Armenia at the Crossroads of East and West: Trade and Investment Opportunities DevelopmentFoundation of Armenia National Authority for Trade, Investment and Tourism
Content Why to Invest in Armenia Investor Profile in Armenia Sectorial Overview
Why to Invest in Armenia 1 Political, Social and Taxation and Incentives 3 Economic Environment Trade Regimes and Market Legal and Regulatory 4 2 Access Opportunities Environment
Why to Invest in Armenia 1 Political, Social and Economic Environment • Stable political institutions and functional democracy • Strong commitment to build open economy and create attractive • trade and investment opportunities • Political commitment to continuous reform of the business environment and providing robust macro-economic fundamentals • Pro-business values, norms, customs, practices and behaviors by a society at large • Natural attitude towards literacy, education, creativity and innovation • Importance or place of women in workforce and societal norm for equal status and equalwages for female workers • High rankings on the World Bank Doing Business Index • The most liberal economy in the CIS countries
Macroeconomic Stability Peer Average Real GDP Growth Rate 2010-2015 With a 5 year compound annual 11% growth rate of 4.2% outpacing peer countries. 8% 6% 5% 5% 5% 4% 4% 3% 3% 2% 2% 1% 2015 $11 billion GDP $3,515 GDP per capita -2% $24.3 billion GDP (PPP) $8,070 GDP (PPP) per capita Peer Average Inflation Rate 2010-2015 29% CPI 22% Armenia has one of the lowest 13% 11% 8% 8% 8% 8% 7% 6% 6% 5% 4% 4% inflation rates in the region with a 5 year average annual inflation rate of 5%. No major fluctuations.
Ease of Doing Business Political stability and good investment climate • Armenia Rank Armenia is Georgia 24 continuously Armenia 35 Startinga business 5 improving its Kazakhst… 41 Dealing with 62 positions in the Belarus 44 construction permits ranking of WB on the Russia 51 ease of doing Getting electricity 99 Moldova 52 business. Registering property 14 Turkey 55 • By the ease of doing Azerbaijan 63 Getting credit 42 business Armenia Kyrgyz … 67 ranked 43th in 2010, Protecting minority 49 Ukraine 83 while in 2016 the investors country is the 35 th . Uzbekistan 87 Paying taxes 41 Iran 118 Trading across borders 29 Tajikistan 132 Enforcing contracts 28 Out of 189 countries Resolving insolvency 71
Ease of doing Business Main Highlights Armenia is one of the leading Dealing with construction permits Cost for property countries in the world by starting a in Armenia longs up to 84 days , registration is about business . The registration of a while in Europe & Central Asia the 0.2% of property business longs up to 3 days and same indicator is about 176 days value. costs about USD 35 . Meantime, in average. there are no any requirements for minimal paid-in capital. For exporting or Total tax rate in Armenia is 19.1%. The credit bureau covers importing goods border There are 7 types of regular taxes . information for 94.1% of adults & documentary The payments of 3 taxes out of 7 and 50% of operating companies procedures longs about can be proceed online and the 5 hours. number of tax payments is 10 annually. Armenia has a very Cost of claim of commercial The extent of director liability distinguished system contracts in Armenia is much more index in Armenia is stronger (6 our of shareholders’ rights affordable (14% of claim), than the of 10 point), than the same protection. The extent same indicator in European and indicator in European & Central of shareholder right Central Asian countries in average Asian countries in average (4.9) or index in Armenia is 9 (26.2% of claim). even in high income OECD countries out of 10. (5.4).
