Business

• Private Entrepreneur (PE)

• Limited Liability Company (LLC)

• Joint-Stock Company (JSC)

• Closed Joint-Stock Company (CJSC)

• Partnership

• Cooperative

• Branch Office

• Subsidiary

• Non-Profit Organization

• Private Equity Fund

Note: owning or managing an operational company in Armenia will generally qualify you and your family for a residency status. It may also become a basis for citizenship by exception through a direct petition sent to the Prime Minister of the RA. Three years of residency generally makes one eligible for citizenship. 

For more information and to compare each form, click here. To figure out what documents are needed to begin your business, check out our article here.

Currently, Armenia is seeing growing opportunities to work with Iran, China, India, and Southeast Asia. As a member of the Eurasian Economic Union (EEU), Armenia has free access to Russia, Kazakhstan, Kyrgyz Republic, and Belarus. Free Trade agreements also exist with Ukraine, Moldova, Tajikistan, Turkmenistan, and Georgia. 

Armenia is also the only CIS country to enjoy the “GSP+” arrangement with the European Union, allowing the export of over 7000 products with reduced or no tariffs. A GSP agreement also exists with the US, Canada, Japan, Norway, and Switzerland. 

In general, there are 3 main steps to opening a business in Armenia:

• Register your company

• Create a company seal

• Open a corporate bank account

It is recommended to have an accountant to ensure your monthly reporting is done on time and in line with the local laws. The fewer mistakes on this front, the better for you. 

Documents need to set up a company

You will need certain things before getting ready to register your company:

• Passport - original and Armenian notarized translation

• Local phone number (cell phones work, as well)

• Local address (not your rental home to prevent any problems) - it is recommended to use a company providing virtual offices if you don’t have a physical one. Refer to armenian-lawyer.com or bridgingnations.am. 

Opening a Corporate Bank Account

Setting up a corporate account at the bank of your choice will take you a few hours to complete. Only the minimum number of documents are required, for the most part, but you’ll have to check with the bank in question to be sure. Normally the passports of the shareholders and directors should be enough. You will receive a registration certificate with the taxpayer ID number, ready for immediate operation. Note: You will need a company seal to open an account, for the most part. 

Armenia’s banks offer a wide range of business-oriented services to foreigners as well as locals. You are able to open an account in most major foreign currencies, conduct international bank transfers, pick up a safety deposit box, use state of the art mobile banking, etc. Note: Not all banks will work with clients from Iran and Syria due to international restrictions. We recommend contacting different banks about your preferred business accounts. Most are quite flexible and willing to match another’s incentives to keep you to themselves. 

Shop around for the best bank for you. You will at least need your company seal, registration certificate (obtained from registration office once completed), notarized Armenian passport translation, and a local phone number. Certain banks might have a slew of other documents to present, however, so call or connect with them beforehand. 

Free Economic Zones

Free economic zones (FEZ), also known as free economic territories (FETs) or simply free zones (FZ), are regions specifically designated for trade activities that are taxed differently from the rest of the country. They are either taxed lightly or not at all, bolstering economic activity. Each country has its own FEZ rules, depending on the country of export. 

Armenia’s FEZ include:

• Alliance (for Hi-Tech and Pharmaceuticals) in Yerevan

• Meridian (Jewelry and Watchmaking) in Yerevan

• Meghri (for cooperation with Iran, 2km from the Iranian “Aras” FEZ)

A fourth FEZ is expected to open in the Hraztan region and is expected to begin working by 2021, focusing on production, Hi-Tech, and blockchain. 

An investor can be a FEZ resident by obtaining permission from the Government of Armenia upon evaluation of Application, Business Plan, and Reference provided by the organizer about activities performed in the FEZ. The process could take up to 4 months. Click here for more.

Taxes

When opening a business, you get to opt for turnover or micro-business tax regimes within 20 calendar days of the company’s registration.

There are special tax regimes in place for small family businesses, exempting them from corporate income tax and value added tax if their annual turnover does not exceed 9 million AMD (~19,000 USD). Up to 115 million AMD turnover is subject to a 1.5-5% tax, replacing the Corporate Income Tax (CIT) and Value Added Tax (VAT). Over that, businesses are expected to pay 18% CIT and 20% VAT.  A Patent Tax of a flat monthly fee would replace the CIT and VAT for certain trades, such as dentist offices, games and entertainment facilities, small restaurants, auto and transportation services, beauty salons, etc. Dividends are taxed at 5%, but double treaties may lower this amount. 

Payroll taxes include both personal income tax (PIT) and social security payments (SSP) withheld from employees and contractors. The taxes apply to salaries, benefits, bonuses, temporary disability compensation, maternity leave compensation, and such others. Check with your accountant for the full list. The SSP withheld is 5% of incomes up to 500,000 AMD, or 10% of incomes above that. The maximum amount held back each month cannot exceed 25,000 AMD until July 1, 2020. Furthermore, a flat military tax of 1000 AMD per month is applied. This increases the average tax burden to around 25.25%.

Imported goods are subject to taxation at 20% VAT, though there are a number of exceptions. For certain government-approved projects, VAT payments can be deferred for up to three years. There are no import duties for items shipped from Russia, Belarus, Kazakhstan, and Kyrgyzstan. 

There are no taxes on capital gains on the sale of securities, real estate, or other assets. However, depending on the nature of the company, you can expect excise, environmental, road, real estate, and/or vehicle property taxes to be added. Excise taxes are expected to increase by 3% per year.

Note: A zero-tax regime exists for certain types of business, including micro (defined as having sales under 24 million AMD a year) not in the Yerevan region, those operating outside the capital (especially in border regions) or in a FEZ, etc. 

Foreign Ownership

Foreigners may own 100% of the company without the need for local partnership. There are no citizenship restrictions applied to ownership or stakeholders. All employees can also be foreigners. There are no laws forcing a certain ratio to be local employees. A local address is also unnecessary. The foreigner may be the only director as well as the full owner of the company. 

Foreign Investment

An investor in Armenia is freely allowed to export their cash and profits made during their investment. Types of investment allowed in Armenia by foreigners, include:

• Foreign currency deposits

• Movable and immovable property

• Securities provided by the legislation of the RA

• Economic activities allowed by legislation

• Extraction of natural resources

• Acquisition of existing enterprises

• Opening of branches and representative offices of foreign legal entities

• Opening a foreign legal entity

• Acquisition of shares in existing companies in the RA
   

Government Incentives

Certain incentives for your business include:

• Up to 30% profit tax reduction for new jobs created for a period of 3 years

• VAT payments postponement for up to 3-year period for importing equipment and goods

• Profit tax privileges for large importers

• Reduced corporate tax for large exporters

• 0% VAT, corporate, property, customs duty taxes up to 10 years in Free Economic Zones: residents of Free Economic Zones (FEZ) are exempt from all taxes except the payroll taxes.

• 0% corporate tax, income tax and VAT in specific territories of Armenia

• Customs duty exemption for materials and equipment/technology

• Support for creation of startups by SME DNC

• Inactive (dormant) companies do not pay taxes or file tax returns

• IT companies applying for an IT Start-Up certificate (issued by the Ministry of High-Tech Industry) after May 18, 2019, may be exempted from corporate tax until December 31, 2022. Payroll tax is also reduced to 10%. The petition must be filed within 90 days of the business’ registration. Note: This is only available to companies with under 30 employees, as well as those not considered subsidiaries or branch offices for foreign companies.