Republic of Armenia Ministry of Economy

OBJECTIVE FACTORS FOR INVESTMENT

IN ECONOMY OF ARMENIA

Armenian Research Institute For Scientific and Technical Information

Yerevan 1996 ArmNIINTI Authors: R. V. Harutyunyan, Y. G. Nersessian

This information has been compiled by the Analysis and Expertises Department of ArmNIINTI Translation - Y. G. Nersessian Type-setting - Editing and Publishing Department Graphics - Creative heritage of the prominent Armenian architect Rafael Israelian Managing Editor - Y. G. Nersessian

ã "Lratu", 1996 CONTENTS

INTRODUCTION...... …… 3 1. HISTORY - BRIEF SURVEY...... ….. 4 2. POLITICAL STRUCTURE ...... 6 3. NATIONAL ECONOMY OF ARMENIA...... 6 4. PRIVATIZATION...... 7 5. INVESTMENT CLIMATE...... ….. 8 6. FORMS OF BUSINESS ORGANIZATIONS ...... … 12 7. TAXES AND DUTIES...... …14 8. SECURITIES MARKET...... 16 9. BANKING AND FINANCE...... 19 10. 10 TELECOMMUNICATIONS AND TRANSPORT...... 20 11. 11 LEGISLATIVE FRAMEWORK FOR PRIVATE SECTOR DEVELOPMENT ..………………………………………………………... 21 12. INTELLECTUAL PROPERTY...... …. 22 APPENDIX 1 The Law of the Republic of Armenia On Foreign Investments...... ………….23 SECTION 1 General Provisions...... ……23 SECTION 2 State Guarantees Concerning the Protection of Foreign Investments...... ……. 24 SECTION 3 Creation of Enterprises with Foreign Investment and Termination of Activities Thereof ...... …25 SECTION 4 Conditions of Activities of Foreign Investors and Enterprises with Foreign investment...... ………...... 26 APPENDIX 2 Government Institutions...... …28 APPENDIX 3 Banks...... … 31 APPENDIX 4 Embassies of Foreign Countries in Armenia...... … 34 International Organizations...... …...34 Embassies of the Republic of Armenia in Foreign Countries...... 36 APPENDIX 5 Hotels...... 38 Restaurants and Clubs...... 38 Marzer 1.Yerevan 7. Kotaik 2. Tavush 8. Gekharkunik 3. Lori 9. Ararat 4. Shirak 10. Vayots Dzor 5. Aragatsotn 11. Sunik 6. Armavir

Territory - 29800 sq km Official language - Armenian Population - 3.7 million inhabitants including: National currency - the Dram ethnic Armenians - 3.5 million inhabitants Exchange rate (November 1996) - Religion - Christianity 1$US=420drams Time-band - GMT+3 National holidays and Memorial days: - Capital - Yerevan (13 million inhabitants) New Year's Day - January 1-2 Administrative territorial units - 10 regions Christmas - January 6 (marzer), plus Yerevan which is considered a Motherhood and Beauty Day - April 7 region Genocide Memorial Day - April 24 Distance from major cities of the region: Victory Day - May 9 Tbilisi - 255km Independence Day - May 28 Baku - 634km Constitution Day - July 5 Stepanakert - 357km Referendum Day - September 21 Ankara (via Batumi) - 1560km Earthquake Memorial Day -December 7 Teheran - 1020km INTRODUCTION

The foreign investment has been the Meanwhile, it informs foreign center of attention of government authorities investors about the history, political and of the Republic of Armenia This present pub- economic structures, business organiza- lication, which is prepared by the Armenian tions, taxation regulations and privatization Research Institute for Scientific and Technical process in Armenia. Information (ArmNIINTI) introduces legisla- Detailed information regarding tion concerning foreign investors in the Re- foreign investors, including "The Law of public of Armenia. the Republic of Armenia on Foreign This brochure contains vital informa- Investments", are given in Appendixes of tion about the opportunities and the privileges this brochure. for foreign investors participating in the business operations in the territory of the Republic of Armenia.

