Armenia

Small Armenia links Europe with Asia in the Caucasus. Once upon a time, Armenia was one of the largest states in the Middle East and Transcaucasia, which competed with the Parthian kingdom and Ancient Rome. Now Armenia is a modern country with hospitable people, ancient history, a huge number of historical monuments, rich culture, delicious food, beautiful nature.

The official name of the state — Republic of Armenia. The state occupies an area of 29,743 km² (138th in the world). The population is about 2,997 585 people (as of early 2023).

Armenia is a mono-ethnic state, 98% of the population of which are Armenians. The largest ethnic minorities of Armenia (together making up about 2% of the total population) — Yezidis, Russians, Assyrians, Kurds, Ukrainians, Greeks, Georgians, Persians.

The official language is Armenian. In 2019, "Armenian type art and its cultural manifestations" included in the UNESCO Representative List of the Intangible Cultural Heritage of Humanity. The Armenian alphabet is fundamentally different from all known alphabets. Mostly on the signs of shops and official buildings, there are also Latin inscriptions.

In addition to the Armenian (more precisely, Eastern Armenian) language, Russian (about 70% of the population speaks it) and English are widely spoken in the country, as well as Kurdish as the language of the largest national minority.

The Russian language functions in an informative role: the newspapers "Respublika Armenii", "Voice of Armenia" are published in it; and others. The Russian language is a compulsory subject for study in the schools of the country.

Most of the population of Armenia is Christian (about 98.5%) — followers of the Armenian Apostolic Church. A small number of followers of other religions — about 0.2% of both non-religious and atheists — about 1.3%.

The official currency of the country is the Armenian dram.

Yerevan — the capital and largest city of the Republic of Armenia, the industrial and economic center of the state, as well as the most important transport hub of the country. One of the oldest cities in the world.

Yerevan Brandy Factory (YBC) — Armenia's leading enterprise for the production of alcoholic beverages, Nairit Chemical Plant for the production of synthetic rubber, ArmenAl aluminum plant, Yerevan Thermal Power Plant, Kanaker and Yerevan stations of the Sevan-Hrazdan HPP cascade, Yerevan HPP-2.

NASDAQ OMX Armenia (called the Armenian Stock Exchange until 2009) is the only stock exchange operating in Armenia and is located in Yerevan.

Gyumri — the second largest city in Armenia, the administrative center of the Shirak region. Light, machine-building, and food industries are developed in the city. Gyumri was the industrial center of the Armenian SSR in the past. In 2010, the Akhuryan sugar factory was launched in the city with a processing capacity of 800 tons of raw sugar per day.

Vanadzor — third largest city in the country. At present, light and food industries form the basis of the industrial production of the city.

In administrative terms, the country is divided into 10 regions (marzes) and the city of Yerevan. The regions are made up of urban and rural communities. A community may include one or more settlements.

Armenia — the oldest state, the history of which is more than 3000 years old. The mythological date of the founding of the Armenian state by the legendary Hayk is 2492 BC. It was from this giant that the name of the hay people came. From the same year, the Ancient Armenian (Haykid) calendar came into force. The very name Armenia is first found in the cuneiform writings of Darius I, in which he mentioned the Indo-European people who moved to their homeland from Europe through Asia Minor.

At first they lived with the Hittites, and then moved east to the Armenian Highlands. In the XIV century BC. in this upland near Lake Van, the state of Nairi existed. In the 9th century BC. the Assyrians formed in its place a union of states of Urartu. Only after the fall of the Assyrian Empire did the first Armenian state arise, which was located in the 7th century BC. in the power of Media, and in VI — within Persia. After the accession of A. Macedon, the Yervanduni dynasty ruled Armenia.

The country reached its greatest prosperity during the reign of Tigran II the Great from the Artashesid dynasty. From 140 BC to 55 BC he expanded the borders of Armenia from the Lesser Caucasus to Palestine. In later eras, the Armenian Highlands became a bone of contention between neighboring empires. In the second half of the 4th century AD. The state was divided between Rome and Persia. In the 7th century, after the defeat of the Persian Empire, the Arabs took control of most of the country.

