Azerbaijan’s Tax Reform Aims at Transformation, but the Growing Tax Burden Draws Criticism

Azerbaijan is attempting to move its investment policy into a new phase, balancing its long-standing “open door” approach to foreign capital with a clearer assertion of state control over assets considered strategic. Amendments approved by President Ilham Aliyev to the law “On Investment Activity” aim to clarify the legal basis for government intervention in strategic investments while preserving formal protections for investors.

Azerbaijan’s latest attempt to tighten control over public finances reflects a familiar dilemma for resource-rich states: how to modernise fiscal management without fundamentally reshaping the institutions that underpin it.

With Donald Trump’s return to power in the United States, radical shifts in domestic and foreign policy have begun to impact global markets, with these effects expected to expand further. The energy and securities markets appear to be among the most affected sectors, leading to significant implications for the State Oil Fund of Azerbaijan (SOFAZ) and the State Oil Company of Azerbaijan Republic (SOCAR).

Celebrating its 25th anniversary, the State Oil Fund of the Republic of Azerbaijan (SOFAZ) [1] has had its budget proposals reviewed by the Chamber of Accounts since 2018[2]. Previously, SOFAZ's budget proposals were approved directly by the country's president without the opinion of the Chamber of Accounts.