Ultimate Guide to Hiring In Azerbaijan‌ | Salary, Laws & Taxes

1. Global Expansion joins the United Nations Global Compact initiative X  Download Brochure Solutions Why Global Expansion Technology Tools Resources Speak To An Expert Back to Countrypedia Definitive Guide to Hiring in Azerbaijan Find everything you need to confidently hire in Azerbaijan - labor law, tax law, compliance, payroll, benefits and more. Capital Baku Population 10.14 Million Monetary Unit Azerbaijani manat Download Guide Hiring in Azerbaijan Hiring employees compliantly in Azerbaijan means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Azerbaijan so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can: Hiring in Azerbaijan Labor Laws in Azerbaijan Azerbaijan Salary and Wages Income Tax in Azerbaijan (a) Establish your own new legal entity, banking, accounting and payroll service in Azerbaijan or Social Security in Azerbaijan Immigration Azerbaijan (b) use an Employer of Record like Global Expansion who can handle all of the details for you. Value Added Tax (VAT) in Azerbaijan Mandatory Benefits in Azerbaijan Need assistance hiring in Azerbaijan ? Contact us about our International EOR Service Payments And Invoicing Payroll Accrual in Azerbaijan Labor Laws in Azerbaijan Accrued Benefits in Azerbaijan Employment laws in Azerbaijan are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on Azerbaijan employment laws and Azerbaijan policies here. Why use Global Expansion to hire in Azerbaijan Employee Probation Period Download Guide Hi and welcome to Global Expansion, your partner in global Generally, a probation period of up to three months is allowed employment solutions. Can I help you find what you Annual Leave in Azerbaijan need? Generally, employees are allowed 21 days of vacation leave.  Some specialist and managerial positions provide 30 days of leave.  Two weeks of leave should be taken together. Holidays in Azerbaijan 2nd January New Year's Day 9th March International Women's Day   Nowruz 11th May Victory Day    Eid al-Fitr 28th May Republic Day  15th June National Salvation Day  26th June Day of the Armed Forces of Azerbaijan    Eid al-Adha 9th November State Flag Day

2. 31st December International Solidarity Day of Azerbaijanis  Start your expansion today Maternity Leave Azerbaijan Pregnant women are entitled to a total of 126 days of paid maternity leave, which consists of 70 days before and 56 days after the expected date of delivery. Paternity Leave Azerbaijan Fathers are entitled to 14 days of unpaid paternity leave after the birth of a baby. Sick Leave in Azerbaijan For the first 14 days of illness, it is the responsibility of the employer to pay sick leave compensation.  After 14 days, sick leave is paid by the State Social Protection Fund. Working Hours in Azerbaijan A normal working day cannot exceed eight hours, and the normal working week is five days, with two days off. Overtime in Azerbaijan Overtime is paid at the rate of 200% of the normal salary. Termination of Employment in Azerbaijan In general, termination of an employment contract in Azerbaijan is strict and must be carried out with the utmost care.   Labor laws for termination are in favor of the employee and any misstep can have major consequences for the employer.    For employees who are terminated based on redundancy, 3 month’s severance pay is required. When terminating an employment agreement due to downsizing, 2 months’ notice is required. Notice period in other circumstances is as follows: - Less than 1 year of employment– 2 weeks’ notice   - 1-5 years of employment- 4 weeks’ notice   - 5-10 years of employment- 6 weeks’ notice   - 10+ years of employment- 9 weeks’ notice.    Severance pay varies depending on the length the employee has been employed:   - Less than 1 year – 1 month’s salary   - 1-5 years- 1.4 times the monthly salary  - 5-10 years- 1.7 times the monthly salary   - 10+ years – 2 times the monthly salary Notice Period in Azerbaijan If an employee’s job has been made redundant, the employer must give two months’ notice to the employee. During this 2-month period, the employee is able to take one day of paid time off per week for the purpose of finding new employment. Notice period in other circumstances is as follows: - - Less than 1 year of employment– 2 weeks’ notice   - 1-5 years of employment- 4 weeks’ notice   - 5-10 years of employment- 6 weeks’ notice   - 10+ years of employment- 9 weeks’ notice. Severance in Azerbaijan Severance pay varies depending on the length the employee has been employed:   - Less than 1 year – 1 month’s salary - 1-5 years- 1.4 times the monthly salary  - 5-10 years- 1.7 times the monthly salary  