In the 9th century, the territory of Armenia was divided into several small states, the largest of which was the kingdom of Bagratuni. The capital was moved to the city of Ani. The reign of this empire did not last long. Soon the state was divided into two kingdoms, and another independent kingdom appeared in Syunik. The wars between the principalities did not stop, but at the same time, the country experienced a cultural and economic flourishing. From 1090 to 1375 the powerful Cilician kingdom existed. In the following centuries, there were many fierce wars on the territory of Armenia between the Turkic tribes, the Ottomans and the Persians.

 For a long time, Armenia was divided into two parts: Western (in the Ottoman Empire) and Eastern (in Persia). The era of the revival of the nation began in the 19th century, when Russia, during the Russian-Iranian (1813) and then Russian-Turkish wars (1877-78), annexed most of Armenia to itself. The first half of the 20th century was one of the most difficult eras in the history of the country. During the First World War and after it, hundreds of thousands of Armenians died and lost their homes. Armenia received the status of a republic twice. For the first time in 1918, and in the second — in 1991 to the present.

The Republic of Armenia is located in Western Asia, but does not have its own access to the sea. In the west, Armenia borders on Turkey, in the east — with Azerbaijan and Karabakh, in the north — with Georgia, and in the south — with Iran. About 90% of the country's territory is occupied by mountains and hills, which is not very conducive to agriculture. The exception is the Ararat plain — the main agricultural region of the country, however, even here it is possible to get a crop only with stable watering of crops. Since the legendary Armenian peak Ararat has been ceded to Turkey since 1921, Mount Aragats (4095 m) is considered the highest point in Armenia. There are more than 9 thousand rivers in Armenia, most of them are small. But the largest river in Transcaucasia flows through the territory of the state — Arax. There are also more than 100 lakes in the country, the largest of which is — Lake Sevan, located at an altitude of 1900 m above sea level — an important fishing region of the republic and the largest source of fresh water in the entire Transcaucasus.

The ancient culture of Armenia was founded during the dominance of the Urartu civilization, and its further development took place under the influence of Eastern and Western trends. A key transitional moment in the history of Armenia was the official adoption of Christianity in the country in 301 AD. Religion has influenced all aspects of the development of culture in the country: architecture, literature, fine arts, music, etc.

At present, there are unique cultural monuments throughout Armenia in its different parts, many of which are included in the UNESCO World Heritage List.

Architecture of Armenia organically merges into the surrounding landscapes, creating, together with the surrounding ridges and peaks, a single, complete composition. "Land of Stones" — this is often called Armenia.

Religious objects are considered traditional Armenian architecture: monasteries and temples. It was they who were able to withstand the onslaught of devastating raids, conquests, wars, and earthquakes.

In every culture there is a certain original element, which, not being present anywhere else, involuntarily becomes a symbol of the entire national culture. In Armenia, such a symbol is "khachkars" — the so-called cross-stones — monuments of Armenia, not found in any other country in the world. The word "khachkar" formed by two Armenian roots: «khach» — cross and «kar» — stone.

You will never confuse Armenian music with any other. She has a special melodic and rich sound. In general, this originality is achieved through the sound of original Armenian instruments that have been preserved since the early Middle Ages — violin prototypes — pandir and bambir; string — tavih, knar; brass — flute, zurn, avagpog; drums — drum.

Armenians value personal communication very much and pay great attention to establishing close friendly contacts between business partners.

Business negotiations should be planned in advance and try not to be late for meetings, even if your partners from Armenia are not so punctual.

During the negotiations themselves, you should not show violent emotions, this can ruin your reputation. You can bargain with Armenian partners, although this is not always desirable, it is worth acting according to the situation. Also, don't be too direct during negotiations: Armenians are sensitive to direct rejection.

