Study of Small and Medium Enterprises in Azerbaijan - IFC

The absence of the IRB registration leads to an increase in actual visits/inspections
of the enterprises. As a matter of fact, nobody can really tell the actual number of
inspections executed in Azerbaijan in any given sector or place.
6.4 MED’s representative presence at the inspections
According to the President’s Decree dated 2002, all inspections, except for taxation,
should be conducted in the presence of a MED representative at the place of
inspection. This requirement should lower the pressure created by inspections, as well
as reduce the practice of non-official payments during the inspections.
Yet, as in the case of inspections’ registration in the IRB, the requirements providing
for the presence of MED representative are not being observed. The chart below
shows the frequency of MED participation in the 2007 inspections:
Chart 6.12
Average level of
MED representative
presence at
inspections
10%
Participated
Didn’t participate
90%
Despite the fact that the about 60 percent of the enterprises are inspected,
practically all inspections by relevant authorities were conducted without a MED
representative.
It is necessary to note that throughout the country, in 90 percent of the cases, the
inspections were conducted without a MED representative.
Despite the entrepreneurs’ low level of legal awareness, it appears that they are aware
of the requirement to have a MED representative’s presence during the on-site
inspections. Many also knew their right to be able to request a MED presence, if
absent. Therefore, why do businesspeople not request their attendance? In answering
this question, one draws parallels with the number of respondents who fail to register
inspections in IRB.
The explanation is again quite similar – it is all about maintaining ”friendly” relations
with the inspectors and not wanting to spoil a relationship where informal arrangements
are made possible. Any invitation of a MED representative may be seen as
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St u d y o f Sma l l a n d Me d i u m Ent e r p r i s es in Az e r b a i j a n