Az Company Formation

---
name: az-company-formation
description: "Company formation and entity choice in Azerbaijan for tax year 2026. Covers the limited liability company (MMC) under the Civil Code (no statutory minimum capital, capital paid before registration or within at most 3 months), joint-stock companies (minimum AZN 2,000 closed, AZN 4,000 open), branches and representative offices of foreign companies, and the individual entrepreneur; registration with the State Tax Service, the statutory registration times (immediate or 1 day for an electronic local-investment LLC, 2 days for other commercial entities), the state duty (none for an electronic LLC, AZN 15 on paper, AZN 300 for branches and financial firms); and the first-year tax calendar. Trigger phrases: set up a company in Azerbaijan, register MMC, LLC Azerbaijan, Azerbaijan registration fee, fərdi sahibkar, foreign branch Azerbaijan. Out of scope: tax computations (az-corporate-income-tax, azerbaijan-income-tax, azerbaijan-vat, azerbaijan-payroll, azerbaijan-social-contributions) and tax"
license: "AGPL-3.0-or-later (code) / OpenAccountants Guide License v1.0 (content)"
metadata:
  source: openaccountants
  openaccountants_url: "https://www.openaccountants.com/skills/az-company-formation"
  jurisdiction: "AZ"
  tax_year: "2026"
  last_updated: "2026-10-31"
---

# Azerbaijan Company Formation & Entity Choice

## Entity types, capital and incorporation

The most common vehicle is the limited liability company (məhdud məsuliyyətli cəmiyyət, MMC). Commercial legal entities register with the State Tax Service under the Ministry of Economy, which is also where the company is set up as a taxpayer. Figures below are from the Civil Code, the Law on State Registration of Legal Entities and the State Register, the State Duty Law, the Tax Code (consolidated text including Law 476-VIIQD of 30 September 2026) and the State Tax Service's registration pages, all read on 31 October 2026. Amounts are in manat (AZN).

- **Most common entity type**: limited liability company (MMC), set up by one or more individuals and/or legal entities, with charter capital divided into shares set by the charter. Members are not liable for the company's obligations and risk only the value of their contributions _(Civil Code art. 87.1)_
- **Other entity types**: closed and open joint-stock companies (qapalı / açıq səhmdar cəmiyyəti); branches and representative offices of foreign commercial entities, which are registered like commercial entities _(State Tax Service, fees and costs page; Registration Law art. 7-1)_; and the individual entrepreneur (fərdi sahibkar), an individual doing business on their own account without forming a legal entity, who registers with the tax authority on an individual registration application _(State Tax Service, "How to start a business")_
- **Minimum charter capital, LLC**: no minimum requirement for LLCs and cooperatives _(State Tax Service, fees and costs page)_. The capital may not be less than the amount that protects creditors, and regulated financial-market firms follow their sector laws _(Civil Code art. 90.1)_
- **Sector minimums**: closed joint-stock company AZN 2,000; open joint-stock company AZN 4,000; non-bank credit organisation set up as a commercial entity AZN 300,000; credit union AZN 4,000; investment fund manager AZN 125,000; joint-stock or unit investment fund AZN 500,000; credit bureau AZN 2 million; new bank AZN 50 million; new insurer AZN 5 million (non-life) or AZN 10 million (life), new reinsurer AZN 20 million _(State Tax Service, fees and costs page)_
- **Paying in LLC capital**: if the charter sets no payment period, the founders pay the charter capital in full before registration. If the charter sets a period, it may not exceed 3 months (venture capital funds set up as an LLC are excepted) _(Civil Code art. 90.2)_. Once the capital is fully paid, the registry must be told within 5 working days _(Registration Law art. 5.8)_
- **Registration authority**: the State Tax Service under the Ministry of Economy; the application "on state registration of a commercial entity" goes to the tax authority with the other registration documents _(State Tax Service, "How to start a business")_
- **Registration timeline**: a local-investment LLC registered electronically is registered at once on the speedy track, or within 1 day on the ordinary electronic track. Other commercial entities, branches and representative offices of foreign commercial entities, and the electronic registration of a foreign-investment LLC are registered within 2 days _(Registration Law art. 7-1)_. Where a founder of a foreign-investment LLC is a foreign legal entity, its registration documents (trade-register extract, registration certificate) are attached to the electronic application, legalised where consular legalisation is required _(Registration Law art. 7-2.1)_
- **State registration duty**: no state duty for the electronic registration of an LLC, local or foreign investment. On paper: AZN 15 for most legal entities, AZN 5 for agricultural entities, and AZN 300 for banks, exchanges, insurers, insurance associations and brokers, and branches and representative offices of foreign legal entities _(State Duty Law arts. 20.1-20.3, 20-1.3; Registration Law art. 4.3)_. Re-registration costs 50% of those amounts, a duplicate registration certificate AZN 3, and a register extract AZN 2 per page; changes to the state register are made free of duty _(State Duty Law arts. 20.4-20.6, 20-1.1)_. Notarising the application costs AZN 3 per signature. An "Asan İmza" or e-signature costs AZN 18 _(State Tax Service, fees and costs page)_
- **Core incorporation steps**: choose the tax system and the activity types in the registration application; for an electronic LLC, the founder fills in the electronic form, enters the first employment contracts and the beneficial owner, and signs the generated charter with an enhanced electronic signature _(Registration Law arts. 5-2.1, 5-2.2; State Tax Service, "How to start a business")_. Then register each business site (shop, café, workshop, warehouse) with the local tax office, open a bank account and, for cash takings, install a cash register _(State Tax Service, "How to start a business")_
- **Post-registration setup**: the tax authority passes the registration to the State Social Protection Fund, where the employer is registered automatically. Each employee needs a written employment contract, notified in the electronic information system. Changes to the registered activity types or tax system must be reported to the tax authority within 40 days _(State Tax Service, "How to start a business")_
- **Tax system in year one**: a new taxpayer applies the method it chose in its registration application. An existing taxpayer elects the simplified tax, or opts out of it, by 20 April each year and cannot change the choice before the end of the calendar year _(Tax Code art. 218.2)_. The simplified tax is 2% of gross receipts for a non-VAT business with taxable operations of at most AZN 200,000 in any rolling 12 months, subject to the exclusions in art. 218.5 _(Tax Code arts. 218.1.1, 220.1)_. Detail and eligibility tests: [az-corporate-income-tax](az-corporate-income-tax.md), [azerbaijan-tax-optimization](azerbaijan-tax-optimization.md)
- **Annual compliance, profit tax**: annual return by 31 March of the following year, with tax settled by the same date; quarterly advances within 15 days after each quarter, each one quarter of the previous year's tax _(Tax Code arts. 149.2, 151.1, 152.1)_. A simplified-tax payer files and pays quarterly by the 20th of the month after the quarter _(Tax Code arts. 221.2, 221.3)_. Detail: [az-corporate-income-tax](az-corporate-income-tax.md)
- **Ongoing compliance, VAT and payroll**: a VAT-registered company files a monthly VAT return by the 20th of the following month and pays within the same period _(Tax Code arts. 177.1.3, 177.2, 178)_; registration rules: [azerbaijan-vat](azerbaijan-vat.md). Income tax withheld from salaries is transferred by the 20th of the following month, and the withholding return is filed by the 20th of the month after each quarter _(Tax Code arts. 150.3.1, 150.3.3)_. Contribution rates and payment dates: [azerbaijan-payroll](azerbaijan-payroll.md), [azerbaijan-social-contributions](azerbaijan-social-contributions.md)
- **Late returns**: failing without grounds to file a required return for a period with taxable or exempt operations costs a AZN 40 financial sanction _(Tax Code art. 57.1)_
- **Accounting**: keeping accounts under the accounting standards and rules set by the Law on Accounting is mandatory _(State Tax Service, "How to start a business")_. Which framework applies (national standards or IFRS) and the filing date are on the Not yet confirmed line.

