Companies and entrepreneurs launching innovative manufacturing operations in Armenia will be eligible for major tax breaks, President Serzh Sarkisian said on Friday.
Meeting with members of the country’s leading business associations, Sarkisian reaffirmed his government’s pledges to improve the business environment. He said the government will also spur job creation with fiscal measures.
“I want to declare to everyone here that that any manufacturing operation that will be set up in the republic on an innovative basis … to put it simply, if it manufactures something that is not manufactured in the republic today, we as a state are ready to help it by all means,” Sarkisian said. “We are ready to give tax privileges in the first instance.”
“We, for instance, are ready to exempt [those manufactures] from profit tax for 3-4 years and postpone the payment of value-added tax (VAT). We are ready to give other assistance,” he said.
The Armenian government already delays the collection of VAT from industrial equipment imported by local firms. This privilege is not automatic and has to be approved by the full cabinet of ministers on a case-by-case basis.
Under Armenian law, the rate of corporate income tax is fixed at 20 percent for all businesses operating in the country.
Many businesses, especially large and lucrative firms owned by government-linked tycoons, have long been suspected of underreporting their earnings. Proceeds from profit tax accounted for less than 15 percent of the Armenian government’s total tax revenues last year.
Sarkisian met with businesspeople at one of three industrial enterprises in Yerevan which he visited on Friday.
The Armenian leader appears to have shown a stronger interest in economic affairs in the past month, discussing them with central and regional government officials and inspecting businesses in and outside the capital. Some observers link this with renewed opposition demonstrations attended by a growing number of disgruntled Armenians.
The president told Prime Minister Tigran Sarkisian and other top officials on March 11 to adopt a more hands-on approach to economic development. He said that is essential for speeding up GDP growth and easing hardship in Armenia.