Investing in Azerbaijan: Amendments to the Law on Investment Activity​

Azerbaijan amended its Law on Investment Activity in February 2026, forging a more comprehensive legal framework for the protection of state interests and clarifying the boundaries of nationalization and state acquisition of investments.

What protections does the investor have?

Article 13, which governs guarantees against nationalization and state acquisition, establishes as a general rule that investments and capital investments on the territory of Azerbaijan may not be acquired or nationalized without the investor’s consent. The law confines the permissible exceptions to three narrowly defined grounds: state needs, emergency requisition under Article 209 of the Civil Code. The law also introduces the new concept for [acquisition] of strategically significant investments including prevention of exceptional circumstances detrimental to the interests of the Azerbaijani state and people or contrary to the national interests of the Republic.

The amendments, furthermore, explicitly provide that such measures shall not have be discriminatory character toward investors.

What is the compensation mechanism?

Where the investment agreement does not prescribe a valuation methodology, compensation is to be determined by reference to the fair market value of the investment at the moment immediately preceding the nationalization or acquisition, or its public announcement, whichever occurs earlier. Payment must be made without delay: in freely convertible currency for foreign investments, and in the currency of the original investment for domestic ones.

Tax Updates

Azerbaijan amended its Tax Code and the Law on Customs Tariff in early 2026, introducing a broad set of changes to taxpayer registration procedures and the treatment of income tax, VAT, excise tax, and customs duties exemptions. The amendments entered into force on 1 January 2026, with certain provisions to be phased in through 23 August 2026.

Tax registration of non-residents engaged in e-Commerce

The amendments overhaul the tax registration framework for non-residents conducting electronic commerce in Azerbaijan. Under the previous regime, registration related obligations arose only in respect of works and services rendered to residents. The revised rules extend this scope to works and services provided to any person not registered with the tax authorities.

The amendments also draw clearer boundaries around what constitutes e-commerce for these purposes. Excluded from the definition are consultancy, legal, financial, accounting, design, and engineering services delivered via email or other interactive means; real-time educational and training services conducted over the internet; and online ticket sales for science, education, culture, sports, and entertainment events.

Extension of Moratorium on Business Inspections

As part of a decade-long policy of suspending business inspections, the legislation first enacted in 2015 has been amended to extend the moratorium through January 1, 2027. The move relieves entrepreneurs of yet another year of bureaucratic burden, reinforcing a self-regulating business environment as a foundation for sustained economic development.

Nevertheless, the inspections will continue in critical areas, including:

• • Tax inspections, financial market audits, and customs audits;
  • Inspections of private medical activity entities by the relevant executive authority;
  • Monitoring compliance with pharmaceutical quality and safety standards, as well as food and feed safety;
  • Fire safety inspections, state supervision in construction, oversight of hazardous facilities and mining areas, and radiation safety controls;
  • Inspections by authorized representatives of utility enterprises concerning meter tampering or unauthorized network connections at business premises;
  • Inspections for compliance with the Law on Combating the Legalization of Criminally Obtained Assets and the Financing of Terrorism and the Law on Targeted Financial Sanctions;
  • Inspections involving cases that pose a significant threat to human life and health, state security, or economic interests, as determined by the relevant executive authority.

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