Baku's Old Town is a Unesco heritage site but gleaming new buildings are also cropping up, such as the Flame Towers, in the background. Joern Haufe / AP Photo
Baku's Old Town is a Unesco heritage site but gleaming new buildings are also cropping up, such as the Flame Towers, in the background. Joern Haufe / AP Photo
Baku's Old Town is a Unesco heritage site but gleaming new buildings are also cropping up, such as the Flame Towers, in the background. Joern Haufe / AP Photo
Baku's Old Town is a Unesco heritage site but gleaming new buildings are also cropping up, such as the Flame Towers, in the background. Joern Haufe / AP Photo

With the discovery of oil, Azerbaijan's Baku spreads its wings


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Why Baku?

Dubbed "the Dubai of the Caspian", Baku is a city in transformation. With recent oil and gas discoveries poised to make Azerbaijan one of the most important energy suppliers in the world, its capital - and, at two million people, the largest city in the Caucasus - is beginning to bear the telltale signs of a 21st century metropolis in mid-oil boom, with towering glass-fronted architectural spectacles, the obligatory Zaha Hadid-designed centre and, of course, a lot of construction sites. Naturally, a world record is on the way: plans were unveiled recently for the kilometre-tall Azerbaijan Tower that is set to make our own Burj Khalifa look rather modest (although it will take another 15 years).

But while Baku might be eyeing the future, this is also a city steeped in the past: Soviet-era Ladas touch bumpers with Hummers, well-restored 19th-century mansions offer evidence of its time as the world's first oil capital and, with the medieval Old City, there's a vast, archaeologist's playground right in the centre.

Just over two hours flight from Dubai and with daytime summer temperatures in the early 30s, Baku is perfect for a long-weekend break.

A comfortable bed

If the idea of sleeping in a Unesco heritage site appeals, there are several boutique hotels and guesthouses hidden amid the alleyways of the Old City. The Old City Inn (www.oldcityinn.com; 00 994 12 497 4369) comes recommended. While it's actually a training hotel, so patience is required with the service at times, with large rooms and great views from the rooftop restaurant, you'll forget the odd niggle. Doubles cost from US$128 (Dh470) a night, including taxes and breakfast.

For something more grandiose, there is a growing list of options (including the new out-of-town Jumeirah Bilgah Beach Hotel). The lavish Excelsior Hotel (www.excelsiorhotelbaku.az; 00 994 12 496 8000) is among the favourites with visiting dignitaries. While it might be a short taxi drive from the central hub (it's near Zaha Hadid's new slug-shaped Cultural Centre), this hotel is renowned for its gym facilities and pools. Doubles start at $363 (Dh1,343), including taxes and breakfast.

Find your feet

A stroll along the Baku Boulevard, parallel with the Caspian coast, is a fine way to see the changing faces of the city. It's still lined with the Baroque-stone mansions built by rich industrialists of the 1800s, while the new tribute to energy wealth is the multi-storey Park Bulvar mall. Go past the walls of the Old City, and carry on to the Baku Crystal Hall, a multimillion dollar events centre constructed for this year's Eurovision Song Contest. Although the boulevard is being extended to some 26 kilometres, taking in these main landmarks can be done in a couple of pleasant hours.

Meet the locals

Central Baku is extremely pedestrian friendly, and in the evening and on weekends the lengthy promenade and numerous open spaces are teeming with life. Head to Fountain Square (so named because it has several fountains) near the Old City and watch the world go by in one of the cafes with a glass of Azercay tea, grown in the south of the country. Locals are generally very friendly and, while English isn't widely spoken, most are happy to give it a go.

Book a table

Just off Fountain Square, Yeni Bah Bah Club serves an excellent array of regional cuisine (mains from around $13 [Dh47] a person), heavy in dolma (stuffed vegetable dishes) and lamb stews laden with pomegranates and walnuts, while two older gentlemen play local music in the corner.

Among the growing number of hipster-friendly hangouts is Çhinar (www.chinar-dining.com) which serves elaborate sushi and South East Asian fare (mains from about $17 [Dh62]. Sit in the stylish outdoor area if the weather is fine.

Shopper's paradise

The streets of central Baku are lined with high-end fashion boutiques brandishing designer price tags, only underlining the city's reputation as one of the most expensive around. There are several stalls and shops in the Old City selling the usual "I Love Azerbaijan" tourist tat but look harder and there's some quality to be found, such as old brass teapots and ornate crockery. And if you want a carpet, you've come to the right place, with rug-weaving an essential element of Azerbaijani history, admired by the likes of Marco Polo and noted for its intricate designs.

What to avoid

Baku is extremely safe. The only theft you might experience is when the bill comes, with prices in some of the more expensive spots verging on the ridiculous. Check menus before you order if you're on a budget and be especially careful when ordering tea. While Azerbaijan might pride itself on its "chay" (tea) industry and culture, a cup can sometimes set you back the same price as a meal.

Also, opt for the London-style cabs as they're the only ones that come with a meter. They work out far cheaper and you avoid tedious negotiations over your fare.

Don't miss

Dating back to the 12th century, when Baku became the capital city, the Old City has several worthwhile sites. Climb Maiden's Tower for views across the city, Baku Bay and beyond, even as far the triple-headed Flame Towers, the soon-to-be-completed hill-top complex set to become a major symbol of the city. The restored sandstone Palace of the Shirvanshahs, the home for a 15th century ruling dynasty, houses several exhibitions on Baku's architectural legacy.

Go there

FlyDubai (www.flydubai.com) flies to Baku from Dh1,022 return.

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Ten tax points to be aware of in 2026

1. Domestic VAT refund amendments: request your refund within five years

If a business does not apply for the refund on time, they lose their credit.

2. E-invoicing in the UAE

Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption. 

3. More tax audits

Tax authorities are increasingly using data already available across multiple filings to identify audit risks. 

4. More beneficial VAT and excise tax penalty regime

Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.

5. Greater emphasis on statutory audit

There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.

6. Further transfer pricing enforcement

Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes. 

7. Limited time periods for audits

Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion. 

8. Pillar 2 implementation 

Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.

9. Reduced compliance obligations for imported goods and services

Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations. 

10. Substance and CbC reporting focus

Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity. 

Contributed by Thomas Vanhee and Hend Rashwan, Aurifer

TALE OF THE TAPE

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2. Prayer 

3. Hajj 

4. Shahada 

5. Zakat