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]

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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.