IT certificate in Armenia – tax benefits for IT
Armenia is in the top countries for the relocation of IT specialists. By opening a company in this country, it remains possible to work with both Russian and world markets. Armenia has offered particularly attractive conditions to organizations operating in the field of information technology. We understand what benefits are offered to IT companies and how to use them.
What bonuses are given to IT companies?
In 2014, Armenia adopted the law “On state assistance in the field of information technology”. According to it, organizations working in the field of IT and meeting certain conditions (see below) are issued an IT certificate. It significantly reduces the costs of the company, since it is provided with significant tax benefits:
zero income tax rate (instead of 18%);
income tax rate:
10% on employee salaries (instead of 21%);
5% on dividends (instead of 21%).
! Only those organizations that are registered in the territory of Armenia fall under the law. It can be not only companies founded in the form of LLC, but also individual entrepreneurs (IEs) that are registered in Armenia.
!! Preferential taxation applies only to foreign income. That is, if your company is going to work not only with foreign, but also with the local market, it makes no sense to receive an IT certificate – benefits will not be provided.
Which IT companies can apply for an IT certificate?
In order to issue this document, the company must work within one of the six approved areas:
engage in software development;
to implement educational, research programs in the field of IT;
carry out activities for the management of computer systems;
conduct advisory activities in the field of computer technology;
carry out activities related to web portals;
process data, post information online and conduct other related activities.
Other requirements for an IT company:
founded less than three months ago:
the number of employees is not more than 30 people;
has a legal address (the main thing is the presence of a virtual office, there may not be a real one);
has active bank accounts (the movement of funds must be visible).
How to get an IT-certificate?
Register a company in the territory of Armenia. More details HERE. The process takes several business days. So far, this can only be done internally. Despite the lack of automation of the work of government agencies, the Russians note that all issues are resolved fairly quickly, as a rule, there are no problems at this stage.
Open an account for a legal entity in Armenian banks. The process takes up to two weeks. It is required to provide: the charter, papers confirming the registration of the business, information about the business reputation of the owners, their property, accounts in other countries. Sometimes financial institutions additionally request information about potential counterparties. When submitting documents, the director of the company must be present at the bank.
Develop a business plan for the project. There is no approved form for its registration. The main thing is to reflect: what activities the organization is currently carrying out and what it plans to do in the future.
Apply. You should provide: a free-form application + information about the founders of the company and the number of employees + a business plan. If necessary, you can contact local lawyers. They will help to properly prepare a package of documents for an additional fee. Then it is sent in paper form to the certification commission under the Ministry of Economics of Armenia.
Present the project in person to representatives of the Ministry of Economy. The commission that decides on the issuance of an IT certificate consists of five people. For a presentation, it is best to prepare slides and reflect the key points of the business plan in them.
If a positive decision is made, then the IT-certificate begins to operate in the same month (currently it is unlimited).
! Not only the owner of the company, but also its representative can register a company, submit an application and speak before the commission. To do this, you will need to prepare an appropriate power of attorney. That is, if desired, the owner can resolve all issues remotely.
!! You can appoint someone nominally as a director of a company.
I received an IT certificate. What’s next?
Be sure to notify the tax authorities. Also, once every six months, the Ministry of Economics should report on the stage of implementation of the business plan. The document must be prepared and sent before the twentieth day of the month following the reporting semester. In order for your certificate not to be revoked, the main thing is just to submit the report on time. Lack of results or low performance cannot lead to its annulment.
Is there a chance of losing the ability to use an IT certificate?
Yes, if the state authorities reveal that the company is engaged in other than permitted areas of activity.
Why can they refuse to receive an IT certificate?
There are several reasons. According to the current legislation, an IT certificate will be refused if:
the company employs over thirty employees;
the company’s activities do not correspond to one of the six areas indicated above;
the application was submitted later than the allowed deadline;
the declared company is a subsidiary of another legal entity;
the owner or influencer of the company is a person who has previously violated the requirements of this law;
the company had previously been issued a certificate, but the application provided false information or, after receiving the certificate, it began to engage in other activities and it was withdrawn;
other reasons for refusal can be found in the law “On state assistance in the field of information technology”.
! It should be noted that if you were once denied a certificate, you should find out the reason, make the appropriate changes to your project and try to apply again.
Today, Armenia is an excellent option for IT business relocation. Mild climate, lack of a language barrier, friendly attitude towards the Russian-speaking population and favorable conditions for doing business. Even if companies for some reason do not approve an IT certificate, then this country is still worth a closer look.