Economicly Freedom Index Economic freedom overall score: Armenia vs. CIS • Economic Freedom Score: 67.0 financial freedom 70 • Economic Freedom Status: investment freedom 75 Moderately Free trade freedom 85 • Global Ranking: 54th monetary freedom 71 • Regional Ranking in Europe: labor freedom 64 23rd business freedom 83 • CIS Ranking: 1st government … 83 fiscal freedom 84 freedom from … 36 CIS property rights Average 20 Armenia overall score 67 - 10 20 30 40 50 60 70 80 90 100 73 73 80 71 69 67 67 67 67 66 65 63 63 60 61 61 70 58 59 47 52 53 53 54 60 50 40 30 20 10 0
Economic Freedom Index - Main Highlights Armenia is the most Armenia is fully free Armenia is economically free country by trade, considered country in the CIS. fiscal, government moderately free and investment country. freedoms. Armenia is less Extent of Investment Trade freedom is the corrupted than Iran, freedom in Armenia is most distinguished Azerbaijan, Kazakhstan, more distinguished, freedom in Armenia. Belarus, Kyrgyzstan, than in other peer Uzbekistan, Ukraine countries, except and Russia. Georgia.
Global Terrorism and Global Peace Index Global Terrorism index 2015, Global Peace index 2015, Institute For Economics & Peace Institute For Economics & Peace Country Rank Country Rank Armenia 116 Armenia 91 Azerbaijan 93 Azerbaijan 132 Georgia 71 Georgia 79 Iran 39 Iran 138 Turkey 27 Turkey 146 Belarus 77 Belarus 110 Russia 23 Russia 152 • • Armenia is one of the safest and Armenia is one of the most peaceful terrorism neutral countries in the region countries in the wider region. • and amongst 162 countries in the It outperforms all its peers in CIS and world. Eurasian Region
Robust Financial System • tax concessions to investment funds (0.01% of NAV, management service of the fund is exempt from VAT) • Opportunity to establish any type of fund in Armenia • A well-developed securities market infrastructure • The securities and cash accounts held by Central Depository of Armenia with Clearstream make the foreign securities market fully accessible to those investing in Armenia • No special permit to the foreign investor is required for investing. • Sound and developed banking system operates in compliance with the Basel 3 standards • In the event of any changes to the laws regulating the investment regime, a foreign investor is given the opportunity to follow the former terms in the next 5 years
Doing Business- Regional Outlook Armenia Iran Russia Number of procedures to start a business 2 8 4.4 Time to register a business entity (days) 3 15 10.5 Cost to register a business (USD) 32 133 128 Time for dealing with construction permits (days) 84 97 263.5 Number of procedures to register a property 3 7 3 Cost of registering a property (% of property value) 0.2 6.1 0.2 Total tax rate (% of profit) 19.9 44.1 47 Time to export: Border compliance (hours) 3 107 96 Time to export: Documentary compliance (hours) 2 159 43 Cost to export: Border compliance (USD) 0 565 1125 Cost to export: documentary compliance (USD) 150 143 500
Why to Invest in Armenia 2 Legal and Regulatory Environment • National treatment at pre and post establishment of investments • No horizontal or sectorial restrictions • No limitations on the conversion and transfer of money • Free repatriation of capital and earnings in a freely convertible or usable currency at the market rate of exchange prevailing on the date of transfer • No controlled foreign corporation (CFC) rules • Foreign investments can not be directly or indirectly nationalized, confiscated or expropriated • 100% foreign ownership is allowed • Full protection of property rights
Why to Invest in Armenia Taxation and Incentives 3 • Low and attractive statutory tax rates • Fiscal and non-fiscal incentives for investors, including FEZs
Tax Rates & Incentive Schemes Taxation Support Schemes Export Support and Grant Schemes Number of taxes 9 Trade Show Participation Support VAT* 20% Profit tax 20% or 0% if exports exceed Co-funding of certification costs about 100 mln USD in source markets Personal income Average 30% Export Insurance tax Co-funding of distributors’ visits Excise tax Depends on good, but not more than 50% Property tax Up to 0.55% * Agriculture is exempt from VAT Deferrals and exemption from custom duties
Free Economic Zones Electronics VAT- 0%, Precision engineering Profit tax -0%, Information technologies Custom duties — 0%, Jewelry Property tax — 0%. No restrictions on currency convertibility Accelerated depreciation on or repatriation of capital & profit capital assets Loss carry forward for corporate tax purposes (5 years)
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