Armenia’s business environment evolves at an exciting pace regardless of or due to external factors. And even though the ecosystem is quite developed and fully compliant with the latest digital transformations, it is sometimes challenging to find up-to-date and relevant data. It is critical to have available data that can be reached within a simple Google search. Here is what we have searched for on the internet about Armenia’s business ecosystem and created a list of business questions about Armenia.
When starting a business in Armenia, be it your homeland or a new country to invest in or relocate to, the first thing to look for is the legal aspect. Regardless of company type (LLC, OJSC, CJSC, PE), the business should be registered.
Previously, we discussed the most profitable business sectors in Armenia and listed the segments where investors can invest right now, expecting great returns.
There are a number of substantial advantages to starting and doing business in Armenia:
Whenever a business owner gets lost in terms and legislative operations, authoritative firms like Tower International Consultants are there to assist in registering a business.
Armenia has a unified tax system with favorable rates regulated by the Constitution of the Republic of Armenia. Small businesses have a unique tax regime advantage to reduce their tax burden while in the development stage.
A few more taxes may be applied to businesses depending on the nature of their activities, so it is advised to consult with a competent specialist.
The best advice is to partner with a professional consulting agency, especially if you are unfamiliar with the market and the country’s laws. Well, actually, even if you are a native and want to start a business, there are tons of laws and tax nuances you may not be aware of. Also, the tax system underwent tax reform in 2020 by switching to a flat income tax rate that raised more questions.
The accounting standards of Armenia are adopted by the Ministry of Finance and Economy and are based on International Accounting Standards. Upon starting business and accounting, the presentation of financial statements is performed as stated by the Republic of Armenia Law of Accounting. The package of financial statements should include:
In short – YES! Just check out the names of top global companies with Armenian origins that still have headquarters in Armenia.
Of course, this is only a small part of all the large and small companies that started in Armenia and have expanded their global outreach. The tech segment is the best example to discuss, but, of course, there are various categories of products and services.
The reason why we are drifting around the Armenian tech sector is tax benefits granted by the government, which exempt startups from paying income taxes and reduce payroll taxes to 10%. Foreign investments and startups brought in 30.3% GDP growth, the highest out of the rest of the sectors.
Armenia’s investment climate changes and improves in parallel with the development of the business ecosystem. The dynamics are quite optimistic and full of definite changes to attract foreign investors. Significant investments were registered in the banking, pharmaceutical, energy, mining, and information technology sectors, evaluating those segments as the most promising for foreign stakeholders. At the same time, the country’s legal framework aims to attract investments. The only obstacle is the relatively small market and its geographic position, but as a solution, Armenia may become an intermediary country. Of course, this is only one of the scenarios.
One of the most promising investments and business development segments is still ICT and tech startups. With extensive experience in startup accelerators and incubators in Armenia, the tech talent pool has huge potential to attract foreign investors’ attention. Here are some more investment incentives.
Economic freedom and open markets are two of the cornerstones of the country’s economy. Assessing the country’s readiness to do business and providing infrastructure for business is highly critical to being competitive in the global market. In the Economic Freedom Ratings for 2022, Armenia took 11th place out of 165 countries, being in the “Most Free” countries’ list, while its neighbors in the region were no higher than the 15th and the lowest, 159th place. This is quite impressive for a small country and is crucial for Armenia’s development at the expense of foreign investments and foreign businesses. Possessing all the necessary priorities, Armenia may act as a powerful trampoline to boost business development.
The decision to start a business or relocate to Armenia should be carefully considered in many aspects. I hope we managed to cover all the troubling questions. Still, if there are questions to be answered for decision-making, you can always refer to services like tax outsourcing and tax consulting, legal advisory, and business consulting in Armenia. Also, we pay special attention to companies and individuals that relocate to Armenia, and offer special services for them as well.
Tower International Consultants provides Accounting, Tax and Legal advisory, Accounting and Tax outsourcing and Business consulting services to major Armenian and International companies, investors, banking companies and financial institutions.