Doing Business in Armenia

Do you want to expand your business into Armenia, or hire employees there? Find out the key things you need to know about Armenia expansion below.

Armenia Economy Overview

Currency

Armenian Dram (AMD)

Working hours

40 hours/week

Public/bank holidays

12 public holidays

Capital

Yerevan

Languages

Armenian

Population

2.8 million

Minimum hourly salary

500 AMD per hour

Tax year

1st Jan – 31st Dec

Date format

DD/MM/YYYY

Misclassification penalties

Misclassifying Armenian employees as contractors comes with many potential consequences: You could face fines, back taxes, and other penalties.

Fun fact

Yerevan, the capital of Armenia, is one of the oldest cities in the world (782 BC). It is even older than Rome. Yerevan is known as the “pink city” for the color of the volcanic tuff that covers its facades.

Thanks to prudent economic policies, Armenia has transformed itself in recent years from one that relied upon International Development Association grants and loans to one that is contributing positively to the fund and helping others. In 2019, it was recategorized as an upper-middle-income nation, and the country achieved an incredible 8.7% growth in GDP in 2023. Armenia’s population is just under 3 million with a well-educated and highly literate labor force estimated to be around 1.4 million strong. An outward-looking approach to international relations has helped it build strong partnerships around the world and today, Armenia forms a unique connection between the Eurasian Economic Union and the European Union.

This guide discusses the challenges and advantages of doing business in Armenia.

Table of Contents show

Overview of Armenia's Economy

Steady and stable economic growth has been the overriding course of the Armenian economy in recent years. Since 2014, it has averaged GDP growth of over 4% and is forecast to continue on the same path in the foreseeable future.

Economic Sector	Contribution to GDP
Service Sector	Approximately 54%
Industry	Significant
Agriculture	Significant

A government policy of treating domestic and foreign businesses equally benefits global companies seeking to do business in Armenia. Liberal banking regulations and favorable investment laws are further incentives for operating within Armenia, as is the creation of free economic zones specializing in technology, pharmaceuticals, jewelry, logistics, and digital industries.

Government Policies and Initiatives	Benefits for Businesses
Equal treatment of domestic and foreign businesses	Attracts global companies
Liberal banking regulations and favorable investment laws	Incentivizes business operations in Armenia
Creation of free economic zones	Specializes in technology, pharmaceuticals, jewelry, logistics, and digital industries

All this combines to make Armenia an attractive position for expanding global business.

Taxes

Employer tax: 0%

Employers are not required to contribute towards social security in Armenia.

Employee tax: 5% – 10%

Pension System

5% of the monthly gross salary if it is less than AMD 500,000.
10% of the monthly gross salary (but not more than the maximum threshold) minus AMD 25,000 if the monthly gross salary is more than AMD 500,000

Income tax

21.00%

Gross income

up to 100,000 AMD
100,000-200,000 AMD
200,000-500,000 AMD
500,000-1,000,000 AMD
in excess of 1,000,000 AMD

Progressive tax rate

1,500 AMD
3,000 AMD
5,500 AMD
8,500 AMD
15,000 AMD

Business Regulation in Armenia

Armenia’s “open-door” policy for foreign investment has removed many of the barriers to doing business in the region, but all companies must still ensure compliance with the regulations and labor laws of the state. This includes registering with the State Register Agency of Legal Entities under the Ministry of Justice and providing key details such as the name and legal type of the company, a list of owners and directors, a registration address, and the amount of charter capital. Businesses registering in Armenia should also ensure they are aware and able to comply with all taxation requirements and labor laws.

Key regulations for doing business in Armenia include:

Business Registration

Business types, including Private entrepreneurship, Limited Liability and Joint-stock Companies, Partnerships and Joint Ventures, or Branches and Representative Offices, can all be registered in Armenia via a one-stop shop for business entry that was established in 2011.

In some circumstances, registration can be completed in less than an hour and should never take longer than three days from the submission of all required documents. Electronic registration is also possible. Armenia currently charges no fee for registering a commercial legal entity, but registering branches and representative offices costs AMD 12,000 (approximately $25).

Taxation

Businesses operating in Armenia are required to pay several taxes. These include an 18% profit tax and 20% VAT plus property, income, and excise taxes. Small businesses are sometimes exempt from VAT and instead pay a smaller turnover tax designed to encourage growth. Armenia has treaties to prevent double taxation with more than 40 nations and also offers tax incentives in several sectors to encourage foreign investment.

Labor Laws

Workers’ rights in Armenia are protected by a framework of regulations laid out in The Labour Code of the Republic of Armenia. These include a minimum wage of approximately AMD 500 per hour (between $1.00 and $1.50, depending on the exchange rate).

Armenia also has a maximum working week of 40 hours, a mandated annual leave allowance, and a series of anti-discrimination and anti-exploitation laws. All businesses operating in Armenia should remain in full compliance with all its labor laws.

Benefits of Doing Business in Armenia

Armenia has proven itself to be one of the most reliable economies in the Caucasus region and is keen to cement its growth by fostering a welcoming environment for international business to become a notable player on the world stage. A highly educated and cost-effective labor force is one benefit of doing business in Armenia, as is a proactive government working to make international business as simple and rewarding as possible. In addition to this, Armenia offers several other advantages to international business, including:

Stable Economy

Despite the global challenges of the last four years, Armenia has proved to be an extremely resilient economy. 2017 to 2019 saw annual growth between 5% and 7%. It recovered quickly after 2020’s COVID-19 pandemic to grow once more by 5.8% in 2021 before reaching an incredible 12.6% in 2022. The Central Bank of Armenia (CBA) performs excellently in its task of keeping the economy stable and sustained growth is expected to continue for the foreseeable future.

