Tax authorities in Azerbaijan are placing growing emphasis on the scrutiny of related-party transactions, with transfer pricing becoming a central focus. At BDO, we assist you in evaluating your cross-border group transactions, selecting appropriate transfer pricing methods, and preparing robust documentation to support compliance.
 
These assessments are guided by the arm's length principle, which requires that transfer prices reflect those that would be agreed upon between unrelated parties under similar conditions. Azerbaijan’s transfer pricing framework, introduced in 2017 and governed by Article 14-1 of the Tax Code, aligns closely with the OECD Transfer Pricing Guidelines
 
Under Azerbaijani law, transfer pricing rules apply to a wide range of controlled transactions, including those between residents and non-residents, permanent establishments, and entities in low-tax jurisdictions. Taxpayers are required to maintain documentation that supports the pricing of these transactions and submit annual reports to the State Tax Service.

Non-compliance with transfer pricing obligations can result in significant penalties. These include:

 
Given the increasing complexity of local and international requirements, it is essential for businesses operating in Azerbaijan to ensure that their transfer pricing policies are not only compliant but also strategically aligned with their global operations.