Extension of Tax Benefits for IT Startups in Armenia Approved by Parliament
On December 16, 2022, the Armenian National Assembly ratified a legislative package extending tax incentives for startup IT companies for another year, until the end of 2023. This decision was made during an extraordinary session of the Assembly.
During the second and final reading of the amendments to the Law on State Support for the Information Technology Sector, Deputy Minister of High-Tech Industry David Saakyan emphasized the importance of continuing these tax benefits. Babken Tunyan, Deputy Chairman of the Parliamentary Committee on Economic Affairs and member of the ruling Civil Contract party, cautioned that indefinite tax incentives could create an imbalance with other sectors of the economy, highlighting the need to assess the outcomes of these incentives.
Former Minister of High-Tech Industry and current Vice-Speaker of Parliament Akop Arshakyan noted that similar tax incentives exist in other regional countries, and Armenia must remain competitive in attracting new companies. The proposed extension includes a zero percent profit tax rate and a 10 percent income tax rate for eligible IT startups. As of November 8, 2022, 1,230 IT certificates had been issued, with 1,105 companies having foreign founders. Both commercial and non-commercial organizations in the IT sector can benefit from these incentives, and foreign entities can also apply to start or expand their operations in Armenia.
Furthermore, on December 1, the Armenian government approved a program to support IT organizations and individual entrepreneurs, allocating 10 billion drams (approximately $25 million) for income tax refunds. However, many industry representatives have expressed concerns that government support may be too late to address the significant losses incurred by IT companies due to the depreciation of the dram.
During the second and final reading of the amendments to the Law on State Support for the Information Technology Sector, Deputy Minister of High-Tech Industry David Saakyan emphasized the importance of continuing these tax benefits. Babken Tunyan, Deputy Chairman of the Parliamentary Committee on Economic Affairs and member of the ruling Civil Contract party, cautioned that indefinite tax incentives could create an imbalance with other sectors of the economy, highlighting the need to assess the outcomes of these incentives.
Former Minister of High-Tech Industry and current Vice-Speaker of Parliament Akop Arshakyan noted that similar tax incentives exist in other regional countries, and Armenia must remain competitive in attracting new companies. The proposed extension includes a zero percent profit tax rate and a 10 percent income tax rate for eligible IT startups. As of November 8, 2022, 1,230 IT certificates had been issued, with 1,105 companies having foreign founders. Both commercial and non-commercial organizations in the IT sector can benefit from these incentives, and foreign entities can also apply to start or expand their operations in Armenia.
Furthermore, on December 1, the Armenian government approved a program to support IT organizations and individual entrepreneurs, allocating 10 billion drams (approximately $25 million) for income tax refunds. However, many industry representatives have expressed concerns that government support may be too late to address the significant losses incurred by IT companies due to the depreciation of the dram.