5 1. HISTORY - BRIEF SURVEY

The Republic of Armenia is located in the southern part of Transcaucasia, at the junction of Europe and Asia. Armenia is bor- dering Georgia in the north, Iran in the south, Azerbaijan in the east and Turkey in the west. The Republic of Armenia covers approxi- mately 28,9 thousand sq. km Most of the territory lies between 1000 to 2500 m above sea level. The highest point is Aragats moun- tain (4090m above sea level). The climate in Armenia is continental with hot summers and cold winters. The total land boundaries com- pose 1254km (including: with Azerbaijan - 787km, Georgia - 164km, Iran - 35km and Turkey - 268km). The population of the republic is 3.7 million inhabitants. Armenia has ethnic and religious homogeneity. More than 95% of the population are Armenians and only 5% are Yezids, Russians, Assyrians, Jews and Greeks. The state religion is Christianity, which was proclaimed in 301 AD. In 2001, the 1700th anniversary of this event shall be widely cele- brated all around the world. In 405 AD, Mesrob Mashtots invented the Armenian alphabet, after which many liter- ary works, including, the Bible, were trans- lated into Armenian. This period became known as the Golden Age of Armenian literature. In one of the most unique libraries in the world, the "Matenadaran", situated in Yer- The Republic has a large amount of evan, many thousands of manuscripts, includ- artesian water reserves, approximately 50 ing first manuscript Bibles, are kept. billion cu m. Armenia is rich in natural resources such as copper, zinc, aluminium, The Armenian plateau is one of the molybdenum, marble, granite, perlite, tuff, most ancient centers of world civilization. travertine, pumice and volcanic basalt and There are many ancient architectural monu- gold. There are also large amounts of ments in Armenia. mineral water. The national language is Armenian, however, the Russian is widely used. Many people speak English, French and German. The nature of Armenia is very pictur- esque The Alpine lake Sevan is located in the hollow surrounded by the mountains. This is the most popular recreation area for tourists

6 7 2. POLITICAL STRUCTURE INFOTERRA and many other international organization. The Republic of Armenia is a sovereign and democratic state The President of the Republic is the head of the State The 3. NATIONAL ECONOMY OF highest legislative body is the National ARMENA Assembly. Both the President and the 190 deputies of the National Assembly are The National Economy of Armenia democratically elected every five years. is largely based on both the Processing and Mining Industries. Additionally, The President has the sole power to agricultural products compose 10-15% of appoint and dismiss the Prime Minister. the Gross National Product (GNP). Additionally, upon recommendation of the Prime Minister, the President appoints and Prior to 1990, the economic dismisses members of the Government. infrastructure was based upon a central plan and was controlled by the Former The Constitution of the Republic was Soviet Union departments. However, the ratified by national referendum on July 5, 1995 industries of the Republic of Armenia were Under the new Constitution, administrative not incorporated within the economy of the territorial units of the Republic of Armenia are Republic. considered regions (marzer) and communities (amaykner) Regional governors, appointed by Today, the newly created the Central Government, implement and co- infrastructure encourages and supports the ordinate regional policy in harmony with the development of local enterprises. The central executive body. Republic of Armenia derives its economic power from numerous sources: building There are ten regions in the Republic, materials production, chemistry, plus Yerevan, the capital of the Republic biotechnology, jewellery, mining, which is considered a region. The President of metallurgy, radioelectronics, instrument- the Republic, upon the approval of the Prime making, machine-tool construction and Minister, appoints the Mayor of Yerevan. electronics. Additionally, the Light, Food, The Constitution and the law of the Timber, and Wood Industries contribute to Republic of Armenia protects citizens rights the enomic power of the Republic. The and freedoms regardless of their nationality, non-ferrous industry is created through the race, sex, language, political views, religious production of copper, molybdenum believes, and social origins. concentrates, lead, gold, and other precious The Republic of Armenia is a member and rare metals. of many international organizations, such as The building material industry is the CIS (Commonwealth of Independent based on the volcanic rocks with the States, former soviet republics), the United unique appearance and physico-technical Nations, the EBRD (European Bank for characteristics - tuff, perlite, basalt, Reconstruction and Development), the IMF granite, and marble (Internat ional Monetary Fund), the IAER Lately, the handicraft industry, (International Atomic Energy Agency), the such as souvenirs manufacture from ICAO (International Civil Aviation Armenian obsidian and onyx, has been in organization) the International Financial great demand. The Light industry produces Corporation, the Multilateral Protection of high quality handmade and machine-made Investments, the WHO, the Interpol, the carpets and rugs with Armenian UNESCO, UNCTAD (United Nations ornamental pattern, which are very popular Conference on Trade and Development), in Armenia and abroad as well as shoes, World Organization of Intellectual Property,