In Armenia, it is not customary to make quick decisions; therefore, the process of signing a contract may be delayed.

Armenians are very friendly in communication and will be very grateful if you give them the opportunity to start and end the conversation.

During the breaks between consideration of business topics, you can discuss national cuisine, sports, weather and history with your Armenian partners, avoiding personal topics and religious issues.

Since Armenians are very hospitable people, you can expect to be invited to visit the country during your business visit. You should not refuse the invitation, as by refusing you can cause personal offense. During a feast with Armenians, you should expect a large number of toasts.

It is customary in Armenian culture to give and receive gifts. For a business gift, office supplies with your company logo are the best. It is desirable that the gift was in the package. If you were given a gift, you should not open it in the presence of other people.

Armenians adhere to the traditional European business dress code. For men — this is a dark suit and tie, for women — business suit with a knee-length skirt in dark colors. Women in Armenia pay great attention to their appearance. Casual clothes are rarely used for business meetings.

In Armenia, it is generally accepted that the host introduces himself first, and then the guest. Armenians use a long and firm handshake to greet; however, the distance between people may be less than usual.

During a business trip to the country, you should also pay attention to what not to do in Armenia:

• Speak loudly or act outrageously in religious settings.
• Discuss politics, especially regarding Azerbaijan, Nagorno-Karabakh or Turkey.
• Smoking in public places.
• Don't have cash. You can pay with a bank card mainly only in large cities. You may need local bills and coins everywhere.
• Do not tip in restaurants and cafes. Keep in mind that restaurant staff are underpaid and make most of their money from tips.
• Do not communicate with the local population. Armenians will be sincerely interested in you and your travels in Armenia, so we recommend that you openly make contact and respond with mutual goodwill towards the locals.

In accordance with the Constitution of the Republic of Armenia — sovereign, democratic, social, legal state. According to the provisions of the Basic Law of the country, the Republic of Armenia has a parliamentary form of government.

State power is exercised on the basis of the principle of separation of legislative, executive and judicial powers. The President of the Republic of Armenia ensures the observance of the Constitution, the functioning of the legislative, executive and judicial powers, the territorial integrity and security of the Republic. The President is elected by the Parliament of the country for a term of 7 years. The same person cannot hold the presidency for more than one term.

The President of the Republic, after the beginning of the term of office of the newly elected National Assembly, appoints the candidate represented by the parliamentary majority as Prime Minister. In other cases, the President of the Republic immediately appoints the candidate elected by the National Assembly as Prime Minister.

Within the framework of the Government's program, the Prime Minister determines the main directions of the Government's policy, directs the activities of the Government and coordinates the work of the members of the Government.

Armenia — industrial-agrarian country. The Armenian economy gives priority to small-scale agricultural production. The structure of GDP accounts for: agriculture — 31.1%, industry — 21.8%, trade — 8.7%, construction — 8.5%, transport — 5.1%, other areas — 24.9%.

Leading industries: mechanical engineering and metalworking, chemical and petrochemical, non-ferrous metallurgy, production of building materials (including those based on deposits of colored tuffs, perlites, limestones, granites and marbles), food, light.

Agricultural land occupies about 44% of the land fund. The main cultivated crops — vegetables, gourds, potatoes, wheat, grapes, horticultural, essential oil, tobacco, sugar beets. Animal husbandry specializes in dairy and meat cattle breeding; sheep are bred in mountainous areas.

The economy of Armenia distinguishes 5 economic regions that differ in natural and economic-geographical conditions and industrial specialization:

1. Ararat (electricity, engineering, chemical industry, production of building materials, agriculture).
2. Shirak region (textile industry, mechanical engineering; animal husbandry).
3. Pridebedsky (copper industry, chemical industry; agriculture, engineering).
4. Sevan-Agstevsky (electricity, livestock, grain and tobacco).
5. Syunik (mining, agriculture, hydroelectric power and engineering).

