"The state of entrepreneurship is reflected by the number of inactive commercial entities... 65,000"

In Azerbaijan, the status of more than 65,000 commercial entities is inactive. According to the State Tax Service, as of December 1, there were 188,877 registered commercial entities. Of these, 123,682 are active, while 65,195 are inactive.

Elman Samadov (a pseudonym), a Baku resident, told  Radio Azadliq that he opened a toy store last year: "I had no issues with documentation and was happy that my business would run smoothly. However, due to high taxes on one hand and a lack of customers on the other, I was forced to close the store. I had one employee and paid simplified tax. It was manageable at 5%, but when it rose to 20% (at the beginning of this year), it became unprofitable. On top of that, I had to pay rent tax too."

According to him, although he applied for a concessional loan, he was rejected: "So, for now, I’ve closed the store."

The State Tax Service told Turan that the number of active commercial entities has increased by 10.9% in the first 11 months of this year compared to the same period in 2023:
"Currently, the share of the private sector in gross domestic product (GDP) has risen to 87%, and its share in employment is over 78%."

It was emphasized that to prevent bureaucratic interference, inspections, with certain exceptions, have been suspended from 2015 until January 1, 2025:
"Entrepreneurs who have obtained an investment promotion document are exempt for 7 years from 50% of profit or income tax, property and land tax, as well as VAT and customs duties on imported equipment..."

According to the service, between 2004 and 2023, concessional loans totaling 3.01 billion manats were issued to 28,308 entrepreneurs: "The number of projects reached 45,669, and the number of new jobs created was 176,213."

Economist Zohrab Ismayil, commenting on the issue to Radio Azadliq, said that the state of entrepreneurship in Azerbaijan can be understood by the number of inactive commercial entities: "In a country of 10 million, there are 188,000 entrepreneurs, of which approximately 65,000 are inactive. This shows that there is no proper environment for entrepreneurship in Azerbaijan, and people cannot engage in business."

According to the expert, the reasons for this are numerous: "Firstly, there is state monopoly in the country, and the main sectors of the economy are controlled by state companies. Whether it is foreign trade or domestic business, there is no environment for free entrepreneurship."

He added that state procurements are not conducted freely and transparently: "Finally, the rule of law is also very weak... Commercial entities are opened, but due to the unfavorable conditions, they cannot sustain their activities and eventually stop functioning."