Setting up a company in Armenia

The Law of Companies of the Republic of Armenia provides that any person with legal capacity, natural or legal person, whether resident or non-resident, can establish a company in Armenia.

The first and important requirement for the establishment of a company is its registration.

Registration is carried out by the Agency of the State Register of Legal Entities of the Ministry of Justice of the Republic of Armenia.

State registration of a legal entity can be confirmed within two days after all required documents are submitted.

There is also an online registration platform (www.e-register.am).

Types of business organizations or legal forms of companies in Armenia are as follows.

• Private company

• Limited liability company

• Public limited company

• Entire company

• Association based on trusts (limited partnership)

• Production cooperative

Registration fees vary according to the legal form of the company. For example, in the case of a private company it costs 3,000 AMD (+/- € 5.15)

The steps for registering a company are the following:

Attached to the application of the individual entrepreneur is his original passport / identification card and his photocopy, document that proves the payment of the state fee (payment receipt or payment by electronic payment system).

Legal person. The application for registration must be signed by all participants / founders, including the decision to establish a legal entity, the name of the newly established company, the address of the legal entity, as well as information about the CEO or CEO interim (passport / ID card).

The Law on Companies of the Republic of Armenia also refers to the establishment of a branch of a foreign company.

In this case, the following documents are required:

• Application signed by the CEO, which includes the name of the founding company, registration number, details of the branch manager (VAT, passport / ID).

• The company's decision to establish a branch or representative office, approval of the statute, as well as the appointment of a manager of a branch or representative office.

• Letter from the branch or representative office, signed by the authorized representative of the founder.

• Document proving the payment of the state fee.

Property registration

• The seller receives a special certificate on real estate rights, restrictions and restrictions from the State Committee for Real Estate Cadastre of the Government of the Republic of Armenia.

• State tax is paid and a notarized sale contract is signed.

• The right to real estate is registered in the territorial office of the RA CA SCC, and the new owner receives a certificate of ownership.

For the establishment of a company in the Republic of Armenia, the next step, in addition to its registration, is the opening of a bank account.

• Accounts can be opened and managed by RA residents և non-resident legal entities in RA national currency and foreign currency.

• To open a bank account, a legal entity must submit an application signed by its authorized representative, attaching a state registration license (if applicable), a state registration certificate and a document certifying the taxpayer's registration number (number of VAT).

Tax system

Income tax (including social security contributions).

If the amount of monthly taxable income is up to 120,000 dram (+/- 206,04€, the tax rate is approximately 24.4%.

Income taxpayers: Income of residents of RA և non-residents of Armenian origin.

The annual income tax rate is set at 20%.

Taxpayers. Income of RA residents (for example, state-owned organizations and contractual investment funds) and Income of non-residents from Armenian sources.

• For residents in the territory of the Republic of Armenia taxable earnings received outside its borders.

• For non-residents: full benefit from Armenian sources.

The VAT rate is set at 20% for goods and taxable billing for services.

VAT payers: companies whose annual turnover exceeds 115 million dram (+/- 197456,78€).

Export of goods and the import of certain goods (especially agricultural products) included in the Nomenclature of Goods for Foreign Economic Activity (FEZ) is exempt from VAT.

Consumption tax.

Excise taxpayers: all natural or legal persons that produce or import excise goods in the Republic of Armenia. According to the Special Tax Law of the RA, the special tax is levied on beer, cigarettes, cigars, wines, cognac, etc.

Turnover tax

Turnover tax (TC) is a substitute for VAT and (or) income tax for sole proprietors and companies. Business volume taxpayers are those whose income from the sale of goods, services (works carried out) for all types of activities during the previous calendar year, without VAT, does not exceed 115 million drams.

The object of the turnover tax is the income from the sale of goods (services) provided by the taxpayer on the turnover during the reporting period, as well as other income received. The reporting period for turnover tax is quarterly.

Property tax: the value of the cadastral appraisal of real estate in Armenia is 0.1-0.8%.

Import Tax: Rates are set at 0% or 10%, depending on the import.

Kind of product:

Taxable object: goods transported through the customs territory of the Republic of Armenia.

Double taxation agreements with more than 40 countries.

Special tax regimes.

Tax regime in border communities. Individuals, sole proprietors and organizations operating in border communities are exempt from turnover tax, income tax, VAT, or income tax. The exceptions are the goods subject to excise duties.

Family business tax regime. Exceptions also apply when family members (parent, spouse, child, brother) start a family business. In that case, family members who are engaged in the family business are exempt from all taxes related to that activity. Only residents of the Republic of Armenia have the right to establish a family business.

The business volume of the family business in the fiscal year must not exceed 18 million AMD. Each family member involved in a family business pays only 5,000 drams in income taxes.

Free Economic Zones (ZEF): legal entities that operate in ZEFs are exempt from VAT, income tax, property tax and customs duties.

The tax exemption period depends on the declared time and the value of the goods. If the value of the goods is less than 70 million AMD, then the period is 1 year.

 

For more information on the above or on our services on Armenia please consult Legal Counsel Armenia, Naira Damirchyan on info@a-law.eu or fill in our online contact form.