The main industrial center of Armenia — Yerevan, followed by Gyumri and Vanadzor.

In foreign trade, exports are inferior to imports. Top Exports — polished diamonds, machinery and equipment, copper ore. Import — gas, oil, food, etc. Main export partners: Belgium, Russia, Iran, Turkmenistan, USA, Georgia; by import — Russia, USA, UK, Iran, Türkiye, Belgium.

Also, Armenia can become a kind of electricity hub in the region, said Prime Minister Nikol Pashinyan on June 9, 2023, at the plenary session of the Eurasian Congress in Sochi.

Armenia is developing production capacities, carrying out a large-scale reconstruction of power lines. Construction of power lines Armenia — Iran and Armenia — Georgia will create new opportunities for increased supply or seasonal power exchange. From this point of view, Armenia can become a regional power hub.

It is also important to achieve carbon neutrality and the development of "green" energy. Yerevan is carrying out work to extend the life of the Armenian NPP and build a new power unit.

Armenia's largest trading partner — Russia. It accounts for 27.5% of exports and 29.4% of imports. More than half of the imports from Armenia to the Russian Federation are agricultural and food industry products, while Russia mainly supplies raw materials to Armenia.

One of the largest enterprises in Armenia — Galaxy group of companies. It includes the country's largest telecom operator Ucom, importer of food products MegaFood, the largest shopping center in Yerevan Yerevan Mall, premium jewelry and watch stores.

Armenia imports 78% of its energy consumption mainly from Russia. 24% of Armenia's exports are copper, and another 8% — gold. The rest — a wide variety of goods, from diamonds and tobacco products to agricultural products.

There are no explored oil and gas reserves in the country, but due to the peculiarities of the country's landscape, the most probable oil and gas reserves are hidden at a depth of 5-13 km and covered by a rock layer 1-2 km thick.

More than 40 large enterprises operate in Armenia with 100% or partial participation of Russian capital in the leading sectors of the country's economy. At the same time, such companies as Gazprom-Armenia CJSC, GeoProMining Gold LLC and CJSC "Electric Networks of Armenia" are annually included in the top 10 largest taxpayers, and are also the largest employers of the Republic.

An effective mechanism for bilateral trade, economic and investment cooperation is the Intergovernmental Commission for Economic Cooperation between the Russian Federation and the Republic of Armenia (IPC).

Armenia joined the WTO in 2003. Since 2015, Armenia has been a member of the Eurasian Economic Union. The country is also a member of the FTA (Free Trade Area between CIS countries).

Since 2011, a universal Business Entry Center has been operating in Armenia under the Ministry of Justice. Companies and sole proprietors can simultaneously receive name reservation, business registration and tax identification number in one place. Electronic registration is also available on the site, which requires an electronic signature. Registration of commercial organizations is carried out immediately when submitting documents in electronic form or using approved templates of required documents. In other cases, the process may take up to 2 business days.

There are the following legal options for starting a business (commercial activity) in the Republic of Armenia:

Individual entrepreneurship

Individual entrepreneurship — the simplest form of corporate organization. It is a commercial organization owned and operated by only one person. A citizen has the right to engage in entrepreneurial activities without registering a legal entity when registering as a private entrepreneur. Private entrepreneurs are liable for their obligations with all their personal property, which means that a citizen is personally liable for any obligations arising from commercial activities.

Limited Liability Company

Limited Liability Company — the most common corporate form in Armenia. This is a company founded by one or more persons whose authorized capital is divided into shares of ownership in the amounts determined by the charter. Members of a limited liability company are not liable for their obligations; they bear the risk of losses associated with the activities of the company, within the value of their contributions. Profit is distributed among the founders in accordance with the provisions of the charter.

Joint stock company

Joint-stock company — This is a legal entity whose authorized capital is divided into a certain number of shares. The founders set the par value of the shares. Their liability is limited to the value of their share. An open joint stock company differs from a closed one by the presence of shares offered for sale to the public. A closed joint-stock company functions in the same way as a regular joint-stock company, with an authorized capital divided among shareholders, with a certain nominal value of one share and limited liability for each shareholder.