Generous Incentives

Armenia has an “open-door” policy for foreign investment designed to make doing business in the country as easy as possible. It has four Free Economic Zones in which businesses are exempt from all VAT, profit tax, and property taxes. It allows 100% foreign ownership of local business entities and treats global businesses as equals to domestic ones. Armenia also places no restrictions on the repatriation of profits made within its borders by foreign entities.

Unique Location

Thanks to its wide network of strong relationships with more than 50 international organizations and 172 nations from every region of the world. Armenia is seen as a unique bridge between the Eurasian Economic Union and the European Union. Doing business in Armenia opens the door not just to the opportunities within the country but to potential new relationships with the nations of the wider region.

Thriving IT sector

While Armenia’s economy is improving, the information technology sector has proved to be a leading light with an annual growth rate of approximately 20%. This has been achieved by creating investment opportunities in artificial intelligence, cyber security, data processing, and software development. It has also encouraged innovation and entrepreneurship through its Engineering City project, a technology hub offering co-working spaces, funding opportunities, and tax incentives.

Business Expansion Options in Armenia

Armenia has processes in place to ensure entry into its markets is as easy as possible for foreign investors. Some of the most common pathways global businesses use to expand into Armenia include:

Armenia Employer of Record (EOR)

Armenia’s business registration process has been made as simple as possible for all types of entities, but there are still benefits to be gained from working with an expert in the field. Both an Employer of Record (EOR) and a Professional Employer Organization (PEO) are services that can be contracted to handle the requirements for expanding a business into Armenia.

These bodies are also able to help with hiring an Armenian labor force, managing human resources, and ensuring compliance with local labor laws. For the most part, they operate similarly, except for one key difference. An EOR assumes the role of sole employer in Armenia and adopts all liability that goes with it. A PEO works only as a co-employer and shares liability with its foreign clients.

An EOR is fast and efficient, making it perfect for companies that need to quickly deploy staff on the ground.

An EOR handles payroll, benefits, taxes, and compliance with local labor laws, allowing businesses to focus on their core activities.

Learn more about EOR in Armenia

Recruitment Agencies

Recruitment agencies in Armenia help businesses expand by connecting them with skilled local talent across various industries.

Remote People provides recruitment solutions that simplify hiring and ensure compliance with Armenian labor laws.

For businesses looking to grow in Armenia, Remote People offers the expertise and resources needed to build a local workforce quickly and effectively, making it a practical solution for market expansion.

Learn more about Recruitment Agencies in Armenia

Armenia Professional Employer Organization (PEO)

Partnering with a professional employer organization (PEO) allows companies to employ local staff in Armenia without the need to establish a legal entity. This approach is quicker and less expensive, making it ideal for businesses testing the Armenia market or those with limited operations. PEOs handle administrative tasks and ensure that companies comply with Armenia regulations, reducing the complexity and risk associated with hiring local employees. Some Armenia PEOs even provide recruitment services.

Learn more about PEO in Armenia

Subsidiary Incorporation

Simplified registration processes and limited personal risk make registering a Limited Liability Company (LLC) one of the most attractive ways to do business in Armenia. An LLC can have anything from one to 49 founders between whom profits are divided. Armenian regulations stipulate no minimum charter capital requirement except in certain sectors.

Branch Registration

For those who choose not to register an independent LLC in Armenia, launching a branch of the parent company is another option. This requires a registration fee of AMD 12,000 (Approx. $25) and does not protect the business owners from exposure to losses and debts accrued by their Armenian operations. A branch in Armenia is not considered a legal entity and instead operates on behalf of the wider company. A branch’s activities are limited to representing the same interests as its headquarters.

Business Opportunities in Armenia

Armenia presents a range of promising business opportunities for investors and entrepreneurs, driven by its strategic location, skilled workforce, and favorable business environment.

The country’s efforts to promote economic growth, attract foreign investment, and foster innovation have created a conducive atmosphere for businesses across various sectors. Some of the most significant opportunities lie in the following areas:

Business Opportunity	Reason
Information Technology (IT) and Software Development	Armenia’s highly educated and tech-savvy workforce, combined with government support for the IT sector, make it an attractive destination for software development, outsourcing, and IT services.
Tourism and Hospitality	Armenia’s rich cultural heritage, stunning landscapes, and growing tourism infrastructure offer potential for investments in hotels, resorts, tour operations, and related services.
Agriculture and Food Processing	With its favorable climate and abundant agricultural resources, Armenia presents opportunities in modern farming techniques, organic production, and food processing for export markets.
Renewable Energy	Armenia’s significant potential for solar, wind, and hydropower energy, along with government incentives for renewable energy projects, create opportunities for investment in this sector.
Manufacturing and Textiles	Armenia’s competitive labor costs, access to regional markets, and supportive government policies make it an attractive location for manufacturing industries, particularly in the textile and garment sectors.

It is incredibly welcoming to foreign investment, with several incentives and a consciously simple system. Whether choosing to introduce an entity independently or working with an expert in global employment, doing business in Armenia is something any expanding international business should consider.