3. - 10+ years – 2 times the monthly salary 13th / 14th Month Pay No  There is no statutory requirement to pay the 13th or 14th month. Instead employees can, at their discretion grant performance based bonuses. There is an emphasis in the labour code that those bonuses are to incentivise the performance of employees Azerbaijan Salary and Wages Start onboarding your new team Income Tax in Azerbaijan A resident’s taxable income in Azerbaijan is comprised of worldwide income (i.e. income generated in and outside Azerbaijan). A non-resident’s taxable income in Azerbaijan is comprised only of the income generated from sources in Azerbaijan. The taxable base of residents is determined as the difference between gross income for a calendar year and expenses (or deductions). Where income from dependent employment has been taxed at source, no further income tax or deductions are calculated. The taxable base for non-resident physical persons engaged in activity in Azerbaijan through a permanent establishment (PE) is the difference between gross income generated in a specific period from Azerbaijan sources with regard to the PE and the amount of expenses (or deductions) with respect to the generation of income during that period. From 1 January 2019, monthly income of employees who are engaged in employment for non-oil-gas and non-government sectors shall be exempted for a seven-year period, as follows: Taxable monthly income Tax rate Up to AZN 8,000   14% of the amount exceeding AZN 8,000 Above AZN 8,000 The standard rates that are applicable to the employees of the oil and gas and government sectors, and which will be applied after the seven-year grace period, are as follows: Taxable monthly income Tax rate Up to AZN 2,500 14% AZN 350 + 25% of the amount exceeding AZN 2,500 Above AZN 2,500 Tap the world's talent pool Social Security in Azerbaijan From 1 January 2019, the mandatory social security contribution rates for employment income (other than oil and gas and government sectors) are as follows for a seven-year period: Social Social contribution per employer Amount of income contribution per employee Up to AZN 200 3% 2% AZN 6 + 10% for the amount above AZN 200 AZN 44 + 15% for the amount above AZN 200 Above AZN 200 The standard rates that are applicable to the employees of the oil and gas and government sectors, and which will be applied after the seven-year grace period, are as follows: Employee: 3% Employer: 22% All foreign employees are subject to social security contributions at these rates, except persons with diplomatic status and expatriate employees working under PSAs. Entrepreneurs who are physical persons are liable to social security contributions at rates that vary depending on the

4. type of activities and region of operation of such entrepreneurs. Immigration Azerbaijan Foreigners who want to visit Azerbaijan and who are from countries with which Azerbaijan has a visa regime should obtain entry visas from the respective embassy or consulate of Azerbaijan.  In general, entry visas are granted to foreign individuals for entry into the country.  Under recent changes to the migration legislation, several types of entry visas are available. These visas are based on the purpose of the visit and include, but are not limited to, the following:  - Visa for business trip purposes  - Visa for labor activity conduction purposes  - Touristic visa  - Visa for official visit  Visas are divided into single and multiple entries with the validity period of stay ranging from one month for single- entry visas to 180 days for multiple-entry visas. To obtain a visa from the diplomatic representations, embassies and consulates of Azerbaijan abroad or from the Consular Department of the Ministry of Foreign Affairs of Azerbaijan, applicants must present the following items:  - Letter of invitation provided by a legal entity registered in Azerbaijan that is approved and certified by the Consular Department of the Ministry of Foreign Affairs in Azerbaijan before its submission to the respective Azerbaijan embassy  - A completed application  - Passport-size photographs  - A passport  - Applicable fee Expatriates must obtain a work permit to work in Azerbaijan.  Work permits are obtained through the “one window” principle or the migration online system Permits for staying in Azerbaijan temporarily or permanently are obtained through the “one window” principle or through the migration online system, which is designed to ease the application process.  Under the “one window” principle, all documents necessary for the registration of expatriates in Azerbaijan or for the obtaining of work permits for them are submitted to one state body (State Migration Service), which, in turn, coordinates the work with other state authorities and issues identification cards and work permits for expatriates.  The “one window” principle is likewise used to register expatriates who have already been granted permits for staying in Azerbaijan temporarily or permanently and to obtain special identifications for them.  Citizens of countries that have a non-visa regime with Azerbaijan, such as the Russian Federation, do not need a visa to enter Azerbaijan. Need assistance hiring in Azerbaijan ? Contact us about our International EOR Service Type of Visa/PermitDocumentation Validity Eligibility Single entry (1 month) Business Visa Letter of invitation provided by a 5legal entity registered in Azerbaijan that is approved and certified by the Consular Department of the Ministry of Foreign Affairs in Azerbaijan before its submission to the respective Azerbaijan embassy  Foreigner visiting Azerbaijan for business purposes must obtain a business visa Multiple entry (180 days)

5. A completed application  Passport-size photographs  A passport  Applicable fee Letter of invitation provided by a legal entity registered in Azerbaijan that is approved and certified by the Consular Department of the Ministry of Foreign Affairs in Azerbaijan before its submission to the respective Azerbaijan embassy  Single entry(1 month) Foreigners visiting Azerbaijan for tourism purposes must obtain a tourist visa Multiple entry (180 days) Tourist Visa A completed application  Passport-size photographs  A passport  Applicable fee A duly completed application form Notarized copies of any documents in support of the prospective employee’s professional qualifications An identity document for the employee The employee’s work history for the previous five years A health certificate for the employee confirming that they are not carrying HIV or Hepatitis B or C Expatriates must obtain a work permit to work in AzerbaijanExpatriates must obtain a work permit to work in Azerbaijan. Work Permit 1 years A copy of the employee’s passport, which must be valid for at least six months after the planned arrival in Azerbaijan A copy of a document that certifies the employee’s right to stay in Azerbaijan A reference confirming the necessity for a specialized worker Onboard employees in days, anywhere in the world Value Added Tax (VAT) in Azerbaijan The standard rate of VAT is 18%. VAT

