Free economic zones (FEZs) in Armenia offer a unique opportunity for entrepreneurs to establish businesses in strategic sectors of the economy and to process, produce and export goods with a reduced tax burden. FEZs allow the export of goods without any restrictions to international markets with more than 500 million consumers. The law “On Free Economic Zones” and tax legislation grant exemptions from profit tax, income tax, property taxes, VAT and customs duty payment obligations to companies operating within FEZs.
The law on FEZs grants the following incentives to FEZ operators and organizers:
- NO VAT for delivering services and supplying goods in FEZ territory;
- Tax-free profit to legal entities and NO income tax for sole proprietor acting as operators or organizers of FEZs;
- NO property taxes on public and industrial buildings and structures owned or leased within FEZs;
- NO customs charges and non-tariff regulation measures applied to the export of goods released under the customs regime “Imports into Free Economic Zones”, or to other goods produced due to the use of such goods within the territory of FEZs;
- Freely convertible currency is ALLOWED as a medium of exchange while trading within FEZs, unlike the entire territory of the Republic of Armenia, where trade is allowed only through use of the national currency.
The services rendered by the State bodies in FEZs are implemented on a simplified, “one stop shop” basis. Two FEZs will soon be operational in Armenia. One of them will be in the agricultural sector, in the area adjacent to “Zvartnots” International Airport. This FEZ will focus on the storage, grading, deep freezing and packaging of fresh fruit and vegetables.
The second FEZ, which is established in the territory of RAO Mars Closed Joint-Stock Company and Yerevan Research Institute of Mathematical Machines, will specialize in the production and export of innovative technologies in the areas of electronics, precision engineering, pharmaceuticals and biotechnology, information technologies, alternative energy, industrial design and telecommunication (design and production of technological equipment, systems and materials for data/information transfer).
*Acknowledgement – this content is provided from Investment Guide Armenia 2013 upon approval. – Full report here