Study of Small and Medium Enterprises in Azerbaijan - IFC

Box 5.2 Permits in the European Union
The current permit system in Azerbaijan has two origins:
1. The rules and technical requirements governing permits which were elaborated
during Soviet times and have not been brought in line with requirements of a
modern market economy.;
2. During the past years, the government adopted a number of legal acts in order
to regulate the development of a market economy.
Consequently, the current permit system is characterized by inconsistencies due to
lack of a systematic approach. This means that there is:
1. No clear definition of what constitutes a permit;
2. No exhaustive list of permits;
3. No defined procedures for issuance and revocation of permits;
4. No defined validity period of permits;
5. No defined cost for obtaining permits.
Moreover, the lack of clear principles governing the permits system has led to the
introduction of a number of permits from different government agencies without
a clear legal basis and, which may conflict with the sound principles of the market
economy. Box 5.2 shows an example of state regulation of permits in the European
Union countries that sets up a balance between freedom of entrepreneurship, protection
of the population, and state regulation 32 .
Basics
Permits in the European Union are based on risk management. Permits are used as a tool to protect consumer’s health and safety and to
protect the environment. Constitutional court prevents abuses, overseeing the list of permits introduced by the state bodies.
Overall constitutional principles:
• Parliamentary law should define whether a specific activity requires a permit;
• A permit can only be required and issued if envisaged by the law.
Law defines key criteria:
• Object and activities subject to permits;
• Material and procedural criteria for issuing permits;
• Responsibility of permit issuing bodies;
• Fees associated with issuing permits;
• Opportunities for appearing decisions and other legal measures in cases of denial or issuance delay (such as “silence is consent”).
Types of permits:
• Administrative preventive permits: i) as a condition to undertake and commence certain activity; ii) issued by a single decision of a public
institution (e.g., environmental permits, construction permits);
• Registration and notification system: i) individual decided whether he/she can meet the conditions of the law; ii) activity can be commenced
after registration or notification; iii) public institution is entitled to control the fulfillment of the defined conditions and criteria
and can prohibit to carry out an activity (i.e., catering services, retail food shops).
32
Based on materials of the conference “Permits and approvals in Entrepreneurship Activity,” Minsk, Belarus,
December 20, 2006.
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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