procedures are recorded? • PROCEDURE = any interaction of the company founders with external parties (government agencies, lawyers, auditors, notaries, etc.) or spouses (if legally required); • Every procedure required by law (de jure) and/or commonly done in practice (de facto); eachelectronic procedure is counted separately; • Pre-registration, registration and post-registration procedures; • Founders are assumed to complete all procedures themselves (unless the use of a third party is mandated by law, or solicited by the majority of entrepreneurs); • Procedures in the same building but in different offices or counters = separate procedures; • Visit the same office several times =each visit is counted separately; • E-procedures through the same website but in separate filings = separate e-procedures; • Approvals from spouses to own a business or to leave home are considered procedures if required by law or if by failing to do he or she will suffer consequences under the law, such as the loss of right to financial maintenance; • Procedures required for official correspondence or transactions with public agencies (e.g., company seal, bank account) are included.

8. How is the time to complete a procedure calculated? The time sub-indicator captures the median duration, indicated by company incorporation experts, necessary in practice to complete a procedure with minimum follow-up with government agencies and no extra payments.

9. How is the cost of a procedure calculated?

10. How is paid-in minimum capital measured?

11. The frontier in Starting a Business Starting a Business

12. What does it measure – and what does it not? Main findings and good practices Starting a Business in Azerbaijan

13. Where is it easiest to start a business? What do they have in common? Top ten performers Score • 1. New Zealand 99.98 • 2. Georgia 99.34 • 3. Canada 98.23 • 4. Singapore 98.23 • 5. Hong Kong SAR, China 98.15 • 6. Jamaica 97.35 • 7. Australia 96.47 • 8. Armenia 96.21 • 9. Azerbaijan 96.14 • 10. Ireland 95.91

14. In most economies it takes between one week and one month to start a business Fastest business start-up: ½ day (in New Zealand) • Source: Doing Business 2019.

15. Starting a BusinessGood practices Global good practices • Similar requirements for men and women • Putting procedures online • No paid-in minimum capital requirement • Creation and improvement of one-stop shops • Standardized forms • No court involvement • Fixed registration fee • No requirement to publish in legal journal

16. What does it measure – and what does it not? Main findings and good practices Starting a Business in Azerbaijan

17. Where does Azerbaijan stand on the ease of starting a business in 2017/18? Best score Azerbaijan scored 96.14 points on starting a business in Doing Business 2019, giving it a ranking of 9in Starting a Business. • Source: Doing Business 2019.

18. Starting a Business in Azerbaijan • Source: Doing Business 2019.

19. Reforms in DB19 • No reforms recorded in Azerbaijan in DB19: • Reform not counted in procedure #1: • Apply for registration; obtain TIN number and register for VAT • Online application for registration • A procedure is recorded as being done online if several conditions are met, including: (1) the online platform for the procedure exists and functions without major issues, (2) the majority of entrepreneurs use the online system, (3) no in person follow-up is required after the online interaction is completed. • The Doing Business team verified with incorporation practitioners that online registration was available but not widely used for companies similar to Starting a Business case study. • The majority of founders preferred to apply for company registration in person and obtain hard copy of registration certificates. • Based on this practice, the Doing Business 2019 report recorded the procedure of registering a company, obtaining tax identification number and registering for VAT as a procedure that was done in person by majority of cases similar to Starting a Business case study.

20. Corrections in DB19 • Correction made to the cost of the procedure #1: • Obtain electronic signature for online registration • Cost changed from [18*5+13] to [18*5] (AZN) (multiply by 5 to account for 5 founders) • The most common option for e-authentication is using ASAN-Imza, which is a sim-card service. This service can be activated at the cost of AZN 18 per signature, and is valid for 3 years. The card readers have not been used in practice for electronic signatures for about 1-2 years now. Previously, we have been adding the cost of one card reader (AZN 13), but it is removed since it has not been used in practice and now companies use cell phones for authentication instead.

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