Laws and Regulations for Doing Business

TAXATION

Companies with foreign investment are subject to the same tax regime as Armenian companies. 

Profit Tax - The annual profit tax rate is 20%. There are several profit tax exemptions for taxpayers who specialize in agricultural production.

Value Added Tax - The basic rate of VAT is 20%.

Income Tax - Rate is from 10% to 20% depending on the monthly income.

INVESTOR PROTECTION AND PROFITS REPATRIATION

Based on the Law on Foreign Investments, in the case of changes in the legislation of Armenia regulating foreign investments, the laws, which were in force at the time when the investment was made, shall be applied for a five-year period, upon the request of a foreign investor.

Foreign investments in Armenia cannot be nationalized or confiscated. Confiscation may be allowed only as an extreme measure in the case of an emergency declared in accordance with the legislation of the Republic of Armenia, and it may be applied only upon the decision of a court and with full compensation. Investors must also be compensated for any damage or loss of profit resulting from illegal actions by state bodies or officials. Compensation shall be paid at current market prices or prices determined by independent auditors either in the currency invested, or in any other currency mutually agreed upon by the parties.

There are no restrictions on conversion or repatriation of capital and earnings including branch profits, dividends, interest, royalties, or management/technical service fees. Cash exports are limited to US $10,000 or its equivalent. There are no limitations on wire transfers. Funds may be converted and transferred through all domestic banks.

Twenty-two banks have foreign participation in Armenia. The majors are HSBC-Armenia (UK), Mellat Bank (Iran), Unibank (Russia), Areximbank (Russia) and Commercial Bank of Greece.

All forms of property and civil rights to own and use property are protected under the Constitution. The Law on Property Registration regulates issues relating to registration of property rights.

Armenia is also a member of MIGA as an additional guarantee for foreign investors.

DISPUTE SETTLEMENT

Commercial disputes may be settled either in state courts or through alternative dispute resolution mechanisms. Commercial or property-related disputes may be settled out of court through institutional or ad hoc panels of experts (e.g. chambers of commerce or bank associations). Armenian courts are independent.
Armenia is a signatory to the international convention on investment disputes and is a member of the International Center for Investment Disputes Settlement.
As provided by the Bilateral Investment Treaties (BIT) signed by Armenia, foreign investors can apply to internationally established tribunals for the resolution of commercial issues.

FREE TRADE TREATY

Armenia has Free Trade Regimes with Georgia, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, and Ukraine. Under the terms of free trade agreements, tariff exemptions are extended to goods traded between Armenia and Belarus, Georgia, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan and Ukraine. Excise taxes are charged at various rates on the import or production of some goods, including alcohol, tobacco and petrol.

DOUBLE TAXATION TREATIES

Double taxation treaties (DTTs) are in force with Belarus, Bulgaria, China, France, Georgia, Iran, Latvia, Lebanon, Lithuania, Romania, Russia, Turkmenistan and Ukraine. Treaties with Belgium, Egypt, Greece, Netherlands, Poland, Syria and Uzbekistan are subject to ratification.

TRADE LIBERALIZATION

Armenia has a liberal foreign trade regime with a simple two-band import tariff (at 0% and 10%), no taxes on exports, and no quantitative trade restrictions. Import, export, and domestic production licenses are required only for health, security, and environmental reasons. There are no limits on hard currency imports.
The new Customs Code (in force since January 1, 2001) streamlines customs procedures and complies with WTO Rules.

MAIN FEATURES OF CUSTOMS REGULATIONS

• All exports from Armenia are duty free.
• The import tariff rates are 0 or 10%. The 10% tariff is levied mainly on consumer and luxury goods.
• Tariffs are in ad valorem terms and levied on CIF values.
• Armenia uses the Harmonized Code System for tariff classification.
• All payments must be made in the currency of Armenia.
• No import customs duties are payable in the following circumstances:
  1. imported capital goods (included in the list defined be the Government of Armenia) forming a part of an investment in a business;
  2. transit goods transported across the territory of Armenia;
  3. the means of transport (e.g. truck) used for regular interstate transport of freight;
  4. currency and stocks;
  5. goods temporarily imported into Armenia and temporarily exported from Armenia for the purpose of processing or reprocessing.