IT industry in Armenia has seen a dramatic growth for the last few years. The industry size in 2017 has reached 765,1 million USD versus 559,1 million USD in 2015 which represents around 37% growth like for like (National Statistical Service of Armenia 2015, 2016, 2017).

Parliament of Armenia has passed a law on

provision of tax exemptions to the IT industry which entered into force in

2015. In accordance with the law, the IT industry has been afforded the

privilage of 0% corporate tax (usual rate being 20%) and 10% only income tax

for employees irrespective of the amount of the salary (usual rate up to 37%

depending on the amount of salary) for a period of three years. The exemption

applies to start-ups involved in software development and related services. The

effect of such law has been dramatic which can be judged from the number of

companies established after such extension (140 companies only established in

2015 and 2016).

The Government of Armenia has presented a

draft law for circulation intending to extend the privelages of taxation

indefinitely. While the draft has passed the preliminary discussion phase, it

is still not presented to the Parliament for vote by the Government probably

due to change of power in April 2018.

In accordance with the survey of Legelata

(2018) around 80% of the clients of Legelata in IT industry would expand the

business in Armenia significantly if the tax privelages would be extended.

Moreover, around 32% of the clients would consider shrinking the business if

the favourable treatment is not extended.

Be that as it may, Legelata continues to

provide a one stop shop for its IT clients for advising on the taxation, IP and

other related matters and conducting legel management for IT clients to reach

the most efficient legal, tax and regulatory structure and business compliance.

Author: Zaruhi Arzumanyan,

Senior Associate

[email protected]

CONTACTS:

LEGELATA CJSC,

105/1 Teryan street, office 606,

Yerevan, 0009, Armenia

Phone: +374 10 51 43 45

Email: [email protected]

Website: www.legelata.am

Disclaimer:

This material is produced by Legelata CJSC. The material contained

in this newsletter is provided for general information purposes only and does

not contain a comprehensive analysis of each item described. Before taking (or

not taking) any action, readers should seek professional advice specific to

their situation. No liability is accepted for acts or omissions taken in

reliance upon the contents of this material.