Study of Small and Medium Enterprises in Azerbaijan - IFC

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are planned according to the health risk levels and/or potential safety concerns. Construction follows suit, even though it probably does not fall in either category. As the following charts show, besides the exposure of these branches to inspections, many state authorities engage in controlling them. Chart 6.3 Trade and public catering are the most inspected sectors Inspections extent by sectors of activity Trade and public catering Construction Other production, textile Service Agriculture, food production 0% 20% 40% 60% 80% 100% Chart 6.4 Trade and public catering concerns are the most inspected by all state services Extent of inspections conducted by the state services for different sectors of activity Economy Ministry State Standard Force Major Ministry Health Ministry Ministry of Industry Tax Ministry Labor Ministry Ecology Ministry Ministry of Agriculture Trade Other sectors 0% 20% 40% 60% 80% 100% View from an entrepreneur: “The inspector knows that if he closes my café, lets say, for a week, I will lose part of my clients. To attract clients, especially in such a highly competitive sector as ours, is not easy. That is why I do all I can to prevent my business from stopping.” A relatively high cash turnover may explain why a large percentage of the respondents in these industries were forced to make informal payments in order to see a positive inspection result – 26 percent. Risking being out of operations for any period of time is probably a greater threat than settling the inspection issues in an informal way. 94 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
6.1.4 Entrepreneurs are not aware of their rights The type of legal incorporation will significantly determine the frequency of inspections and this is why the report examines the difference between individual entrepreneurs and legal entities. Chart 6.5 Individuals are subjected to almost 40 percent more inspections, compared to legal entities Number of inspections by legal status of business entity 12 9 6 9 11 5 7 For all enterprises 3 For enterprises, that were checked 0 Individual enterprises Small and medium enterprises The research results show that individual entrepreneurs are checked more often than others. In depth interviews offered further evidence that a higher awareness of the legal rights of businessmen can be of significant assistance. Enterprises with an improved understanding of their legal rights were checked less regularly and the findings were more favorable to them. SMEs are rarely subjected to illegitimate inspections, which is not the case with micro enterprises, as illustrated above. This difference corresponds to the maintenance of the Inspections Registration Book; those who keep it updated have a cleaner inspection record. Chart 6.6 Registered SMEs are subject to inspections less often Registration of inspections by the legal status of business entity Legal entities Individuals Ministry of Emergency Situations Ministry of Economic Development Ministry of Agriculture Ministry of Taxes Ministry of Health Ministry of Transport Ministry of Labour and Social Protection State Committee on Land State Agency of Standardization Local executive power 0% 10% 20% 30% 40% 50% 60% 70% 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 95
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Study of Small and Medium Enterpris
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Study of Small and Medium Enterpris
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5. Business Permits................
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Foreword and Acknowledgements IFC,
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critically examines all areas of op
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of each formality. Special attentio
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Policy Recommendations Business Reg
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Problems Sources of Problem Recomme
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Business Taxation Problems Sources
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Capital: Baku Country’s populatio
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The state, ultimately responsible f
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1. Methodology 1.1 Background The s
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the share of economically active co
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Scope of activity Official statisti
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2. SMEs in Azerbaijan The aim of th
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Meanwhile, the number of small and
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Table 2.2 Statistical information o
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The “typical” small enterprise
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According to the IFC survey, more t
Page 45 and 46: 2.5.3 Legal disputes Most entrepren
Page 47 and 48: 3. Business Registration In January
Page 49 and 50: According to the law previously in
Page 51 and 52: 3.4 Economic impact estimate Accord
Page 53 and 54: tion duplicate is addressed to the
Page 55 and 56: the local tax inspectorate for regi
