The world is now more at risk of a WW3 than ever before. The reason is very clear: the confrontation between the West and Russia, which is a war of a new generation, is being waged through other countries in the territory of others. Obviously, these are European countries that are cautiously defending Ukraine and prepared for the Russian advance. As in all wars, the reason is the economic struggle for resources; these are the Russian natural resources and vast lands. At the same time, attempts to inflict economic damage on each other are also on their agenda. The West deprives Russia of high technologies in the form of sanctions, confiscates the property of the Russian Federation and its citizens. In response, Russia allowed only those foreign companies that would work in good faith on the Russian market to operate, multiplied gas prices, and restricted export of wheat.
But as Nietzsche said, “Whatever doesn’t kill you makes you stronger.” Russia will embark on the path of technological development, and energy consumers will think of alternative energy resources that are more environmentally friendly.
In this situation, Armenia got a hold of a very important role which is an economic bridge between the conflicting parties. From the point of view of the West, this is a model of democracy in the post-Soviet space, and on the other hand, Armenia has centuries-old allied, educational, cultural, religious ties and security cooperation with Russia. Therefore, the first point where Russian businessmen looked at was Armenia. We hope that everyone will benefit from this cooperation: after the end of the war, Armenia and Russia will have an even more prosperous future.
However, prior to that, some information about the business environment in Armenia.
The tax legislation is quite similar to the on in the Russian Federation, since the Armenian tax code that was adopted several years ago, took into account the fact that Armenia is a member of the EAEU. In Armenia, the current corporate profit tax is 18%, dividends are taxed at 5%, while in Russia they stand at 20% and 15% respectively. VAT is 20%, which is 2% higher than in Russia. For the IT sector, with some exceptions, benefits are provided in the form of a 10% payroll tax rate and exemption from profit tax. Payroll tax is gradually being reduced and will drop from 21% to 20% in 2023. Despite the fact that the average monthly salary fluctuates around 50,000 rubles, however, it is much higher in the field of information technology. In general, the state pays great attention to this sphere, and there are many technology parks created specifically for this purpose. The communication process with the state, tax authorities, customs, import and export (especially from and to the EAEU member states) are highly developed, digitized and automated. The banking system in its turns, is also at a highly digitized level in order to serve its customers without the need to physically visit the bank. All banks and financial institutions are strictly and closely regulated by the Central Bank of Armenia. The civil laws in the Republic of Armenia are basically similar to the Russian and the European laws, and it is sufficiently regulated by codes, legal acts, which, unfortunately, sometimes contain contradictions and ambiguities that can be resolved in court. The judicial system is overloaded due to the changes taking place in the country, but this does not entail any negative impact on conscientious foreign entrepreneurs in any means. On the other hand, tourism and other service sectors are very developed in Armenia, so when you move your business to Armenia, you can easily and successfully harmonize business with tourism. By the way, emergency medical assistance to citizens of the CIS countries is provided within the framework of the state order, in accordance with the Agreement on MEDICAL ASSISTANCE TO CITIZENS OF THE COUNTRIES OF INDEPENDENT STATES. Our state and people are very hospitable to foreign visitors. On the streets of Yerevan, it is very common to meet expatriates from India, Slavic nations, Iran, as well as representatives from minorities, including Yazidis, Kurds and Assyrians, since Armenia has become their homeland, helping them to preserve their national and cultural identity. Therefore, if your business is located in Russia, and it is no longer possible or advisable to keep operating there due to the ongoing war, then one of the most convenient countries for relocating your business is Armenia.
Our firm has a team of over 15 years of experience in consulting, accounting and auditing services. We are ready to help our potential clients with any business relocation issues and processes. These processes include registration in the state register, tax and statistical authorities, accounting services, organization of import and export processes, rental of premises, settlement of residence status for foreign workers, employment issues, personnel records and any other business-related issues.
Author of the article: IFP Managing partner Ashot Barseghyan, member of the Chamber of Auditors and Expert Accountants of Armenia
- Tax code of RA
- Tax code of RF