How technology sement’s growth helps Armenia economy?

Tech segment’s impact on Armenia’s economy
Tower International Consultants > News > Business > Tech segment’s growth impact on Armenia’s economy

Tech segment’s growth impact on Armenia’s economy

Posted by: Tower International Consultants
Category: Business, Economy

Тhe hi-tech industry is the fastest growing economic industry in Armenia. ‎Last year, the turnover of Armenian tech/IT companies increased to ~$ 400 ‎million, or by 20 percent. In 2020, also the number of employees in this industry increase by 22%. ‎

Tax services & advisory in Armenia

Does your company need tax and accounting outsourcing in Armenia? Check out our services related to tax services, accounting outsourcing and advisory in Armenia.

At the moment, over 1.2 thousand operating IT businesses are registered in ‎Armenia

At the moment, over 1.2 thousand operating IT businesses are registered in ‎Armenia. Substantial tax benefits are provided for them following the policy ‎pursued by the Armenian government. Digitalization, innovation, and the latest ‎technologies are considered by the Armenian government as essential tools for ‎creating an effective and representative system of public administration, a ‎favorable business environment, and ensuring progressive economic growth.‎

State of the technology business segment in Armenia

Despite the pandemic and recession, in 2020 the total turnover of technology ‎companies in the country increased by 20.6% up to $ 380 million, according to ‎the Ministry of High-Tech Industry.‎

Armenia has been moving towards high-tech development for many years, but ‎in the last three years, this progression has accelerated substantially. In 2018, ‎the tech sector grew 33% up to $ 250 million, with an average growth in the ‎three years since 2015 of 28%.‎
Despite the pandemic and recession, in 2020 the total turnover of technology ‎companies in the country increased by 20.6% up to $ 380 million, according to ‎the Ministry of High-Tech Industry.‎

How easy is it to create a tech business in Armenia?

The tax benefits, given by the Government, are designed specifically for IT ‎companies and technology startups. For example, by the end of December ‎‎2022, Armenian IT startups can receive a certificate that will exempt them from paying income tax and reduce the payroll tax to 10%. By the ‎government’s estimation, these benefits positively affected about 230 ‎companies and led to the creation of 1,200 new jobs in 2019 alone.‎

The government is open to cooperation with the IT industry: many ‎Government members came from IT and are doing their best to help with ‎operational issues and legislative initiatives. The Armenian government is also ‎improving IT infrastructure and the conditions for starting and doing IT ‎business in Armenia by offering an “open door” policy that is aimed also to ‎attract foreign businesses and investors.‎

According to the consulting company Meettal in 2020, there were more than ‎‎550 companies and almost $550 million attracted investments in such IT ‎business areas as fintech, education, media, recruiting big data, and much ‎more.‎

Due to the success of some Armenian tech/IT companies, now a new trend is rising: it’s cool to be an entrepreneur and start your own IT business in ‎Armenia. ‎

In parallel, investment funds were created aimed to support and invest in ‎startups at different stages of their life cycles.‎

What are the main benefits involving the tech industry in Armenia?‎

The key advantages of Armenia, including an excellent environment for ‎starting a startup, are:‎

  • Presence of representative offices of global companies – being a small country with a lot of networking, high level of tech. education, ‎representatives of international companies open development centers ‎here. IT/tech companies based in the USA like Microsoft, Vmware‎, ‎Synopsys, etc. already have their offices in Armenia. ‎
  • Safe environment – Yerevan is one of the safest cities in the world. ‎Security is ensured not by police only, but by the sincere hospitality and cordiality of the local population. Armenia is in the top 20 countries in ‎terms of safety in the world, Yerevan at night is safer than cities like ‎Moscow, Berlin, London, Vienna, and in terms of child safety and ‎happiness, Armenia is in the TOP3 countries of the world (according to ‎The Children’s Society (UK)).‎
  • Competitive education for children – there are several educational ‎projects in Armenia that have no analogs in the world in terms of their ‎level. Among them are the Ayb School, the UWC International College, and the TUMO Center for Creative Technologies, where 15 thousand children are taught programming for free by the world’s leading experts. ‎There are Armath engineering laboratories, which have franchise ‎contracts in India and Lebanon. Also, chess has been a compulsory ‎subject in all Armenian schools since 2011.‎

To sum up, there’s a good basis to create an IT company in Armenia. Adding to ‎this the presence of venture funds and business angels, there is a high ‎likelihood of rapid business development with a well-defined strategy and ‎long-term business plan.‎

Banking Industry Transformations in Armenia and in the World

Armenian Dram Cash MoneyBanks’ performance on the debt market and equity is at the same level as during Lehman Brothers’ collapse in 2008. During the starting phase businesses and borrowers started to lose income, jobs and sales, facing the decrease of income…

Read the full story here

‎General players in tech business in Armenia

Tech business environment in Armenia

Now, let’s talk about TOP5 Armenian IT startups, everybody should know. ‎The following Armenian tech/IT companies are exclusively focused on the ‎international market, receive investments from venture funds, produce ‎products that are applicable in everyday life, and are serious businesses of an ‎international level.‎

PicsArt

Founded in 2011, PicsArt is a photo/video editing app. Besides the tools and ‎filters for editing, the application has a social platform where the users share ‎their works or subscribe to other accounts. The app is available in 30 ‎languages and has over 150 million monthly active users.‎

Experts believe that the entry into the Chinese market has tremendously ‎increased PicsArt’s user base: more than 15 million users are citizens of China.‎

Krisp

Krisp is an application that suppresses background noises during a call via ‎Skype, Zoom, and other services. During the 2020 COVID-19 total lockdown, ‎the number of active users of the product increased 20 times.‎

SoloLearn

SoloLearn is a free mobile programming learning platform. The platform offers ‎courses of various difficulty levels in 13 areas: C ++, Python, Java, and others. ‎The application has over 35 million registered users worldwide.‎

Vineti

Vineti is a cloud-based platform that facilitates access to personalized ‎treatments for genetic diseases. The solution helps to select the necessary ‎therapeutic course for the patient, which will be maximum effective. Over the ‎past two rounds of financing, the company received investments of USD 47.3 ‎million. Recently Vineti received an award from the World Economic Forum in ‎the “Technology Pioneer” nomination.‎

Zoomerang

Zoomerang is an app for creating and editing short and eventful videos. The ‎startup competes with TikTok and has already grown to an audience of 20 ‎million users.‎

How can Tower help tech companies located in Armenia

Tower’s support for Armenian tech/IT companies is multi-layer: starting from ‎registration (creating IT company) and accounting support to legal consulting, ‎drafting privacy policies, retention of copyrights, and other services.‎
Following the registration of the company, Tower can offer accounting and tax ‎outsourcing services for high-tech companies, as well as ongoing legal advisory ‎in Armenia.

Photos Ⓒ 2021 from Photo-week.net | Pixmeta

Author: Peproneh Badalyan | Linkedin

Tax Reforms in Armenia: What to Expect After 2021?

From January 2020 Armenian switched to a flat income tax rate that sets income tax at 23% for each Armenia’s citizen regardless of their income size and will continue to decrease to 20% by 2023…