Partnership

A partnership can be registered as a separate legal entity or created by agreement between the partners. In general, partnerships are less regulated and offer more flexibility. Unlike an LLC or JSC, where the company is managed by one director, a partnership can be actively managed by several partners.

You can create a partnership with full or limited liability. General partners are personally liable for the debts of the business, while limited partners are passive investors who cannot lose more than their investment. A contractual partnership is not subject to registration, however, it is necessary to notify the tax office about its creation.

Cooperative

Cooperative — this is a voluntary association of citizens and legal entities on the basis of membership to meet the financial and other needs of the participants, an association carried out by combining property shares of its members.

A branch of a foreign company

A branch of a foreign company — territorial subdivision of a foreign company in Armenia. A foreign company can choose one of several options for entering the Armenian market. It is possible to create a subsidiary company — a separate legal entity (for example, LLC or JSC), which is wholly or partially owned by a foreign company. A foreign company may also decide to carry out commercial activities in Armenia through a branch.

Non-profit organization

Non-profit organizations — These are voluntary associations of citizens who have united in the manner prescribed by law on the basis of common interests to satisfy spiritual or other non-material needs. The property transferred to the organization by its founders or participants is the property of the public association. The organization uses this property for the purposes specified in its charter.

In Armenia, non-profit organizations are usually created in the form of a foundation or a public association. Public Association — it is a membership-based organization that caters to the needs of its members first. Foundations have no members and are primarily focused on funding charitable causes that benefit certain classes of people or society as a whole. Both foundations and public associations can directly engage in entrepreneurial activities.

Private Investment Fund

Private Investment Fund — is an entity used to invest in real estate, securities and other assets. The direct investment fund is registered with the Central Bank of Armenia and has significant tax benefits.

Armenia has a diversified GDP structure that is well positioned for sustainable growth. The main sources of income are the service sector (tourism and retail), as well as the mining industry. In recent years, the construction sector has been developing at an accelerated pace due to the adopted favorable policies.

The Government of Armenia prioritizes the continuity of comprehensive reforms of the business environment, providing favorable investment and business opportunities for foreign investors. Over the past decade, Armenia has carried out major reforms in the areas of property registration, taxation, foreign trade, and connection to the electricity grid in order to improve the favorable investment climate and business environment in the country.

According to the World Bank's Doing Business 2020 report, Armenia ranks 47th out of 190 countries for its ease of doing business, ranks 32nd in the Heritage Foundation's Economic Freedom Index (2021), and ranked among the ten freest economies in 70 countries, including all OECD and G20 countries.

Armenia has a number of competitive advantages, including an economical, skilled, educated workforce, low cost of doing business, favorable investment laws and access to major markets.

Armenia is a member of the Eurasian Economic Union (EAEU), which creates a number of opportunities for access to the EAEU single market with a population of more than 180 million people with the right to move goods in mutual trade between the EAEU member states without paying customs duties, non-tariff measures and technical trade barriers, which leads to a reduction in time and cost for business.

The Treaty on the EAEU also provides for the creation of a single market for services.

The country offers investors a wide range of preferential trading regimes.

Armenia enjoys the benefits of the Generalized System of Preferences (GSP) with Canada, Switzerland, Japan, Norway and the US, as well as the Generalized System of Preferences Plus (GSP+) with the EU. This means that these countries apply zero or significantly reduced rates of customs duties on some exported goods of Armenian origin.

Another option — is the Framework Agreement on Trade and Investment signed between the Government of the Republic of Armenia and the Government of the United States, which creates favorable conditions for investment, promotion of goods and trade between the two countries.

On January 1, 2018, Armenia joined the European REX (Registered Exporter System), which offers Armenian enterprises additional opportunities to export to EU countries on preferential and facilitated terms.

