At a glance

Main competitive advantages

  • A highly skilled, young and cheap workforce and a strong entrepreneurial spirit
  • A long-standing technology-oriented economy with a focus on high quality products
  • A favourable investment legislation, including a 10-year protection against adverse changes in legislation and free repatriation of profit
  • A strategic location to do business with Europe, the CIS, the Middle East and Asia, and very promising medium term development prospects when all borders are opened
  • Strong links with many foreign markets through the large Armenian Diaspora - 8 million people

Economic outline

Key figures

GDP: AMD 4,172 billion/ EUR 8.2 billion (2012)               Population 3.2 million.  Area: 29,700 km²

Market access:

  • Free Trade agreements with Belarus, Georgia, Moldova, Kazakhstan, Russia, Ukraine, Tajikistan and the Kyrgyz Republic (235 million people);
  • General System of Preferences (GSP+) trade regime with the EU: 6,400 products exported with 0 or reduced customs duties;
  • General System of Preferences with the USA, Canada, Switzerland, Japan and Norway;
  • Customs duties for all agricultural and industrial products with few exceptions (under Armenia-EU DCFTA negotiations)
  • WTO membership (since 2003): MFN (Most-favoured-nation) regime with all WTO member countries.

Armenia significantly improved its income levels over the past decade and a half as a result of sustained economic reforms. The average growth rate between 2001 and mid-2010 was 12%. The global financial crisis hit the country severely, but economic recovery is now underway.

Armenia adopted a new industrial strategy in 2011, aimed at increasing the international competitiveness of 11 sectors with export potential. Information and Communication Technologies (ICT), tourism and agribusiness are among the priority sectors.

Foreign Investment

  • Open door policy for investors in any sector
  • FDI is seen as an important source of financial resources, technologies and management skills, and an opportunity to access new markets (industrial strategy)
  • Main targets: attraction of technological firms and of 2-3 multinational companies every year
  • Top investor countries: Russia, Europe (France, Germany, Greece, etc.), Argentina, USA, Lebanon

Business environment

Ease of doing business

Doing business 2013 rank for Armenia: 32/ 185. Change in Rank: ↑ 18

Armenia achieved significant progress in Doing business 2013 and is the second best performing economy among the 6 Eastern Partnership countries.

Major latest improvements include:

  • Protecting investors ↑73: introduction of a requirement for shareholder approval of related-party transactions;
  • Paying Taxes ↑44: reduction of the number of payments for social security contributions and corporate income, property and land taxes and introduction of mandatory electronic filing and payment for major taxes
  • Getting Electricity ↑42: reduction of the connection fees and streamlining procedures
  • Dealing with construction permits ↑3: elimination of the requirement to obtain an environmental impact assessment for small projects.

Investment climate

Armenia's investment climate is increasingly attractive. Investing Across Borders (IAB) assessment for Armenia:

  • Investing Across Sectors: the only restrictions on foreign equity ownership are in forestry (no foreign investment) and oil and gas sector (foreign equity limited to 49%);
  • Starting a Foreign Business: it takes 8 procedures and 18 days to establish a foreign-owned limited liability company (LLC) in Armenia;
  • Accessing Industrial Land: leasing and buying land from both private and public owners are possible. The process of leasing private land is streamlined and extremely fast (10 days);
  • Arbitrating Commercial Disputes: a Law on Commercial Arbitration was adopted in 2006, and an arbitration court was established at the Chamber of Commerce and Industry of Armenia in 2007. All commercial disputes are arbitrable except intra-company and patent or trademark disputes.

Tax system and incentives

Armenia offers a competitive tax system:

  • 20% VAT, 20% corporate tax (income tax and business income), maximum 20% individual income tax;
  • Simplified taxation for Small and Medium Enterprises;
  • Special tax and customs regimes for exporting firms.

Preferential legal regimes of investment are available:

  • 3 year-delay for VAT for investment above AMD 300 million (EUR 585,000) and imported technologies (2009);
  • Free economic zones (FEZ): law adopted in 2011: exemption of profit tax, income tax, value added tax, property tax and customs duty. The first FEZ is to be launched in Zvartnots airport for the agribusiness and jewelry sectors. The second FEZ will target innovative products and will be established in Mars plant, a Yerevan-based manufacture of metal and electronic products.

Referent organisations and useful resources

This publication has been produced with the financial assistance of the European Union. The contents of this publication are the sole responsibility of EUROCHAMBRES and can in no way be taken to reflect the views of the European Union.

© 2011 East Invest Support Office
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