Tax Benefits for IT Companies in Armenia

Tax Benefits for IT Companies in Armenia

Tax Benefits for IT Companies in Armenia

According to the government approval of a set of amendments to the law on state assistance to IT sector government, startups and branches of foreign IT companies will be granted tax breaks. Armen Pambukchyan, deputy Minister of Transport, Communications and Information Technology claimed that the tax benefits will be in effect until 2022.

The tax breaks granted to IT companies have been in effect since 2015 exempting them from income tax payments (the zero rate is in effect). Instead of 23% payroll tax, IT companies pay only 10%.

Thanks to the tax regulation starting from 2014 to 2017, the number of startups in Armenia increased by 256 creating 2,400 new jobs with an average salary of 3-3.4 million drams per year. IT startups have paid almost 611 million AMD in taxes from 2015 to 2017.

Earlier, the acting Minister of Transport, Communication and Information Technologies said the approved amendments would apply to manufacturers of electronic equipment, devices, engineering businesses and others.

Under a government decision passed by the Armenian parliament in late 2014, startups employing up to 30 people are exempt from profit tax until 2020. They are also eligible for a preferential payroll tax rate for their employees, equivalent to 10 percent of their gross wages.

More than 16,000 people are employed by IT companies in Armenia and this sector accounts roughly for 5 percent of the country’s Gross Domestic Product (ARKA, Startups and Branches of Foreign IT Companies in Armenia Will Be Granted Tax Breaks (Nov. 23, 2018)).