8 cotton and wool fabrics. been distributed to private ownership In The Food industry is based on grapes, February of 1994, the Armenian fruits and vegetable processing The most Parliament approved the Program of developed areas are wines and brandy Privatization for 1994-1995 affecting large production, fruits and vegetables preserving, and small scale enterprises. Privatization as well as mineral water production. plays a great role in the process of the realization of economic reforms. The economic strategy lies in the market's stabilization of the domestic products The Program of Privatization market, such as machine-building, household envisaged the privatization of 4700 chemical goods, building materials, and enterprises, including 2700 "small units", supplementary items, with the use of 600 non-finished construction sites and intellectual property of the Republic of 1300 medium and large enterprises in Armenia. Armenia is second, among the 1994-1995. former soviet republics, by the number of Up to September of 1996, were scientists and specialists with higher education privatized 1113 medium and large scale per capita. enterprises. Armenia possesses a various soil and October of 1994 marks the climatic resources which creates a distinct beginning of the distribution of vouchers agricultural sector. The Republic has a total of to all citizens and residents of Armenia. 3 million hectares (7407000 acres), which 20% charge free privatization includes arable land (46%), non-arable land process had been completed in March of (over 40%), and forests (13%). The main 1995. In that period, the Armenian agricultural crops are as follows: grapes, fruits, Government distributed to the population berries, tobacco, geranium, grains, potatoes, over 3000000 vouchers, one voucher per vegetables, melons, water-melons and gourds. person, with a face value of 20000 drams Animal husbandry is focused on each (about 48USD) The second stage of horned cattle, dairy and meat cattle and sheep charge free distribution of vouchers has breeding. begun in November of 1996. In sum, The development of the economy, Privatization improves the efficiency of the however, is delayed because of the partial market economy, helps to cut down the blocade of roads from Turkey and Azerbaijan. budget deficit and promises to generate At the present transition period, Armenia is jobs in the future. remaining heavily dependent on humanitarian The privatization of the housing and technical aid granted by the United States, should be completed to the end of 1996 Russia, United Nations and European Union. The Privatization Program offers significant investment opportunities to foreign businessmen. First, the authorized 4. PRIVATIZATION capital that is set for the enterprises is very low by international standards So, the After the collapse of the Soviet Union, authorized capital of the first ten large Armenia was the first republic, among the enterprises, which were privatized in former soviet republics, to adopt reform March-May of 1995. ranged from 242000 policies. The privatization of the agricultural to 2037000 US dollars only. lands was successfully implemented in 1991. According to the Armenian As a result, over 340200 hectares legislation, specifically the law "On (840000 acres) of farmland were privatized. 63 Foreign Investments", which was adopted per cent of cultivated fields, 80 per cent of the by the Parliament in July of 1994, foreign orchards and 91 per cent of the vineyards have investors may participate in the

