Baku – Sept. 9
Azerbaijan’s shadow economy continues to leave a visible mark on the country’s balance sheets, according to officials and economists, with billions of manats slipping outside formal oversight, Kaspi newspaper informs.
Deputy chair of the State Statistics Committee Rauf Salimov said activities not captured in official accounting make up 7.7 percent of GDP, with 1.8 percent directly tied to shadow transactions. At current levels, this means roughly 3.2 billion manats worth of goods and services escape the statistics, while another 2.2 billion manats in value added goes undeclared.
Where the shadows fall
Economist Ruslan Atakishiyev, who heads the Center for Economic Resources Research, said the largest concentrations are in trade and services, including major shopping centers, small factories operating out of basements, and businesses that declare only a fraction of their actual turnover. “In almost every sector you can find shadow activity,” he said, adding that while a fully “white” economy is unrealistic, the scale can be reduced through consistent tax audits and incentives for disclosure.
Tax gaps and quiet practices
Tax specialist Anar Bayramov noted that some entrepreneurs actively resist transparency measures introduced in recent years. Large shopping centers such as Sadarak and Bina still see extensive undocumented goods circulation, he said, while cargo firms often underreport imports. He also pointed to new techniques, including “card-to-card” payments and settlements via cryptocurrency for cross-border services.
Rent, weddings and cash
Another economist, Eyyub Kerimli, chair of the NGO for Economic and Social Studies, highlighted the rental housing market as a major blind spot: nearly half a million apartments are leased nationwide, many without tax declarations. He said similar practices are common in private clinics, banquet halls, construction, agriculture and tutoring services, where clients often pay cash and receive no receipts.
Carrots and sticks
Officials have combined penalties with incentives to tackle the problem, encouraging non-cash settlements through tax breaks while introducing tougher rules for violators. While Azerbaijan’s 1.8 percent shadow share appears modest compared with some countries, experts stress that even this fraction represents significant leakage — and undermines both fiscal discipline and public trust.
