Business environment in Azerbaijan lack from the lack of enforceability of the existing regulatory requirements, and other problems associated with it. Many areas of business regulation continue to be in need of reforms that would encourage private enterprise. Azerbaijan was even named the top reformer on the Doing Business list by the World Bank in 2007/2008, and some further reforms taking place, but at a much slower pace. Administrative requirements coupled with bureaucracy cost are high. Dealing with construction permits and getting electricity prove to be lengthy processes, and also very expensive. Introduction of one stop shop for construction permits is envisaged to decrease administrative burden, as all documentation can be done with only one state agency, instead of six of them.
Corruption, enabled by this kind of bureaucratic environment, is one of major problems. On the other hand, starting a business is quick and inexpensive and there are few licensing restrictions, which was further elaborated by abolishment of the requirement to use corporate seal. Tax compliance is easier than in many neighboring countries - total number of payments is low but the actual compliance is not easy, with complicated. The minimum wage is low compared to the average wage in the country, but high social security contributions makes labour expensive, contributing to the shadow economy. Labour regulations are mostly flexible: notice periods and severance pay for redundancy workers do not increase with their years in tenure. Working hours regulation is also do not pose a significant burden, apart from more stringent working hours for female employees. However, the relatively long military service of 18 months for general male population (or 12 months for university students) that is mandatory is burdensome to businesses, but also for the young workers due to disruption in human capital accumulation.