9 privatization program, start businesses and • ancient monuments and exotic become real owners of enterprises (Article 4 of nature offering great opportunities for the law "On Foreign Investments"). Nothing tourism development prevents them from participating in the • skilled labor voucher and stock markets to be formed in Armenia. • high labor activity of the population In December of 1994, the liberalization of prices began, symbolizing one of the most • acceptable income taxes important components of a free market. • tax holiday for defined period of This liberalization, and open and time preferential policy concerning foreign • customs exemption for the investors, which are the basis for an effective importation of equipment and means of market economy, have been approved by production. World Bank. All types of investor's profits made in Armenia, after taxes are paid, shall 5. INVESTMENT CLIMATE remain under his disposal Foreign investors may freely The Armenian economy seeks to repatriate their property, profits and other integrate with the world economy as well as to means legally gained as a result of renew its country's solvency. investment The principal economic reforms are: The private sector may embrace • land privatization any spheres except the Defence sector. • privatization of state enterprises It is prohibited to import: • development of a non-regulated • weapons, explosives, army market of financial and hanking systems equipment, components for their production, and army uniforms • transition of pricing and investment rights to the state enterprises • narcotics, psychotropic substances, devices intended for their use. • internal conversion of Armenian monetary unit - Dram The Armenian legislation does not envisage any restrictions on the • remissions of some laws concerning participation of the foreign shareholders in import-export operations private enterprises, as well as for foreign • liberalization of prices Privileges for citizens appointment for any posts Foreign foreign investments in Armenia: investments cannot be nationalized, • political stability and economic confiscated or expropriated unless in reforms' supporting by the population exceptional cases, in a state of emergency, but with full mandatory compensation • availability of factories and plants upon a decision of a Court Investors suitable for putting into operation should be compensated for any damage • availability of high-skilled incurred to their investment, or loss of professionals profit resultant from the actions of the state bodies or state officials (Articles 8 and 9) • the best airport in the Transcaucasian region The Republic of Armenia has signed trade agreements with the USA, • availability of a large variety of Iran, Egypt, Syria, Georgia. Poland, minerals Rumania, and China Close economic

10 relations are maintained with Kuwait. This treaty provides a legal framework for Argentina, Vietnam, and Cambodia. A general OPIC's operations in Armenia agreement has been signed with France. The Armenia is in need of direct foreign major trading partners of the Republic of investments for stabilization and Armenia were Russia, Iran. Ukraine, rehabilitation of its economy Only in 1995, Kazakhstan, Turkmenistan, Belarus. 179 enterprises with foreign investments Exports from Armenia include: were registered in Armenia To the end of machinery, transport equipment, haberdashery 1995, 353 enterprises with foreign goods, chemicals and related products, ferrous investments, including 206 Joint-ventures metals and products, rare and precious metals and 147 branches of foreign companies, and gems, carpets, mineral water and some were registered in Armenia. foodstuffs. The difficult energy situation in Imports include foodstuffs, fuel. raw Armenia forced the Armenian government

Export Import

35

30

25

20

15

10

5

0 Foodstuffs Minerals Jewelry Equipment Non-precious Others metals

Chart 1. Export-import of the main groups of products (1995) materials, machinery, chemicals and related to reopen the Armenian Nuclear Power products. Plant in Medzamor, which was closed after the 1988 Spitak earthquake. Although The basic provisions regulating the most of the testing, reopening, investment climate are set by the "Bilateral maintenance, as well as purchase of Investment Treaty" (BIT) signed by the USA uranium is being done through the services and Armenia on September 23 of 1992. and by of Russian nuclear companies, Armenia the "Law on Foreign Investments", adopted by still needs investors to fond some parts of Armenian Parliament on July of 1994 The the project, including safety measures and treaty concerning the reciprocal radioactive waste burial. Armenian encouragement and protection of investment Nuclear Power Plant was reopened at the (BIT) provides Armenia with the "most end of 1995. favored nation" status for investment purposes.

