Tax Benefits for Tech Startups

SUPPORT MECHANISM:

Allows IT startups and newly formed IT sphere companies (techno parks, accelerators, education organizations) with less than 30 employees to benefit from preferential taxation: zero corporate profit tax and 10% income tax for employees (instead of minimum of 24.4%)

IMPLEMENTING AGENCIES:

Ministry of Economy

ELIGIBILITY:

IT startups and newly formed IT sphere companies  

Timeline:

Law on Tax Benefits for Newly Formed IT Companies was passed by the Parliament and approved by the President in December 2014, and came into force in January 2015.

MONITORING + EVALUATION METHODS

We are monitoring the number of registered companies, revenues, profits, number of people employed.

RESULTS:

As of May 2016, 94 companies were registered, 400 jobs were created.

CHALLENGES + LESSONS TO DATE:

More aggressive communication abroad might have attracted more entrepreneurs and investors from abroad.

NOTES + ADDITIONAL CONTEXT:

Type of policy: Specific incentive.

Background of policy, in the context of country’s situation, existing policy framework, etc.: Rapidly developing IT industry. 

Private sector implementing partners, or other involvement: Union of Information Technology Enterprises.

“The Armenian IT sector, which is dominated by local subsidiaries of U.S. software giants, generated only 1.7 percent of GDP in 2010. The total number of skilled personnel working there has since more than doubled to around 11,600, the government figures show. The export-oriented sector expanded by an average of 22 percent annually from 2008-2013.

Much of this rapid growth has been driven by U.S. hi-tech firms such as Synopsys, National Instruments, Mentor Graphics and VMware.

Several other international hi-tech heavyweights have established or stepped up their presence in Armenia in the past several months. Oracle, the world’s second largest software developer, opened a branch in Yerevan in November 2014, while Taiwan’s D-Link Corporation, a leading manufacturer of computer networking equipment, inaugurated its newly constructed research and development center in Gyumri in May 2015. Later in May, Microsoft announced plans to open in Yerevan soon a regional center for mobile applications and so-called “cloud computing,” which allows such software to be operated over the Internet.

The government expects the sector’s double-digit growth to continue unabated in the coming years. Some government officials have forecast that its annual operating revenue will pass the $1 billion mark by 2019.” (Source: http://www.azatutyun.mobi/a/27260950.html)

 

 

CURATED BY

Startup Armenia
Armenia
Startup Armenia
Armenia
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