FDI friendly laws

Azerbaijani legislation is evolving in accordance with the strategic goal of the Government of implementing a "welcoming policy" for foreign businesses. Foreign investments are protected by certain government and statutory guarantees, including:

* Guarantees against adverse changes in legislation - the general rule is that the legislation in force at the time an investment is made continues to apply to individual investor for the next 10 years, notwithstanding any adverse changes in law;

* Guarantees against nationalization and requisition - foreign investments are not subject to nationalization (except in cases of harm to the population and state) and requisition (except in cases of natural disaster, epidemics, accidents, and emergencies). Foreign investors are guaranteed immediate, adequate and effective compensation in case of nationalization and requisition. Compensation should be commensurate with the amount of the investment at the time of nationalization or requisition, is payable in foreign currency, and may be freely transferred abroad;

* Guarantee of compensation of damages - foreign investors are entitled to compensation of damages, including lost profits, incurred as a result of the unlawful acts of state authorities;

* Guarantee of repatriation of profits - foreign investors are entitled to repatriate profits derived from foreign investments, subject to the payment of applicable taxes and duties.

In order to attract domestic and foreign investment, improve the investment climate and create new competitive and effective production and service areas, measures have been taken to establish Special Economic Zones (SEZ) in Azerbaijan. The legal basis for the establishment of Special Economic Zones has been created and the legal framework for implementing a new mechanism of state support for entrepreneurship has been established. A concessional tax and customs regime will be introduced in Special Economic Zones. SEZs will be created for priority sectors after the territories where they will be located are identified. As a result of this policy, active works have been already started on establishing "Sumgayit Chemical Industrial Park" and "Balakhani Eco-industrial Park" in order to improve chemical industry and waste management respectively. Tax exemptions and customs privileges for 7 years will be applied for the residents of these Parks. Operating entrepreneurs will be provided with infrastructure including all necessary initial facilities. Both whole and partial participation of foreign investments in the projects are also considered and legally allowed by the management of the Parks.

In terms of trade regulation, there are no general trade barriers or prohibitions on the import of any types of goods in Azerbaijan, and only a minimum level of non-trade barriers for international trade. The country is not yet a member of WTO, although the Government has started the accession process. Exported goods are not subject to any customs duties and restrictions. Regulations exist for the export of strategic commodities such as electricity, petrol, cotton and non-ferrous metals.