Armenia: Short Legal Overview Of Investment Environment In The Republic Of Armenia For Foreign Investors

Historical Overview

The Law of the Republic of Armenia "On Foreign Investments" was adopted in 1994, after which it has not undergone significant amendments. As of 1994, the law was generally progressive and corresponded to the best international practice.

The Republic of Armenia ha s acceded to such Conventions as the Convention on the Settlement of Investment Disputes (ICSID Convention, acceded on September 16, 1992), and the Convention on the Protection of Investor Rights (CIS Investor Rights Convention (1997), acceded on January 21, 1999).

The fact that Armenia has acceded to international conventions is evidence of high guarantees of investors' rights in Armenia, and creation of a suitable environment for international cooperation.

Thus, it can be stated that a fairly predictable and stable environment for foreign investors has been developed in RA over the years, and the state is taking serious steps to develop it in order to enhance the flow of investments.

Legal guarantees and privileges for foreign investors

• As a guarantee of equality of rights for foreign investors and their direct investments, at least the same legal regime is defined as for the property, property rights and investment activities of the citizens of the Republic of Armenia, enterprises, institutions and organizations.

Moreover, in order to stimulate the flow of foreign investments, the certain privileges to foreign investors are specified under the law.

• As a guarantee of stability, in case of an amendment in the legislation of the Republic of Armenia regulating foreign investments, within 5 years from the moment of investment, at the request of the foreign investor, the legislation in force at the time of investment is applied.

Thus, in case of a change in the legal regime for foreign investors in Armenia, the legislator has already guaranteed the preservation of the legal regime desired for foreign investors, and it will remain the same within 5 years from the moment of the investment, unless otherwise requested.

• As a guarantee of ownership right to the invested property, the law stipulates that foreign investments in the Republic of Armenia are not subject to nationalization.

The state authorities are not authorized to confiscate foreign investments. Confiscation as an exceptional measure is allowed only under the conditions of the state of emergency specified in the legislation of the Republic of Armenia, following a court judgment and full compensation.

• As a guarantee of foreign investor's damage compensation, the law stipulates that foreign investors have the right to judicial compensation for material and moral damages, including lost profit, caused by the state authorities of the Republic of Armenia or the officials thereof, as a result of actions contrary to the legislation of the Republic of Armenia, as well as improper fulfillment of the obligations stipulated in the legislation of the Republic of Armenia by the mentioned authorities or officials thereof towards the foreign investor or the enterprise with foreign investments.
  
  
• As a guarantee of free management of received income, the law stipulates that the profit (income) of a foreign investor, after paying taxes and making other payments defined under the legislation of the Republic of Armenia, remains under his/her management.

Foreign investors are entitled to open current, settlement or other accounts that are allowed under the legislation of the Republic of Armenia in the banks of the Republic of Armenia following the procedure established by the legislation of the Republic of Armenia.

Foreign investors are entitled to, in accordance with the legislation of the Republic of Armenia, use legally received funds in the domestic market of the Republic of Armenia or for the purpose of purchasing goods.

In this case, free dispose of the received profit both in the territory of the Republic of Armenia and outside the territory of the Republic of Armenia, is guaranteed for the foreign investor.

Privileges granted to foreign investors

• The import of goods included in the list established by the Government of the Republic of Armenia aimed at supplementing its statutory fund by the enterprise with foreign investments is exempted from paying customs duties.
• Following the international agreements, property imported into the Republic of Armenia as a foreign investment is exempted from customs duties within the terms defined by the relevant agreements.
• Property intended for personal needs that is imported into the Republic of Armenia by foreign employees of enterprises with foreign investments is exempted from customs duties.

Other positive aspects for foreign investments

• State taxes for the export of goods are not specified.
• There are no restrictions on the quantity of products.
• A fairly simple procedure is provided for foreign citizens to obtain the work permit.
• Possibility to establish companies in a short period of time.
• Compulsory licensing requirement is intended for a very limited range of industries.
• State fees for licensing, activities in a certain field, property tax, land tax and other fees are financially suitable for investors.
• There are no restrictions on imported cash currency.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.