Azerbaijan

Geography and Political System

Azerbaijan is located on the south-eastern frontiers of the European continent and serves as the geographical bridge between Europe and Central Asia; it is also a convenient economic and energy route from Northern Europe to the Middle East. Azerbaijan is bounded by the Caspian Sea to the east, Russia to the north, Georgia to the northwest, Armenia to the west, and Iran to the south. It has a presidential republic form of government, with Baku as the capital.

The official currency in Azerbaijan is the Azerbaijani manat (AZN), and the official language is Azerbaijani. Since 2017, the manat has remained relatively stable at around 1.70 AZN per USD.

Economic History and Development

With a history of industrial development of more than 100 years, Azerbaijan proved to be an economic powerhouse in the Southern Caucasus throughout the turmoil of the Soviet Union collapse in the early 1990s. After Azerbaijan regained its independence in 1991, the Republic conducted a lengthy period of transition from a Soviet-style command economy into a modern, market-driven economy, concentrated on the production and export of its hydrocarbon resources. Over the past three decades, Azerbaijan has developed into a key energy hub, supplying oil and gas to Europe and beyond.

International Memberships and Cooperation

Azerbaijan is a member of multiple international organizations, including:

• United Nations (UN)
• Organization for Security and Co-operation in Europe (OSCE)
• NATO’s Partnership for Peace
• Euro-Atlantic Partnership
• World Health Organization (WHO)
• GUAM Organization for Democracy and Economic Development
• European Bank for Reconstruction and Development (EBRD)
• Council of Europe
• International Monetary Fund (IMF)
• World Bank

Additionally, Azerbaijan holds observer status in the Community of Democracies and the World Trade Organization (WTO). The country is also a member of the Non-Aligned Movement (NAM) and served as Chair from 2019 to 2023.

Azerbaijan supports the demilitarisation of the Caspian Sea basin and the preservation of the Southern Caucasus as a nuclear-free zone.

Energy Sector and Strategic Positioning

Azerbaijan is a leading exporter of oil and natural gas. Oil production under the first production sharing agreements (PSAs) with the Azerbaijan International Operating Company (AIOC) began in November 1997.

Economic Growth and Diversification

Meanwhile, in spite of the fact that oil remains a key driver of gross domestic product (GDP), the non-oil sector is rapidly growing in Azerbaijan.

• In 2024, Azerbaijan’s GDP grew by over 4.1%, while the non-oil sector of the economy recorded more than 6% growth.
• Azerbaijan has made significant investments in agriculture, tourism, and technology to diversify the economy.
• The country’s foreign exchange reserves exceeded $72 billion in early 2025, ensuring financial stability.
• External debt remains low at 7.2% of GDP.

These economic trends indicate Azerbaijan’s strong financial management and ongoing efforts to reduce dependence on hydrocarbons.

Monetary Policy and Exchange Rate Stability

On 21 February 2015, Azerbaijan’s Central Bank devalued the manat by 33.5% against the USD and 30% against the EURO. .The highest appreciation of the real exchange rate of Azerbaijan’s national currency since the devaluation of 2015 occurred in the last 10 months of 2020. In 2020, the real exchange rate of the manat in the non-oil sector rose by 6.6%.

Since 2017, the manat has remained stable at 1.70 AZN per USD.

PwC Azerbaijan's Tax and Legal practice is the largest team in Azerbaijan, consisting of 40 tax specialists and lawyers at the top of their profession. We are organised around different aspects of tax and law, reflecting the need for in-depth specialist knowledge in each key area. We recognise that, in many cases, knowledge of tax and law must be embedded in a thorough understanding of the industry. We have therefore developed specialised teams along industry lines, allowing us to quickly assemble a team with the required tax and legal skills, as well as the relevant industry knowledge. As a result, we speak our clients’ language and can meet their requirements through understanding their overall business situation, not just narrow individual issues.

PwC Azerbaijan offers a wide range of tax and legal services, including:

• International tax planning.
• Tax compliance services.
• Accounting services.
• Payroll services.
• International Assignment Services.
• Customisation of strategy and operations in new economic environment - tax considerations.
• Tax and legal aspects of mergers and acquisitions (M&A).
• Transfer pricing.
• Indirect tax and customs.
• Personal income tax management and reporting.
• Developing an efficient tax function.
• Corporate and company law.
• Contract law and legal drafting.
• Equity funding and foreign lending.
• Intellectual property (IP), anti-trust, and consumer law.
• Employment and immigration law.
• Dispute settlement, arbitration, and mediation.
• Construction and real property law.
• Anti-trust and competition.
• Licensing.
• Banking and finance.
• Special tax regimes, production sharing contracts, and tax protocols.
• Tax risk management.
• IFRS transition and tax adjustments.
• Company establishments and dissolution.
• Tax structuring. 
• Security agreements.