Price liberalisation
Almost all prices have been liberalised, with controls remaining only on urban transport, electricity, hot water, gas, heating, sewerage, rubbish collection, state-owned housing, telephones and irrigation. The privatisation of state-owned bakeries and flourmills during 1997 and early 1998 has eliminated state controls on profit margins for flourmills, thus eliminating the implicit price controls on bread.
Currency convertibility
The dram is fully convertible for current account transactions. Export surrender requirements were eliminated by mid 1995.
Competition policy
The Law on Banks and Banking, the Law on Bank Insolvency and the Law on Bankruptcy, all passed in 1996, defined free market entry and exit regulations in the banking and business sectors. Armenia is still in the process of establishing legislation to regulate unfair competition.
Funds
received from state property privatisation in 1998 
|
|||
| |
AMD thousands | US$ thousands | |
| |
|||
| Medium-sized and large enterprises | 41,011,053.60 | 80,413.83 | |
| certificate privatisation | 2,118,340.00 | 4,153.61 | |
| cash privatisation | 38,892,713.60 | 76,260.22 | |
| Small enterprises | 3,058,100.70 | 5,996.28 | |
| certificate privatisation | 2,488,600.00 | 4,879.61 | |
| cash privatisation | 569,500.70 | 1,116.67 | |
| Non completed construction | 69,047.40 | 135.39 | |
| certificate privatisation | 63,100.00 | 123.73 | |
| cash privatisation | 5,947.40 | 11.66 | |
| Total | 44,138,201.70 | 86,545.49 | |
| certificate privatisation | 4,670,040.00 | 9,156.94 | |
| cash privatisation | 39,468,161.70 | 77,388.55 | |
| Source: Armenian Development Agency |
|||
Trade liberalisation
Armenia has a liberal foreign trade regime with a simple two-band import tariff (at 0 per cent and 10 per cent), no taxes on exports and no substantial quantitative trade restrictions. Import, export and domestic production licenses are required only for health, security and environmental reasons. There are no limits on hard currency imports. Tariff exemptions are extended to all goods originating from Russia, Turkmenistan, Moldova, Tajikistan, Kyrgyzstan, Georgia and Ukraine under the terms of free trade agreements. Excise taxes are charged at various rates on the import or production of some luxury goods (including alcohol, tobacco, caviar, petrol, precious stones and furs).
International cooperation
In 1992 Armenia applied for General Agreement on Trade and Tariffs status. In 1993 Armenia applied for full GATT membership. Following GATT's conversion to the World Trade Organisation (WTO), in 1995 Armenia applied for WTO membership. Following two rounds of negotiations Armenia has completed its obligations, and the third round, held in March 1999, is expected to clear all the outstanding issues before accession.
In September 1997, the Partnership and Cooperation Agreement with the European Community (PCA) came into force. The PCA liberalised trade with the EC in goods (except for steel, textiles and coal) and services, created a framework for trade and investment facilitation and harmonious economic relations between the parties, and provided a basis for legislative, economic, social, financial, civil, scientific, technological and cultural cooperation. The PCA granted Armenia "most favoured nation" treatment.
| Tax
rates |
||
| Corporate profit tax | ||
| Amount per year, AMD | Tax rate | |
| |
||
| under 7 million | 15% | |
| over 7 million | Flat fee of AMD 1.05 million plus 25% on amount over AMD 7 million | |
| |
||
| Personal income tax | ||
| Amount per year, AMD | Tax rate | |
| |
||
| 0-120,000 | 15% | |
| 120,000-320,000 | 25% of income exceeding AMD 120,000, plus AMD 18,000 | |
| 320,000 or more | 30% of income exceeding AMD 320,000, plus AMD 68,000 | |
| |
||
| Value added tax | ||
| |
||
| Basic rate | 20% | |
| Source: Ministry of Finance and Economy |
||
Foreign trade
Exports include machinery, transport equipment, textiles, chemicals, ferrous metals and metal products, rare and precious metals, gems and foods. Imports include food, fuel, non-food raw materials, machinery and chemicals. The total value of exports in 1998 was US$ 223.4 million (from US$ 233 million in 1997). 1998 imports are US$ 895 million, up from US$ 893.4 million in 1997. Traditionally, Armenia's top foreign trade partner is Russia, but following the Russian crisis of August 1998 the levels of trade have dropped.