## Sources

| Source | URL | Read on |
|---|---|---|
| Civil Code of the Republic of Azerbaijan (Law 779-IQ), consolidated: arts. 87.1, 90.1, 90.2 | https://frameworks.e-qanun.az/46/f_46944.html | 2026-10-31 |
| Law on State Registration of Legal Entities and the State Register, consolidated: arts. 4.3, 5.8, 5-2.1, 5-2.2, 7-1, 7-2.1 | https://frameworks.e-qanun.az/5/f_5403.html | 2026-10-31 |
| State Duty Law (Dövlət rüsumu haqqında), consolidated: arts. 20.1-20.6, 20-1.1, 20-1.3 | https://frameworks.e-qanun.az/2/f_2860.html | 2026-10-31 |
| Tax Code, consolidated text including Law 476-VIIQD of 30 September 2026: arts. 57.1, 149.2, 150.3, 151.1, 152.1, 177, 178, 218.1, 218.2, 218.5, 220.1, 221.2, 221.3 | https://frameworks.e-qanun.az/46/f_46948.html | 2026-10-31 |
| State Tax Service, registration of commercial entities: fees and costs (notarisation and e-signature cost, minimum capital, Civil Code art. 90.2) | https://www.taxes.gov.az/az/page/rusumlarvexercler | 2026-10-31 |
| State Tax Service, "How to start a business" (registration, social fund, employment contracts, 40-day change notice, accounting duty) | https://www.taxes.gov.az/az/page/biznese-nece-baslamali | 2026-10-31 |

Not yet confirmed: whether a separate name-reservation step exists (the old version listed one; the sources read do not mention it); whether a company seal is still needed (the old version listed it; no official source read); the accounting framework by entity category (national standards or IFRS) and the deadline for filing annual financial statements under the Law on Accounting (not read); how long legalising a foreign founder's documents takes in practice, beyond the 2-day statutory period; the Tax Code changes from 1 January 2027 under Law 476-VIIQD (not applied).

## Today's figures and who stands behind this skill

This file is an AI skill (tax rules your AI follows) from OpenAccountants, copied on 2026-10-31. Rates, thresholds and deadlines change. For the current version of this skill, its official sources and the named accountant (if any) who stands behind it, call `get_skill` with slug `az-company-formation` on the OpenAccountants connector (https://www.openaccountants.com/connect), or read https://www.openaccountants.com/skills/az-company-formation. If neither is available, confirm every figure against the official source pages cited above before relying on it.