Armenia: Business Environment

Accounting Rules

Tax Year: The tax year is the calendar year.
Accounting Standards: The Accounting Standards of the Republic of Armenia which have been adopted by the Ministry of Finance and Economy are based on IAS (International Accounting Standards). Activities on standardization and conformity assessment are performed according to the law on Standardization adopted by the Parliament in 1999, amended in 2004 and "On Conformity Assessment" adopted by the Parliament in 2004.
In accordance with the Law, the national standards are voluntary, but a part of them contains mandatory requirements.
Accounting Regulation Bodies: Government of the Republic of Armenia
Central Bank of the Republic of Armenia
Accounting Reports: The presentation and preparation of financial statements should be performed in accordance with the Law on Accounting. The full package of financial statements includes:
- the balance sheet;
- the income statement;
- a statement of changes in equity;
- a cash flow statement;
- notes to financial statements.
Publication Requirements: All organizations with minor exceptions are required to submit their annual financial statements to the tax inspectorate.
Professional Accountancy Bodies: AAA , Association of Accountants and Auditors
Certification and Auditing: For Joint-Stock companies, banks and insurance companies, the annual financial statements have to be audited by an independent auditor. For other companies, this step is not required.
KPMG, Ernst & Young, PricewaterhouseCoopers, Grant Thornton Amyot.
Accounting News: The Government of the Republic of Armenia

Tax Rates

Consumption Taxes

Nature of the Tax: Value Added Tax (VAT)
Tax Rate: 20%
Reduced Tax Rate: According to the Law, some transactions and operations are exempt from VAT and some are rated at zero per cent. The difference between exemption and zero rating is that exemption does not compensate a seller for VAT paid and incorporated at earlier stages of the distribution chain; it only exempts the value added by the seller.

The list of deductions and exemptions can be consulted at Ardani's website.
Other Consumption Taxes: Excise tax on the import of spirits, beer, wine, tabacco substitutes, crude oil, and carbohydrate gases (except natural gas). The following categories are exempt from excise tax:
- Goods imported into and further exported from the RA;
- Goods which are imported by citizens in amounts that do not exceed the limits specified by the Law on Excise of Armenia.

Learn more about Service Providers in Armenia on Globaltrade.net, the Directory for International Trade Services.

Corporate Taxes

Company Tax: 20%
Capital Gains Taxation: There is no long-term capital gains tax in Armenia.
Main Allowable Deductions and Tax Credit: Many deductions exist in the Armenian corporate taxation system although the situation is going to change as the government tries to limit deductions possibilities. Still, the following expenses can be deduced for the calculation of the corporate tax:
- material expenses;
- payments on the obligatory social insurance;
- depreciation allowances;
- insurance premiums;
- interest on loans and other borrowings;
- payment on guarantees, letter of guarantees and credit and other banking services;
- advertisement, representative and business trip expenses;
- expenses on staff recruitment, on audit, legal and other consulting, information and administrative services.
Other Corporate Taxes: Armenian and foreign employers are required to withhold monthly social insurance contributions from their employees salaries and wages at the following rates:
- From AMD 0 to 20,000: AMD 5,000;
- From AMD 20,000 to 100,000: 15% of the amount exceeding AMD 20.000 plus AMD 5,000;
- Over AMD 100,000: 5% of the amount exceeding AMD 100,000 plus AMD 17,000.

Individual Taxes

Tax Rate

Monthly taxable income: AMD 0 to 80,000	10%
Monthly taxable income: more than AMD 80,000	AMD 8,000 + 20% of the amount exceeding AMD 80,000.

Allowable Deductions and Tax Credit: Individual tax payers enjoy the following deductions:
- Personal allowance: AMD 30,000 is deducted from personal monthly gross income before calculating tax;
- Income of military personnel is tax free;
- Grant, property and cash received as inheritance, dividends, income from realization of agricultural productions,and insurance compensation are not taxed;
- Contributions made to religious, public and other non-profit organizations (total contribution not exceeding 5% of the taxable income) are exempted from tax;
- Scholarship and stipends paid to students and monetary & non-monetary gains from lotteries are not taxed;
- For royalties, leasing and interest income the income-tax rate is 10% without taking into account the deductions specified above.
Special Expatriate Tax Regime: Income tax for foreigners is set as follows: 5% on insurance compensation and income from transport (freight), 10% on income from royalties, interests, lease payments, increase in value of property and other income received from Armenian sources.

