General
The importance of an effective and enforceable system of intellectual property laws and institutions has been acknowledged by the Armenian government and the society at large. A number of legal and institutional reforms have been initiated recently with a view to improving the system of intellectual property rights and enhancing the trade and investment environment in the country, including enforcing customs controls on imports and exports of pirated or counterfeit goods. This is also an important factor in ensuring compliance with Armenia’s commitments under the WTO agreements.
Taxation
The Armenian Law on Profit Tax (corporate tax) defines royalty as compensation for transferring a copyright to a work of literature, art or science; a patent; a trademark; a project or a model; a plan; a confidential formula or process; a software for computers or databases; a right to use industrial, commercial or scientific equipment; or information on industrial, technical, organizational, commercial or scientific experience.[fusion_builder_container hundred_percent=”yes” overflow=”visible”][fusion_builder_row][fusion_builder_column type=”1_1″ background_position=”left top” background_color=”” border_size=”” border_color=”” border_style=”solid” spacing=”yes” background_image=”” background_repeat=”no-repeat” padding=”” margin_top=”0px” margin_bottom=”0px” class=”” id=”” animation_type=”” animation_speed=”0.3″ animation_direction=”left” hide_on_mobile=”no” center_content=”no” min_height=”none”][1]Royalty is subject to taxation at the general corporate tax rate of 20%.[2] If royalty is paid to a non-resident entity a withholding tax of 10% is imposed on the resident company making the payment.[3]Individuals are subject to an income tax of 24.4% or 26%.[4] If royalty is paid to an individual not registered with tax authorities as an “individual entrepreneur” a withholding tax of 10% is applicable.[5]
Small and medium enterprises with an annual turnover of less than AMD 58.35 million (approx. USD 142,000) are exempted from corporate tax but subject to turnover tax.[6] Under the turnover tax regime royalties are taxable at 10%.[7]
Licensing and technology transfer are considered provision of services and as such are subject to a VAT[8] of 20%[9]. Small and medium enterprises with an annual turnoverof less than AMD 58.35 million (approx. USD 142,000) are exempted from VAT.[10]Zero rate VAT applies to provision of services outside the territory of Armenia.[11]Services for transfer of patents, licenses, copyright, trademarks and similar rights and provision of software are considered to be provided in Armenia if the recipient of such services (the transferee) is a company or an individual entrepreneur registered in Armenia.[12]If the transferee is an Armenian company and the transferor is a foreign company the Armenian company must withhold the tax unless it is exempted from VAT.[13]
The customs value of goods imported to Armenia shall include the amounts payable to the supplier by the purchaser against royalties and license fees that are required conditions for the sale of the imported goods.[14]The rate of the import duty is either 10% or 0% of the customs value.[15]
Money Transfer
No restriction is imposed on current operations between resident and non-resident entities or persons, i.e. payments for sale of goods, provision of services, performance of work, use of property, granting of short-term loans, payment of interest, dividends, remittances etc.[16]Other transactions , which do not fall within this category of “current operations,” are treated as capital flow and financing operations and theoretically can be restricted by the Central Bank in order to achieve financial system stability, combat money laundering and terrorism financing, prevent economic risks and collect statistical information.[17] In practice, however, such restrictions have not been imposed.
Foreign currency exchange transactions cannot be restricted but shall be executed through licensed entities, i.e. banks, exchange offices, currency dealers etc.[18] Export of cash is limited to AMD 5 million (approx. USD 12,000) or its equivalent in foreign currency, whereas the import is limited to 15,000 euro or its equivalent in another currency.[19]The law requires that monetary equity investments in Armenian companies be made in local currency.[20]
Joint Research and Retention of Rights
Copyright to a work made by the joint creative labor of two or more citizens belongs to the coauthors jointly, regardless of whether such a work forms one indivisible whole or consists of parts each of which also has independent significance.[21]Each of the coauthors shall have the right to use a part of the work created by him that has independent significance at his discretion unless otherwise provided by contract.[22]Copyright to a work shall be exercised by all the authors jointly and remuneration shall be distributed among them equally, unless otherwise provided by contract.[23]If the work of coauthors forms one indivisible whole, then no one of the authors can, without sufficient grounds, prevent others from using the work.[24]
If an invention is made by several persons jointly the right to apply for and obtain a patent belongs to them jointly.[25] Mutual relations of patent holders, i.e.cocreators of an invention, utility model, or industrial design shall be determined by agreement among them.[26]Noncreative support in the creating of an invention, utility model or industrial design (technical or organizational assistance, assistance in formalizing rights, etc.) does not entail cocreatorship.[27]
The Law on Trademarks does not restrict the ownership of a trademark by two or more persons[28] and contains a number of provisions on collective marks[29].
