Having a business presence in Azerbaijan opens doors for relationships within markets in other countries in the region, which makes it an ideal location to expand to. However, companies will have to determine how to set up an Azerbaijan payroll, hire employees, provide compensation and benefits, and more.
G-P can help build a global workforce without establishing a subsidiary. We streamline payroll setup and management by handling the complexities of paying your teams accurately, in the local currency, and on time.
Taxation rules in Azerbaijan
Following taxation rules is vital for both employees and employers who must contribute to the Social Protection Fund (SPF) at varying rates. Employees pay 3% of their salary on income up to AZN 200 and 10% on any income beyond that, while employers owe 22% of the employee’s salary, including any bonuses, up to AZN 200, plus 15% on income beyond that.
In the oil and gas and government sectors, employees and employers pay 3% and 22%, respectively. Compulsory medical insurance requires 2% from employees and 2% from employers.
All employers must withhold taxes from employees’ salaries and pay employees using Azerbaijan’s fully electronic payroll system.
Azerbaijan payroll options for companies
Every company has their own business goals and needs an Azerbaijan payroll option that fits those goals. There are 3 main payroll options, including:
- Internal: Although it’s not a viable option for everyone, larger companies looking to work in Azerbaijan for years to come may choose to set up internal payroll. With this option, you’ll need to hire a bigger HR team and experts in Azerbaijan’s labor laws.
- Azerbaijan payroll processing company: Without the time or knowledge to set up an Azerbaijan payroll, companies can work with a local payroll processing company. You will still be responsible for compliance.
- G-P: Companies can also partner with an EOR like G-P to facilitate easy and compliant payroll management. We set up payroll and ensure teams are paid accurately, so companies can focus on other key components of their operations.
How to set up a payroll in Azerbaijan
You can’t set up Azerbaijan payroll until you’ve establish a subsidiary in the country. This is a lengthy process, and it may take months before you are ready to start hiring and adding workers to your payroll.
An EOR like G-P eliminates this step so companies can start working faster. Our team of HR and legal experts understands everything about employment laws in Azerbaijan, so you can leave compliance matters to us.
Entitlement/termination terms
Hiring and terminating employees in an unfamiliar country such as Azerbaijan can prove difficult, so it’s best practice to add entitlement and termination terms to employment contracts before choosing a payroll option. Employees usually get 3 months of severance pay, and employers must document the termination of employment to meet strict laws.
Streamline global payroll management with G-P.
G-P streamlines each step of the payroll management process with our market-leading Global Growth Platform™. Pay your team with confidence anywhere in the world in 150 currencies with our 99% on-time automated payroll system — all with just a few clicks. Our products also integrate with leading HCM solutions, syncing employee payroll data across platforms automatically to create one reliable, convenient source of truth for HR teams.
Contact us to learn more about how we can support you.