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Azerbaijan: Alat Free Economic Zone

 

Azerbaijan is a country located between the Caspian Sea and the high Caucasus Mountains. Azerbaijan is a rich in natural resources, such as oil and gas to various precious metals, as well as a potential tourist, agricultural and transportation hub.

 

The Alat Free Economic Zone (AFEZ) is a special economic zone located on the Caspian Sea, near the port of Baku, the Azerbaijani capital, 50 km south of the city centre. Its strategic geographic location aims at establishing the area as a regional investment hub and increasing the competitiveness within the Europe-Caucasus-Asia and North-South trade routes. This zone is intended to intensify local and foreign investment in non-oil sectors.

 

The legal framework for the development, operation and governance of the AFEZ originates from the Law of the Republic of Azerbaijan “On the Alat Free Economic Zone”, adopted by the Azerbaijani Parliament, and signed by the President of the Republic.

 

The regulation provided for AFEZ represents an exception to the general Azerbaijani law, so in case of conflict it prevails over the latter.

 

In order to clearly separate the regulations in force in the AFEZ from the rest of Azerbaijan’s legal system, the Azerbaijani parliament has adopted more than 80 specific amendments in various areas, including tax, customs, labour, and licensing and dispute resolution methods.

 

In short, one can say that in AFEZ, with the exception of anti-money laundering regulations and criminal law, there exists an economic law that is autonomous from that applicable in the rest of Azerbaijan.

 

The official site of AFEZ reports that, in line with other international special economic zones, it provides a package of tax and other benefits for investors, including:

 

  • exemption from VAT tax, withholding tax, and any other corporate taxes;
  • exemption from customs duties and taxes on import to the free zone and export from the free zone;
  • no personal income tax for local personnel (if the monthly salary does not exceed 8000 manat – approximately $ 4700);
  • no social security payments and no other similar taxes and payments for foreign skilled personnel;
  • no restrictions on foreign ownership;
  • no requirement for a local partner;
  • trade facilitation–based customs regime;
  • no restrictions on foreign currency or profit repatriation;
  • investors’ property is immune from any nationalization, expropriation measures or any other restrictions on private ownership;
  • access to visas for all foreign nationals;
  • on-site one-stop shop for business appraisal, licensing, permitting (without any base economy authorities or agencies involvement);
  • independent dispute resolution procedures in accordance with best international standards.
  • full protection of intellectual property rights;
  • assistance in hiring local skilled personnel;
  • independent regulatory authority.

 

The mission of Alat Free Economic Zone is to create, develop and deliver investor-centric business solutions that attracts, secure, and support the establishment and growth of businesses operating in high value-added, export-oriented manufacturing and internationally traded services.