Study of Small and Medium Enterprises in Azerbaijan - IFC

3.9 Unofficial payments
As in-depth interviews with entrepreneurs reveal, unofficial payments may still play
a role in the registration process, particularly in the regions 14 . Legal entities resort to
unofficial payments more often than individual entrepreneurs since the procedure for
registration is more complicated. This confirms the assumption that the lack of sanctions
for non-observance of deadlines as well as pre-registration procedure (such as
confirmation of the legal address and notarization of foundation and other registration
documents) creates additional opportunities for corruption.
View from an entrepreneur:
“Although it takes around three days to register a company with the registration office, I
had to spend ‘some money’ apart from the state registration fee. These are mainly costs
for notarization of documents.”
3.10 Recommendations 15
3.10.1 Introduce the “silence is consent” principle
Introduce the “silence is consent” principle at the end of the three-day consideration
period, as well as sanctions for non-observance of deadlines by officials. Registration
should be granted if an explicit refusal decision is not made. Therefore, if no response
is entered into the system within a given time limit, the registration certificate is
automatically granted.
Expected impact
By introducing the “silence is consent” principle and sanctions for non-observance
of deadlines, the government can prevent possible delays in the application review
process. This will reduce opportunities for informal settlements as well.
3.10.2 Streamline the pre-registration procedure for legal
entities
Simplify the pre-registration process by removing the requirement to obtain a confirmation
of the legal address of the company from the proposed landlord and notarize
foundation and relevant registration documents.
Expected impact
Reduced time and costs for the entrepreneurs to register their business.
14
IFC survey data covers figures prior to January 2008 reform.
15
The overall assessment of the new registration system through the survey is due early 2009. IFC’s current
recommendations based on the analysis of legislation, focus group results and report of the Norway Registers
Development assessing the capacity of the Ministry of Taxes to lead the registration process prior to launch of the
‘one-stop-shop’ project in January 2008.
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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