Armenia has concluded free trade agreements with most of the CIS countries.

The country deepens cooperation with the European Union: On March 1, 2021, the Comprehensive and Enhanced Partnership Agreement between the EU and Armenia (CEPA) came into force.

The ongoing and planned large projects in the energy sector, in particular, the construction of a new power unit of the Armenian Nuclear Power Plant (since 2027), the construction of new power lines Armenia — Georgia and Armenia — Iran, within the framework of the project to create an energy corridor "North" — South» between Iran, Armenia, Georgia and Russia.

There are also opportunities to intensify cooperation within the framework of planned projects to improve the transport infrastructure of the capital — Yerevan. This, first of all, concerns projects for expanding and updating the fleet of passenger (bus and trolleybus) vehicles.

There are free economic zones in Armenia. The main goal of creating free economic zones in the Republic of Armenia is to promote, through attracting foreign direct investment, introducing advanced technologies as a result, the growth of export volumes, creating new jobs and ensuring sustainable economic growth.

The main document regulating the activities of free economic zones — RA Law "On Free Economic Zones".

The provision of services to the organizer of the free economic zone and the operator of the free economic zone, the supply of goods on the territory of the free economic zone are exempt from value added tax. Operators of the free economic zone are exempt from income tax and property tax, they are provided with benefits when paying customs duties.

In the investment sphere, the Government of the Republic of Armenia is guided by the policy of "open doors", liberalization of relations related to investment activities, consolidation of national and more favorable regimes for foreign investors, proper protection of investments and other principles adopted in international best practice.

The Law of the Republic of Armenia dated July 31, 1994 No. ЗР-115 "On Foreign Investments" established equal national treatment for foreign investment.

The main principles of the investment policy of Armenia are the application of effective approaches to stimulate economic activity in the investment sphere, ensuring the attractiveness and stability of the legislation regulating investments, ensuring equal, non-discriminatory economic conditions for foreign and domestic investors, providing national treatment and most favored nation treatment to foreign investors and investment and ensuring the protection of the legitimate interests of investors and investments.

 A number of significant guarantees are legally established for investors:

• full protection of assets from nationalization;
• in case of alienation of property by court, compensation to investors is paid before the transfer of assets to another person;
• compensation for lost profits, damages and losses incurred due to the fault of illegal actions of state bodies;
• participation in any area of economic activity;
• complete absence of obstacles to the ownership of shares in the business of residents of Armenia;
• the ability to purchase commercial and residential real estate in the Armenian jurisdiction (excluding land) and the remote acquisition of objects;
• no restrictions on capital repatriation, currency conversion, cash transfers, profits, dividends, royalties, interest, etc.

The Republic of Armenia signed bilateral agreements "On the promotion and mutual protection of investments" with 42 countries, and this process is continuous.

The agreements provide investors of both parties and their investments with additional guarantees and protection in accordance with international law. The agreements define the general principles of the investment activities of the parties, providing an opportunity to create stable, favorable and transparent conditions for investors in both countries on an equal and mutually beneficial basis.

Investment Support Center

The Center provides comprehensive assistance in a number of areas to local and foreign entrepreneurs who intend to invest in Armenia:

• Providing information on investment opportunities and conditions in Armenia, including government incentives and other procedures.
• Support in all processes necessary for the implementation of investments, support in working with government agencies.
• Advising on the resources required for investment, including land and other real estate, state property subject to alienation, sources of co-financing and potential resident partners.
• Providing investment programs to potential investors in accordance with their interests.
• Ensure prompt response to problems that arise in the investment process.

Electronic platform "eRegulations Armenia"

It was created by the joint efforts of the Ministry of Economy of the Republic of Armenia with the UN Development Program with the financial support of the Austrian Development Agency.

The "eRegulations Armenia" platform provides investors with a step-by-step description of the 18 most important procedures. "eRegulations Armenia" platform will serve as a guide for entrepreneurs who intend to open or expand an existing business in Armenia.