Investments Climate
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Certain types of business also require a trade certificate or license from the relevant ministry. These include banking and issue of securities (Central Bank), medical services (Ministry of Health), and food and drink processing (Ministry of Agriculture). This process in practice may take longer than the state registration process. Investment Policy and Incentives Armenia's investment policy is geared towards attracting foreign investors. Foreign companies may invest in any sector and enjoy the same treatment as domestic firms. The law guarantees the right to repatriate profits without limitation. Any currency may be freely converted and bank accounts may be held in foreign currencies. The main piece of relevant legislation is the Law on Foreign Investment of 31 July 1994. The Law aims to create an attractive environment for foreign investment, offering domestic treatment, a five-year grandfathering clause in the event of changes in legislation, and protection from nationalisation or expropriation (with full market value compensation in the extraordinary event of confiscation). Foreigners may establish the same forms of business as local investors and follow the same company registration procedure. Foreigners may not own land, but may lease it for up to 99 years or use it under contract. Profit Tax Concessions Foreign investors enjoy substantial tax benefits. Under the Law on Profit Tax, if the share of a foreign investor in the equity capital of a resident company (except banks) is at least dram 500 million after January 1, 1998, then the amount of the tax of the resident is deducted by:
If the taxpayer is liquidated within the period indicated in this Article, the profit tax is estimated in total amount for the whole period of activity. Profit tax exemptions granted to foreign investors and banks before 1 January 1998 remain in force until the end of their original validity. Losses can be carried forward without time limitation. Deductions for profit tax purposes are allowed for most expenses. Property Rights Protection for Companies, Repatriation of Profits Property rights are guaranteed under the Armenian constitution adopted in 1995. The Law on Property and the Law on Foreign Investment also protect property rights. Foreigners may repatriate profits freely. Hard currency may be imported and exported without limit, as long as it was previously imported or legally obtained in Armenia. Otherwise, there is a limit of US$ 10,000 or equivalent on the export of cash. There are currently no free economic zones, but the possibility of establishing industrial parks, involving Zvartnots airport and existing large electronics firms is under consideration. Bilateral Investment Agreements The BIT requires equality of investment conditions for all investors, be they foreign or national. It protects investors against expropriation and nationalization as well as regulate dispute settlements between the companies and the governments of each party. Armenia has signed bilateral treaties on investment and investor protection with 16 countries (Argentina, Vietnam, Germany, Greece, Georgia, Egypt, Iran, Cyprus, China, Kirgizstan, Romania, USA, Turkmenistan, Ukraine, France, Canada). Tax Rates
Agricultural land is taxed at 15% of its net income. Property tax rates range from 0.2-0.8% of the average annual taxable property value. Double Taxation Treaties Double taxation treaties exist with: Bulgaria, China, Ukraine, Iran and Romania. Conventions have been ratified, signed or initiated with: Russia (ratified), Syria, Turkmenistan, France, Georgia (signed), Estonia, Latvia, Lithuania, Moldova and Uzbekistan (initiated). Negotiations are under way with Belarus, Belgium, Cyprus, Egypt, Greece, Kyrgyzstan, the Netherlands and Indonesia. Bilateral treaties on investment and investor protection exist with 16 countries: Argentina, Canada, China, Cyprus, Egypt, France, Georgia, Germany, Greece, Iran, Kyrgyzstan, Romania, Turkmenistan, Ukraine, USA and Vietnam. Armenia has also signed the CIS multilateral convention on protection of investor rights. |
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