By its decision of 31 March 2026, the Constitutional Court of the Republic of Azerbaijan has introduced a new legal approach to the issue of restricting the right to leave the country for tax debts. The main innovation of the decision is the broader interpretation of the concept of “the head of the legal entity's executive body”.

Previously, such restrictions were mainly applied to heads of local legal entities. However, under certain circumstances, they may now also apply to heads of branches and representative offices of foreign companies operating in Azerbaijan.

Essence of the new approach

The Court notes that local structural units of foreign legal entities (branches and representative offices) effectively operate as independent business entities within the country and bear tax obligations. Therefore:

• Their managers may be assessed within the same scope of responsibility as heads of local legal entities
• In case of tax and other mandatory payment debts, travel restrictions may be imposed by a court decision

Court’s reasoning

This expanded interpretation is based on several legal principles:

• Principle of equality – different treatment of local and foreign entities could lead to unfair outcomes
• Actual management responsibility – although the parent company is located abroad, responsibility for local obligations lies directly with the branch manager
• Purpose of tax legislation – to ensure effective fulfillment of tax obligations

Important legal balance

The Court also emphasized that such restrictions must not be applied automatically. State authorities and courts must:

• Thoroughly examine the evidence
• Consider the possibility of less restrictive alternative measures
• Assess the proportionality of the restriction

In other words, travel bans should only be applied when necessary and justified.

Conclusion

This decision introduces a significant practical change: managers of foreign companies operating in Azerbaijan may now face personal legal risks related to tax obligations. This is expected to further strengthen financial and legal discipline among business entities.