New Legislative Framework to Boost Armenia's High-Tech Sector: Key Tax Incentives for 2025-2031

18.12.2024

We are pleased to inform you about a new legislative framework adopted by the Armenian Parliament on December 4, 2024, which will take effect from January 1, 2025, through December 31, 2031. This legislation introduces significant incentives aimed at fostering growth in Armenia's high-tech sector, particularly in research, development, and professional services.

Key Highlights

1. Payroll Tax Incentives

  • Migrant Workers: Companies employing foreign workers (excluding dual citizens) with legal work rights in Armenia can receive a 60% payroll tax rebate, valid through December 31, 2026. After this period, the payroll tax support will be directly provided to the workers.
  • New Hires: Organizations can claim a 60% payroll tax refund for employees who are gaining their first professional experience in the high-tech sector, provided they were hired within the last 3 years.
  • Trained Employees: Employers can also claim a 50% payroll tax refund for employees who have received certified training from a recognized professional center.
Note: The total payroll tax refund across all categories cannot exceed 50% of the total payroll tax for the reporting period. Refunds will be processed on a quarterly basis.

2. Corporate Income Tax (CIT) Deductions

Organizations participating in the High-Tech Support Program can benefit from additional tax relief by deducting payroll expenses for eligible employees (excluding non-resident employees) twice from the CIT base. However, this deduction cannot exceed 50% of the taxable base.

3. Revenue Requirements

To qualify for these incentives, companies must ensure that at least 90% of their revenue comes from approved professional services, as outlined in a list to be published by the Armenian Government.

4. Depreciation Benefits for R&D Activities

Resident profit taxpayers involved in scientific research and experimental development can set their own depreciation period for fixed assets, with a minimum period of 1 year.

Impact and Goals

This legislation is a part of Armenia’s ongoing efforts to nurture innovation, attract international talent, and support businesses in research and development as well as professional services. With substantial payroll tax refunds, CIT deductions, and flexible depreciation rules, the law creates a favorable business environment for companies operating in Armenia's high-tech sector.

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How we can help

SCHNEIDER GROUP is here to assist you in understanding your eligibility for these tax incentives and navigating the implementation process. We can also help with the certification process required to claim these tax incentives and manage the related accounting tasks.

If you have any questions or would like to learn more about how these changes can benefit your business, please do not hesitate to contact our experts.