6. Standard Rate 18% Mandatory Benefits in Azerbaijan These are mandatory benefits as postulated by law These include probationary period, annual leave, public holidays, sick leave, maternity leave, paternity leave, overtime pay, notice period, and severance pay Statutory benefits also include social security benefits Tap the world's talent pool Mandatory Bene?ts overview Probationary Period Annual Leave Public Holidays Maternity Leave Paternity Leave Sick Leave Overtime Pay Notice Period Severance Pay Social Security Benefits Payments And Invoicing The following persons are liable for the filing of the annual PIT return to the tax authorities no later than 31 March of the following year: - Residents having taxable income that was not taxed at source or deriving income outside of Azerbaijan, including royalties. - Non-residents having taxable Azeri-source income not taxed in Azerbaijanz Independent entrepreneurs ceasing their business activities should submit the tax declaration within 30 days of cessation. A taxpayer who is not liable for submission of the tax declaration may also submit it for recalculation and refund of overpaid taxes. A taxpayer may apply for an extension of the filing deadline for three months, provided that due taxes were paid. Employers should transfer the withheld taxes on the same day of payment of income to employees. Independent entrepreneurs are required to make advance current payments no later than the 15th day of the month following each quarter.  The final payment of tax should be made by 31 March of the following year. Payroll Accrual in Azerbaijan Country Accruals Additional Information State social protection  22.00% Sick leave   3.84% maternity leave     126 days Vacations     10.96% Christmas Bonus over Vacations 8.33%

7. Avoid delays, get started today Payroll Accruals Additional Information Employment Accruals     This equals 5.75% (21/365 days) of annual income Generally, employees are allowed 21 days of vacation leave.     Annual Leave Pregnant women are entitled to a total of 126 days of paid maternity leave     This equals 34.5% (126/365 days) of annual income Maternity Leave     Fathers are entitled to 14 days of unpaid paternity leave after the birth of a baby.  Unpaid Paternity Leave     For the first 14 days of illness, it is the responsibility of the employer to pay sick leave compensation.     This equals 3.83% (14/365 days) of annual income Sick Leave     Normal hourly rate is around 18.43 AZN. Overtime is paid at an additional 18.43 AZN. Overtime is paid at the rate of 200% of the normal salary.    Overtime    Severance pay varies depending on the length the employee has been employed:   Less than 1 year – 1 month’s salary This equals 8.33% (1/12 months) of annual income • 1-5 years- 1.4 times the monthly salary Severance     • 5-10 years- 1.7 times the monthly salary • 10+ years – 2 times the monthly salary     Employers must make the following social security contributions: 2% if annual income is up to AZN 200; AZN 44 + 15% for the amount above AZN 200 if annual income is more than AZN 200     This equals 2% of 200; plus AZN 44 + 15% of 35,200. Social Security    Accrued Benefits in Azerbaijan 0% Christmas Bonus % 0% Christmas Bonus Over Vacations % Severance per Year %     Employees are entitled to severance pay equal to 1.4 times their average monthly salary  (11.66% of annual salary) Vacations % Generally, employees are allowed 21 days of vacation leave (5.76% of annual salary) Notice % Employees are entitled to 30 days of notice period for one year of service or more  (8.24%) 0% Christmas Bonus Over Notifications % 0% Vacations Plus % Total percentage of Salary (yearly)  25.75% The total employment accruals as a percentage of salary per

8. Why use Global Expansion to hire in Azerbaijan Establishing a branch office or subsidiary in Azerbaijan can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Azerbaijan labor laws are complex. The company also has a responsibility to comply with specific employment practices dictated by Azerbaijan law to maintain its good standing as an equal opportunity employer. Global Expansion makes it easy for you to expand into Azerbaijan. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees. We enable you to stay in control of everything. Our Azerbaijan Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.   Ready to hire anywhere in the world? Grow your team the right way with Global Expansion. Request a Proposal Contact Solutions Why Global Expansion Tools United States Employer of Record How we’re different CountryPedia United Kingdom Employment Compliance About GX Global Hiring Guides Follow 4,610 Portugal Global Immigration Total Cost of Employment Calculator Technology France Global Taxes GX One Philippines Global Payroll Resources Equity Pro Articles Singapore Employee Benefits Data Security & Privacy Blog Contact Us Global HR Thought Leadership Global PEO Become a Partner FAQ © 2022 Global Expansion    |   Privacy Policy  |   Cookie Policy   |   Code of Conduct Policy   |   Responsibility Policy   |   Anti-Bribery and Corruption Policy