Study of Small and Medium Enterprises in Azerbaijan - IFC

5.4 Permit expenses
Azerbaijani legislation does not have clear provisions on issuance fees for all permits.
However, it does not mean that payments are not made in practice. The current
legislative framework leads to situations in which entrepreneurs sometimes cannot
distinguish between official and unofficial payments (see Chart 5.5).
Chart 5.5
Average amount of
expenses (official
and unofficial) paid
for obtaining one
permit by SME
and individual
entrepreneurs
350
300
250
200
150
100
136
168
250
309
Azerbaijani
manat
USD
50
0
Individual entrepreneurs
SMEs
5.5 Economic impact of permits
Entrepreneurs have to allocate financial, as well as human and time resources in
order to obtain necessary documents from government agencies. As a result, due to
wasted time, entrepreneurs lose additional profit. Moreover, staff members dealing
with obtaining required documents cannot focus properly on operational work.
According to economic data provided through the IFC survey, it has been calculated
that individual entrepreneurs lose on average 1.7 percent of their annual profits, while
SMEs spend around 0.4 percent of their annual profit (see Chart 5.6).
Chart 5.6
Economic impact of
permit expenses
500
400
375
300
200
213
263
304
Azerbaijani
manat
USD
100
0
1.7% of
annual
profit
Individual entrepreneurs
0.4% of
annual
profit
SMEs
Aze r b a i j a n Bu s i n e s s En a b l i n g En v i r o n m e n t Pr o j e c t 81