ARMENIA Law and Practice Contributed by: Varoujan Avedikian, Tamara Martirosyan, Sofya Sargsyan and Larisa Gevorgyan, Andersen Legal
consider sector-specific requirements imposed by competent authorities. Other BMEs Armenia’s investment regime is generally open; how - ever, certain barriers to market entry (BME) are estab - lished by state authorities and independent regulators for several strategic or regulated sectors reflecting national security, public interest or prudential consid - erations. Such BMEs may include licensing, registra - tion or the various assessment requirements imposed by competent authorities. Key areas include the fol - lowing. • Financial and banking sector: Foreign participation in Armenian banks is fully permitted but subject to approval by the CBA, as detailed in the foregoing. • Audiovisual media: This sector also operates under a licence-based regime, as the entities carrying out activity in this sphere must be licensed by the PSRC. Additionally, according to the Law on Audiovisual Media, at the time of the establishment (creation) of broadcasters or thereafter, the share of foreign capital participation shall not be equal to or exceed 50% of the shares necessary for the decision-making of the given organisation, unless otherwise provided for by an international treaty. • Electronic communication: This sector also requires licensing by the PSRC. Under the Law on Electronic Communication, any person may own and operate a public electronic communications network or provide related services upon obtaining the required licence from the PSRC. Moreover, the PSRC may not deny a licence or permit to an appli - cant who meets all statutory requirements solely because it is wholly or partially foreign-owned. • Energy: The PSRC is responsible for licensing activities within the energy sector. While it does not directly regulate the composition of sharehold - ers in licensed entities, the Law on Energy requires that any transfer of 25% or more of the shares (or any interest granting decisive influence over the licensee’s decisions, irrespective of its quantity) in the charter capital of a person holding a licence to generate electric energy in a power plant with an installed capacity of 30 MW or more must receive the PSRC’s prior consent.
• Mining and natural resources: When investing in this sphere, it is vital to take into consideration that Armenia’s subsoil resources are exclusively state property, and private entities can only obtain usage rights, not ownership. These rights are granted through permits, agreements or mining allotment acts. Foreign investors enjoy the same legal treat - ment and protections as domestic entities, with no requirement to engage in a mandatory local partnership. In conclusion, Armenia’s regulatory system balances openness to foreign investment with targeted over - sight in sectors of strategic significance. While foreign investors are afforded equal treatment and full legal protection, compliance with licensing and disclosure requirements remains a key condition for successful market entry. Armenia’s taxation framework for companies is struc - tured around a corporate income tax (CIT) model, supplemented by a value-added tax (VAT) system, simplified regimes for small businesses and micro- entrepreneurs, and withholding rules applicable to foreign companies earning Armenian-source income. CIT The core tax imposed on companies operating in Armenia is CIT, which is levied at a flat rate of 18% on taxable profits. Armenian tax residency plays a central role in defining the scope of taxation. Resident com - panies are taxed on their worldwide income, whereas non-resident companies are taxed only on income sourced from Armenia. Tax residence is typically tied to the place of incorporation or to the presence of a permanent establishment within the jurisdiction. For resident companies, taxable income is computed by deducting allowable expenses from gross income, while non-resident companies that operate through a permanent establishment are taxed on the income attributable to that establishment. Foreign companies that do not operate through a per - manent establishment may still be subject to Arme - 9. Tax 9.1 Taxation of Business Activities
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