If you are considering the idea of creating your own IT company in Armenia this year, we have great news for you. Armenia has become one of the main destinations for IT professionals who want to take a step forward. The pronounced interest of the nation in the IT sector prompted the parliament to simplify the registration procedures of companies by offering tempting tax incentives and grants for startups. Armenia boasts many advantages, including a highly qualified workforce, reliable infrastructure and economical activities. In addition, enterprises here have the opportunity to conduct research in accordance with international standards and participate in IT conferences or even host them.
Extending the IT Benefits
In 2014, Armenia enacted the law “On State Assistance in the Field of information Technology”, introducing an IT certificate. This certificate provides significant tax benefits, such as:
- Zero VAT rate (replacing the usual 20%)
- Zero income tax rate (instead of the standard 18%)
- Income tax rates of 10% on employee salaries (instead of 21%) and 5% on dividends (instead of 21%).
On December 16, 2022, the Armenian Parliament approved amendments extending preferential tax conditions for start-up IT companies until December 31, 2023. These benefits apply to both LLC and individual entrepreneurs registered in Armenia and working in the field of information technology.
Qualifying for the IT Certificate in Armenia
Companies that meet the following criteria are eligible for an IT certificate:
- Engage in one of the six approved areas covering software development, educational and research programs in the field of information technology, computer systems management, consulting in the field of computer technology, web portals, data processing and related activities.
- Exists less than three months ago.
- The number of staff is no more than 30 people.
- Maintaining a legal address, which can be a virtual office.
- Work with active bank accounts.
From Legal Entity to IT Certificate
The process of obtaining an IT certificate includes several stages:
- Choose the appropriate form of legal entity for your company. LLC or JSC are usually preferred options. It depends on factors such as the number of investors and the need for a board of directors.
- Choose a distinctive company name and specify the legal structure (for example, LLC, JSC).
- Determine the legal address.
- Shareholders and founders may be individuals or legal entities without any restrictions on citizenship. A foreign citizen can act as a director and founder of a newly created company, while a non-resident is required to provide translated and notarized copies of their passports.
- Collect the necessary documents for registration, including the application, the decision of the founders, regulations, confirmation of the tax number and the declaration of the beneficiary. Foreign organizations must provide documents certified by an apostille.
- After registration, open a corporate bank account in Armenian banks, prepare a business plan and send an application for evaluation to the Ministry of Economy of Armenia. The application includes a free-form application, detailed information about the company’s founders and employees, as well as a business plan. Subsequently, the application on paper is sent to the attestation commission.
- If your application is approved, the IT certificate remains valid indefinitely, starting from the same month.
Securing Your IT Certificate: Post-Registration Steps
After receiving the IT certificate, it is mandatory to notify the tax authorities about this. In addition, the Ministry of Economy of Armenia should receive information on the implementation of your business plan every six months. Prepare and submit a report by the twentieth day of the month following the end of each reporting half-year.
In order to keep your IT certificate, it is extremely important to comply with the rules and reporting requirements. Failure to comply with these obligations may result in the cancellation of the certificate.
Armenia is a priority choice for IT entrepreneurs in 2023, due to its prospects in the field of IT, offering significant tax benefits. Similar opportunities are available in the Belarusian Hi-Tech Park.
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