Page 57 and 58: 3.10.3 Introduce the electronic reg
Page 59 and 60: 3.10.7 Simplify the liquidation pro
Page 61 and 62: Business registration before ‘one
Page 63 and 64: Process map of one-stop-shop busine
Page 65 and 66: Registration for individual entrepr
Page 67 and 68: 4.1 Licensing: the legal framework
Page 69 and 70: Chart 4.1 Number of activities requ
Page 71 and 72: While the Rules specify limits for
Page 73 and 74: Chart 4.6 Economic impact of licens
Page 75 and 76: Annex 4.1 Checklist of issues for d
Page 77 and 78: Based on the IFC survey estimates,
Page 79 and 80: 5.2 Permits coverage The Azerbaijan
Page 81 and 82: Box 5.4 An example of overlapping p
Page 83 and 84: 5.4 Permit expenses Azerbaijani leg
Page 85 and 86: Chart 5.9 40% Average percentage of
Page 87 and 88: 2.4. Specifying in the law a unifor
Page 89 and 90: Annex 5.1 Procedure for obtaining c
Page 91 and 92: Annex 5.2 Checklist of issues for d
Page 93 and 94: The most significant legal act in i
Page 95: 6.1.2 There is no effective mechani
Page 99 and 100: IFC’s analysis showed that only h
Page 101 and 102: 6.2.2.1 The inspections process and
Page 103 and 104: View from an entrepreneur: “The s
Page 105 and 106: Chart 6.11 Average registration in
Page 107 and 108: going in the opposite direction. In
Page 109 and 110: clearly defined circumstances, or a
Page 111 and 112: Annex 6.2 Presidential Decree No. 7
Page 113 and 114: The bulk of individual entrepreneur
Page 115 and 116: Items 1-9 are collected at the firs
Page 117 and 118: The IFC survey reveals that one in
Page 119 and 120: Table 7.5 Main tax obligations of a
Page 121 and 122: Chart 7.3 IFC Survey: Complexity of
Page 123 and 124: 7.3.2 Tax inspections negatively af
Page 125 and 126: 7.3.5 The cumbersome VAT administra
Page 127 and 128: • Introducing clearer and more el
Page 129 and 130: Chart 8.1 Development of Credit Ins
Page 131 and 132: More than 90 percent of entrepreneu
Page 133 and 134: Chart 8.9 The loan interest rates o
Page 135 and 136: Case study of a Baku-based glass an
Page 137 and 138: View from a bank employee: “One p
Page 139 and 140: Box 8.2 Examples of a successful cr
Page 141 and 142: Box 8.3 Examples of alternative mec
Page 143 and 144: 9. Foreign Trade The volume of fore
Page 145 and 146: Box 9.1 Customs regimes under the C
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As Chart 9.1 illustrates, 98 percen
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Table 9.1 A comparison of the proce
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The comprehensive system of mandato
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Table 9.2 Average costs for imports
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Box 9.5 Customs payments The Custom
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Box 9.8 An excessive number of docu
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Moreover, due to the underdeveloped
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Expected impact More comprehensible
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9.5.6 Accelerate WTO accession of A
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Chart 9.5 Goods importable upon app
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Azerbaijan has been long pending a
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List of Laws 1. The Tax Code of the
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Statistical Annexes Aze r b a i j a
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Chart A1.3 Individual Entrepreneurs
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Chart A1.7 Individual Entrepreneurs
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Chart A1.14 Three Major Types of Ob
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Registration Chart A2.1 Entrepreneu
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Chart A2.8 Three Major Problems Occ
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Chart A3.3 Existence of Licenses by
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Chart A3.9 Three Major Obstacles to
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Chart A4.4 Obtaining of Any Permits
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Chart A4.10 Time Required to Obtain
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Chart A5.4 Application for Credit o
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Chart A5.12 Average Interest Rate (
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Chart A6.3 Entrepreneurs That Under
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Chart A6.8 Authorities That Made In
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Chart A6.13 Breakdown of Number of
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Chart A6.19 Average Duration of One
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Chart A6.25 Small and Medium Enterp
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Chart A7.3 Small and Medium Enterpr
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Chart A7.8 Reported Share of Busine
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Chart A8.3 Usage of Optional (not c
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Azerbaijan Business Enabling Enviro
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Study of Small and Medium Enterprises in Azerbaijan - IFC

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