Preferential Treatment
Scientific research and development works are exempted from VAT.[30]For corporate tax purposes expenses on scientific, experimental and designing works are deductible in the year where expenses were incurred.[31] Resident entities implementing business plans approved by the Government of Armenia are entitled to a tax credit equal to the amount of wages paid for work performed within the business plan for the first year of operations and the following two years, provided that such amount does not exceed 30% of the corporate profit tax and that the activities in question are not commercial or financial in nature.[32]
- Name of the authority: Intellectual Property Agency of the Ministry of Economy
- Address: Central Avenue, Government Building 3, Yerevan 0010
- Phone Number: (374 10) 543-467
- Email Address: [email protected]
- Website: www.aipa.am
- Jurisdiction of the Authority: examining applications and registering inventions, utility models, industrial designs, trademarks and service marks, geographical indications, topographies of integrated circuits; granting patents; registering license agreements, hearing appeals and oppositions; publishing official information and operating search engines; registering patent attorneys; ensuring international cooperation; providing advice to the Minister of Economy for improvement of intellectual property legislation.
- Name of the authority: State Commission for Protection of Economic Competition
- Address: 5b, MherMkrtchyan St., Yerevan 0010
- Phone Number: (374 10) 543-986
- Email Address: [email protected]
- Website: www.competition.am
- Jurisdiction of the Authority: enforcingcompetition laws; prosecuting unfair trade practices; designing and implementing competition policy; international cooperation.
- Name of the authority: Police, First Unit of the Anti-Organized Crime Department
- Address: 130, Nalbandyan St., Yerevan 0025
- Phone number: (374 10) 520-310
- Email Address: N/A
- Website: www.police.am
- Jurisdiction of the Authority: registering claims, conducting operational and intelligence activities, expert examinations, detecting and investigating intellectual property crimes.
- Name: Ministry of Agriculture
- Address: Central Avenue, Government Building 3, Yerevan 0010
- Contact Details: (374 10) 524-641
- Email Address: N/A
- Website: www.minagro.am
- Jurisdiction of the Authority: examining applications and registering plant variety rights; granting patents; registering license agreements.
- Name: Customs Service of the State Revenue Committee
- Address: 3, MovsesKhorenatsi St., Yerevan 0015
- Contact Details: (374 10) 544-311
- Email Address: N/A
- Website: www.customs.am
- Jurisdiction of the Authority: prevention of illegal import and export of goods containing intellectual property objects.
- Name of the Business Association: Armauthor Association
- Address: 19a, Koryun St., Yerevan 0009
- Phone Number: (374 10) 529-492
- Email Address: [email protected]
- Website : www.armauthor.am
- Membership size: Armauthor is a non-governmental collective management organization of authors’ rights and related rights.
- Types of Members: authors, performers and phonogram producers.
[1] Art. 7, Law of the Republic of Armenia on Profit Tax, No. 155, Sep. 30, 1997, Official Gazette [O.G.] Dec. 3, 1997, No. 27
[2]Id., art. 33.
[3]Id., art. 57.
[4] Art. 10, Law of the Republic of Armenia on Income Tax, No. 246, Dec. 22, 2010, O.G. Dec. 30, 2010, No. 69(803).1
[5]Id.
[6] Art. 2, Law of the Republic of Armenia on Turnover Tax, No. 236, Dec. 19, 2012, O.G. Dec. 28, 2012, No. 66 (940)
[7]Id., art. 7.
[8] Art. 2, Law of the Republic of Armenia on Value Added Tax, No. 118, May 14, 1997, O.G. Jun. 21, 1997, No. 14
[9]Id., art. 9.
[10]Id., art. 3.
[11]Id., art. 16.
[12]Id., art. 14.
[13]Id., art. 8.
[14] Art. 83, Customs Code of the Republic of Armenia, No. 83, Jul. 6, 2000, O.G. Aug. 21, 2000, No. 117
[15]Id., art. 102.
[16] Art. 4, Law of the Republic of Armenia on Currency Regulationand Currency Control, No. 135, Nov. 24, 2004, O.G. Dec. 28, 2004, No. 72(371)
[17]Id.
[18]Id., art. 7.
[19] Decision of the Board of the Central Bank No. 386, Jul. 29, 2005, O.G. Jan. 9, 2006, No. 2(211)
[20] Art. 6, Law on Currency Regulationand Currency Control, supra note 17.
[21] Art. 1117, Civil Code of the Republic of Armenia, No. 239, May 5, 1998, O.G. Aug. 10, 1998, No. 17(50)
[22]Id.
[23]Id.
[24]Id.
[25] Art. 15.1, Law of the Republic of Armenia on Inventions, Utility Models andIndustrial Designs, No. 111, Jun. 10, 2008, O.G.Jul. 9, 2008, No. 2(632)
[26] Art. 1148, Civil Code, supra note 22.
[27]Id.
[28] Art. 2, Law of the Republic of Armenia on Trademarks, Apr. 29, 2010, O.G.Jun. 2, 2010, No. 24(758)
[29]Id., art. 32-38.
[30] Art. 15, Law on Value Added Tax, supra note 9.
[31] Art. 15, Law on Profit Tax, supra note 2.
[32]Id., art. 39.3.
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