FAQ: Social Entrepreneurship in Azerbaijan

What is a social enterprise under Azerbaijani legislation?
The concept of SE is very fresh in Azerbaijan. In accordance with the Law on Employment (adopted in 2018), SE is a specialized legal entity established for ensuring employment of persons who have particular need in social protection and have difficulty in getting job.
According to the “Standards for social enterprises and workplaces above quota” approved by the Cabinet of Ministers in 2020, SE shall comprise at least 80% of employees, who especially need social protection and have difficulties in finding job.
Who are the people under social protection?
• Disabled
• Youth under 20
• Single parents who take care of underage children
• Parents with multiple children
• Parents with disabled child under 18
• Persons who have less than two years to pension age
• Persons released from prisons
• Displaced persons.
How are people in need of social protection attracted to SE?
Employer, the SE, shall refer to State Employment Agency and DOST center. In case an employee is not sent by the above mentioned institutions, only then the employer can hire employees itself.
The employer also carries responsibility to provide training, career guidance and vocational rehabilitation of the employees at the SE.
In what forms do the SEs function?
• Associations and foundations (under the Law on NGOs) – the most wide-spread form;
• Companies (under the Civil Code);
• Public legal entities (under “Law on Public Legal Entities”);
• Cooperatives (under “Law on Agricultural Cooperatives”);
• Family farm associations (under “Law On Family Farming”).
In which cases the SE is exempt from taxes?
Income of NGOs received as membership fees, donations and grants are exempt from taxation. Donations and grants must be registered with the Ministry of Justice.
If the SE operates in the form of NGO and has more than 50% of disabled people on its staff – exempt from property tax and tax on profits is reduced by 50%.
A number of professions, which are usually related to or used at the SEs are exempt from income tax.