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed: See the list of the conventions signed by Armenia.
Withholding Taxes: Dividends: 10%, Interest: 10%, Royalties; 10%
Bilateral Agreement: Armenia and Egypt are bound by a double taxation agreement. Signed on December 2005, it has not yet been ratified.

Sources of Fiscal Information

Tax Authorities: State Tax Service of the Republic of Armenia
Other Domestic Resources: Armenian Development Agency provides with an explanatory section about taxation in Armenia.

Learn more about Taxes and Accounting in Armenia on Globaltrade.net, the Directory for International Trade Services.

Intellectual Property

National Organizations: The authority protecting the intellectual rights in Armenia is called Intellectual Property Agency. It was established in March 2002 and works under the Ministry of Trade and Economic Development.
Regional Organizations: Armenia has signed regional and international agreements in terms of intellectual property such as the Paris Convention for the Protection of Industrial Property, the Eurasian Patent Organization, the Wipo Copyright treaty, among others.

National Regulation and International Agreements

Type of property and law	Validity	International Agreements Signed
Patent Law on Patents, 1999.	20 years, when the patent was granted on a basis of a substantive examination (principal patent), or for 10 years, when it was granted without carrying out of a substantive examination (preliminary patent).
Trademark Law on Trademarks, Service Marks and Appellations of Origins	10 years initial period	Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design Law on Patents (Industrial Property Legislation)(1999)	15 years.
Copyright Law on Copyright and Neighboring Rights (2006)	The author’s economic rights shall run for the whole life of the author and for 50 years after his death. The economic rights of the author holding copyright can be transferred by inheritance.
Industrial Models Law on Patents	10 years.

Legal Framework

Independence of Justice: The judiciary is not fully independent and is subject to political pressure from the executive branch. The new constitution of 2005 increased the power of the legislative branch and allowed for more independence of the judiciary. However, corruption is still present.
Equal Treatment of Nationals and Foreigners: The principle of equal treatment is laid down as a fundamental right in the Constitution. According to this text, everyone is equal before the law.
The Language of Justice: The judicial language in the country is Armenian, though Russian is also widely used.
Recourse to an Interpreter: There is no particular framework for a non-speaking defendant case in a court of justice in Armenia.
Independent interpreters can be reached mainly in big cities and can be helpful in a court case.
Sources of the Law and Legal Similarities: The Constitution (adopted in 1995, amended in 2005) is the main source of the law in the country.
Checking National Laws Online: Ministry of Justice
Armenian Young Lawyers Association

Learn more about Lawyers and Legal in Armenia on Globaltrade.net, the Directory for International Trade Services.

Standards

National Standards Organizations: SARM, National Institute of Standards
Integration in the International Standards Network: The National Institute of Standards (SARM) is a joint-stock company operating under the Ministry of Trade and Economic Development. This Institute carry out works on development and examination of Armenian (AST) and Interstate (GOST) standards, which refers to mandatory standards applied in the former Soviet Union, classification (AC) as well as scientific and methodological works in the field of standardization.

SARM is a member body of ISO since 1996.
Classification of Standards: In the Republic of Armenia, standards are classified into two types, those mandatory and those voluntary.
For the preparation and application of standards, SARM follows the WTO agreement on Technical Barriers to Trade (TBT) Code of Good practice.
The great part of the standards applied in Armenia are international and regional standards (GOST).
Online Consultation of Standards: Catalogue of the National Institute of Standards.
Certification Organizations: SARM National Institute of Standards.

Business Practices

General Information: ADA, Armenian Development Agency. This agency offers a wide range of information on business with Armenia.
Opening Hours and Days: Most businesses operate five days a week. The usal opening hours for financial institutions, commercial organizations are from 9.00 am to 6.00 pm with a one hour lunch break at 1.00 pm.
Retail stores' opening hours vary from their location and size but they usually open from 8.00 am to 9.00 pm.

Public Holidays

New Year	December 31-January 2
Christmas	January 6
National Army Day	January 28
Women's International Day	March 8
Motherhood and Beauty Day	April 7
Armenian Genocide Remembrance Day	April 24
Worker's Day	May 1
Victory and Peace Day	May 9
First Republic Day	May 28
Constitution Day	July 5
Republic Independence Day	September 21
Earthquake Memorial Day	December 7

Holiday Compensation: When a public holiday falls on Saturday, companies close on the following Monday to compensate.

Periods When Companies Usually Close

Closure for New Year	First week of January (Armenian Christmas)
Closure during Summer	One week around Mid-August

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