How to hire and pay contractors in Azerbaijan

How a foreign company hires and pays a contractor in Azerbaijan

Sign a civil-law contract that buys defined work or services, have the contractor invoice you, and pay into their Azerbaijani bank account or a wallet. A foreign company with no registration in Azerbaijan does not run payroll there or withhold Azerbaijani tax for a genuine contractor.

Data labeling fits this model when contributors pick tasks and are paid per accepted task. With Toku as contractor of record, Toku contracts each contributor, collects their invoices and pays them, and your company buys the finished work from Toku.

Contractor or employee: where the Labour Code draws the line

The Labour Code describes an employment relationship as one where the person personally performs a labour function in a profession or position for pay, follows the employer's internal discipline rules, and the employer provides working conditions and labour protection (art. 3(1)). An employee works under a written individual employment contract (arts. 3(2) and 3(5)).

The Code does not apply to people working under podrat (work), mandate, commission, authorship and other civil-law contracts (art. 6(d)). Those contracts sit in the Civil Code: under a podrat contract the contractor performs the agreed work and the customer pays the agreed price (art. 752).

There is no statutory presumption of employment, so the test is the facts. Keep contributors outside the art. 3(1) features: no position or job title, no internal discipline rules, free choice of tasks and pay per accepted result.

Tax registration, invoices and the records you keep

Residents of Azerbaijan are taxed on income earned at home and abroad, so fees from a foreign client are taxable (Tax Code, art. 97.1). A person doing business without a company registers with the tax authority as an individual entrepreneur and gets a taxpayer identification number, the VÖEN (art. 33). Entrepreneurs pay 20% on taxable income (art. 101.3) with quarterly current payments (art. 151.1).

The simplified tax at 2% of receipts covers turnover up to AZN 200,000 (arts. 218.1.1 and 220.1), but it is generally not open to someone who mainly invoices companies, including foreign ones (arts. 218.5.10 and 218.6.2). Most contractors working for foreign clients are therefore on the 20% regime, and they should confirm their position with the State Tax Service.

Withholding at source falls on payers registered with the Azerbaijani tax authority (art. 150.1). A foreign company with no registration in Azerbaijan does not withhold, and the contractor reports and pays the tax.

What you keep as the payer: the contract, the contractor's VÖEN, their invoices (the Tax Code expects services to non-residents to be invoiced, art. 218.6.2), accepted-task records and proof of payment. Toku keeps these for every contributor it contracts.

Payment rails, manat and CBAR currency rules

The manat has been the only legal tender in Azerbaijan since 1994 (Presidential Decree No. 58). Under the Law on Currency Regulation, residents can hold foreign-currency accounts with authorised banks (art. 7(1)), and individuals can freely deposit foreign currency into them (art. 9(7)). The rule that export receipts must be credited to accounts at authorised banks is written for companies, not individuals (art. 7(2)).

Banks act as currency-control agents and report operations to the CBAR's information system (art. 16-1). Parties to a currency operation must give banks the documents they ask for and keep records for at least five years (art. 17(2)).

In practice: pay in manat or US dollars to the contractor's own account at an Azerbaijani bank, and give them a contract and invoice that match each payment so their bank can clear it.

Paying contractors in Azerbaijan in stablecoins

Yes, contractors in Azerbaijan can be paid in stablecoins with Toku. Each contributor can choose USDC or USDT to their own wallet instead of a bank transfer.

Crypto is not legal tender in Azerbaijan, because the manat is (Presidential Decree No. 58). The CBAR approved Rules on Operations with Virtual Assets in 2023, which say virtual-asset services may be provided only by providers authorised by law, but they take effect only once a law licensing those providers is adopted. We found no rule that stops an individual from receiving or holding stablecoins.

Since 2025 the Tax Code lists virtual assets as intangible assets (art. 13.2.9), and a resident's worldwide income is taxable (art. 97.1), so the contractor reports stablecoin pay like any other fee. Because the licensing law is still pending, Toku confirms the route for each person. To set it up, talk to us about paying in stablecoins in Azerbaijan.

Making the IP transfer valid in Azerbaijan

Under the Law on Copyright and Related Rights, economic rights pass only through an author's contract (art. 28), and that contract must be in writing (art. 31(4)). Under the Civil Code, a transaction made without the form the law requires is invalid (art. 329.1).

An enhanced electronic signature with a qualified certificate, such as ASAN İmza or SIMA, has the same force as a handwritten one and meets the written-form requirement (Law on Electronic Signature and Electronic Document, art. 3). The Civil Code has accepted some other electronic signing methods since 2023 (art. 331.1), but the enhanced signature or wet ink is the safe route for an IP transfer.

• List the uses: the contract must name the ways the work may be used (art. 31(1)). Spell out reproduction, modification, dataset compilation, AI and ML training and sublicensing.
• Make it exclusive: rights are non-exclusive unless the contract says otherwise (art. 30(4)). The law transfers rights as an exclusive or non-exclusive licence, so draft the assignment as an exclusive author's contract.
• Set territory and term: with no territory, use is limited to Azerbaijan, and with no term the author can end the contract after five years on six months' notice (art. 31(1)).
• Set the fee or the waiver: the royalty or how it is worked out, and how it is paid, are required terms (art. 31(1)-(2)). An all-inclusive fee or a clear written waiver works.
• Moral rights stay with the author (art. 14.2), so the contract should say how the work may be edited and whether it is credited.

Pay data labelers in Azerbaijan with Toku

Toku Contributor Payouts contracts each labeler in Azerbaijan as contractor or agent of record, collects an author's contract signed with an enhanced e-signature and pays per accepted task in manat, US dollars, USDC or USDT. You send task totals through the mass payouts API or a file, and every payout ties back to its contributor, agreement and tasks.

Toku pays contractors in 100+ countries. Contractor management lists at $19 per contractor per month on the pricing page, and Contributor Payouts is priced on the contributors you actually pay. The API is documented at docs.toku.com.