How To Start A Business In Armenia

In the heart of the South Caucasus lies Armenia, a small mountainous country bordered by Georgia, Iran and Turkey. Its capital, Yerevan, is one of the oldest cities in the world and yet its modern economy is evolving rapidly.

In theory, Armenia may be overlooked because of its smaller size compared to neighbours but the reality is very different. Instead, the country has become a best-kept secret for aspiring entrepreneurs, resulting in the accelerated growth of new startups.

So if one were to go about starting a business there, what would the process be? We’ve put together a full guide for you, including everything you need to know before setting up shop.

 

Why Should You Start A Business In Armenia?

 

More entrepreneurs are setting their sights on Armenia’s economy for a number of reasons. Whether you’re after affordability or startup support, Armenia offers it all.

Cheaper startup costs: The overall cost of setting up a business in Armenia is much cheaper as opposed to Western Europe, including office spaces and utilities.

Government support: The government actively supports new ventures, with tax exemptions for those in IT, tourism and agriculture.

Startup assistance: Yerevan is home to plenty of incubator and accelerator programs, with co-working spaces such as Impact Hub and Hero House. These offer pitch nights and ongoing tech conferences to help new startups get off the ground.

EAEU: Armenia is part of the Eurasian Economic Union and can trade freely with countries like Belarus and Russia.

 

Industries With High-Growth Potential

 

Armenia’s economy is a diverse one, with startups taking off in multiple sectors. These ones in particular continue to thrive, offering numerous opportunities for newcomers in the startup space.

IT and software development: In 2022, IT exports increased by 33% and have continued to soar since then. Multinational companies like Krisp and Picsart are based there, leading the way for new ventures.

Tourism and hospitality: Armenia is incredibly appealing to travellers especially those who enjoy food and hiking in areas like Lake Sevan and Tatev.

Renewable energy: The government plans to have 30% of its electricity come from a renewable source by 2030. To encourage this, projects in solar, wind and hydro are highly incentivised.

Textiles: Armenia has very low labour costs, making it ideal for small-scale manufacturing startups.

 

Navigating Armenia’s Tax System

 

Armenia’s tax system is considered to be very startup-friendly in an effort to attract new businesses and investors from all over the world.

The standard corporate tax rate is 18% while Value Added Tax (VAT) is 20% on goods and services. Some smaller businesses may be eligible to be exempt from VAT if they are below certain thresholds.

If your yearly turnover is below AMD 24 million which is approximately £46,000, then you could qualify for 0% tax on income.

IT startups who register with the Ministry of High-Tech Industry can also receive a five-year tax holiday.

 

 

Visa And Residency Requirements For Foreign Entrepreneurs

 

On the whole, Armenia’s immigration policies are more relaxed and there are multiple options available for expats to consider. Up to 60 countries, including the US, Canada, EU and UK, can enter Armenia without a visa and stay for up to 180 days per year. Residents in other countries can apply for an e-visa online which is usually valid for 21-120 days.

Armenia also has a digital nomad visa which is ideal for freelancers or those who are self-employed and want to live there.

If you plan on staying longer in Armenia and running a business, you can apply for:

Temporary Residency: This is valid for one year and is renewable, often issued for work-related activities.

Permanent Residency: Valid for five years, this option is available to those who have direct ties to the country such as investments or family members living there.

 

How To Register A Business In Armenia

 

Setting up your business in Armenia is a fairly straightforward process that is quite quick to complete and can be done online for added convenience. Let’s take a look at the steps that you would need to take.

 

Choose A Legal Entity

 

There are four common types of business structures in Armenia that you can choose from.

Limited Liability Company: This is ideal for small to medium size enterprises (SMEs).

Sole Proprietorship: Although simple to set up, one person is left with the liability.

Joint Stock Company: Suited to bigger companies who have multiple shareholders.

Branch Office: This is for those who already have a foreign business and are expanding it.

 

Register With The State Registry

 

This can be done either at the Ministry of Justice office based in Yerevan or online. Applicants will need to supply their passport or ID, business name and selected structure, legal address and a founding agreement if applicable.

Within 1-2 business days, you will then receive your registration certificate and taxpayer ID.

 

Open A Business Bank Account

 

Most of the banks like Inecobank and Ameriabank have business accounts that offer online banking. To open an account, you will need your passport as well as all company documentation.

 

Register For Tax

 

During the registration process, you will automatically be registered with the State Revenue Committee but if applicable, you will also need to register for VAT.

 

Should You Start A Business In Armenia?

 

Armenia offers a rare blend of affordability, resources and market access for the bold entrepreneurs with out-the-box ideas. For those looking to innovate in tech, sustainability or tourism, the opportunities are there to scale quickly with additional support and mentorship.

With the government becoming more actively involved in encouraging startup growth, there has never been a better time for new ventures to take off.

Good luck!