11 Joint Ventures Branches

90 80 70 60 50 40 30 20 10 0 Russia Iran USA France Georgia Lebanon Great Syria Britain

Chart 2. The share of foreign countries in the economy of Armenia An International Conference on turbines, exploration of existing coal Armenian Energy Strategy which was deposits; production of insulation convened in Yerevan in May of 1994, outlines materials, introduction of energy saving potential business opportunities in this sector, technologies; modernization of the old and some of which may be backed by World Bank inefficient energy network infrastructure; and European Bank of Reconstruction and construction of the electricity transmission Development. These include: modernization of line from Iran to Armenia, development of existing, and construction of new large thermal alternative energy sources; assistance in power plants, and more than a hundred small development of energy-related legal hydropower plants; production of small hydro framework; personal training programs etc. Structure of the energy production, GWt/% Name 1988 1993 1994 1995

Total 15305 6295 5658 5574 TEPS 8961/58,5 2002/31,8 2144/37,9 3338/60,0 HEPS 1534/10,1 4293/68,2 3514/62,1 1932/34,5 ANPS 4810/31,1 -/- -/- 304/5,5 Balance: export (-) -2919 +111 - - import (+) For station 1167/7,6 316/5,0 190/3,4 332/5,9 maintenance Losses 1650/10,78 2390/37,96 2250/39,76 2188/39,25

ANPS - Armenian Nuclear Power Station HEPS - Hydroelectric Power Station TEPS - Thermoelectric Power Station

12 Taking into account the current 6. FORMS OF BUSINESS economic conditions, markets, and resources ORGANIZATION of the Republic, the following fields may be the most favorable for the investor and the The Armenian government gives recipient: great importance to the role of foreign investments in the process of transition to Agricultural sector: the market economy. It has provided basic legal guarantees and protections, as well as 1. Establishment of companies for various tax, customs, and income transfer fruits and vegetables processing and privileges to foreign legal entities. packing. The best quality apricots are Currently, there are more than 120 growing in Armenia, which are difficult Joint Ventures registered in Armenia with to store and transport. The creation of participation of businessmen from the canneries in rural areas may solve this USA, Australia, Canada, Germany, problem Austria, France, Italy, Poland, Greece, 2. Production of various type of food Iran, Hong Kong and others. According to products in 50g packing for breakfast in the law "On Ownership of the Republic of hotels Armenia" passed by the Supreme Council 3. Production of "Emental" type of on October of 1990, the Joint Ventures cheese on the basis of alpine cattle- with foreign and local citizens and legal breeding entities participation, may have their own 4. Creation of cattle-breeding farms property if it is necessary for their activity, with necessary mixed fodder stipulated by constitutive documentation 5. Fertilizers production (Article 55). 6. Eggs and boiler chicken production 7. Herb cultivation Foreign investors have a right to 8. Trout and sturgeon fishes raising their own industrial and other enterprises, buildings, structures, and other property to Industrial sector: conduct economic activities in the Republic of Armenia, All property rights 1. Creation of oil-processing enter- concerning Armenian citizens also apply to prise the foreign citizens possessing property in 2. Creation of a high-technology Armenia, with the exception of the land copper-melting plant ownership rights (Article 56). 3. Production of small-sized agricultural equipment for farms The Republic of Armenia 4. Exploration of rocks with an guarantees the stability of foreign owner's equipment which improves actual activity. The damages caused to the output (hydroabrasive cutting) owners as a result of a legislative act 5. Establishment of franchise mutual suspending ownership rights are fully relations between industrial enterprises payable on the Court's decision at the of Armenia and leading companies of expense of the Republic (Article 59). European Union, which put out the Foreign investor's may choose any same kind of products of the following forms of business 6. Creation of modern printing plant organizations to conduct economic activity for information material output, colorful in the territory of Armenia: packaging design, as well as any types • Joint Ventures of code pattern • Foreign-owned enterprises 7. Creation of a center for multi- • Stock company media programs output on laser disks • Limited partnership

13 • Production cooperatives Joint Ventures (Article 26) • Personal/Family enterprises A Joint Venture is an enterprise According to the law of Republic of founded on collective or mixed ownership, Armenia "Onnterprises and Entrepreneurs with the obligatory property and hard activities" signed by the President on March of currency investment by foreign citizens, 1992, all enterprises and organizations which enterprises and organizations. belong to the foreign citizens and legal entities may develop entrepreneurial activities in the The Armenian legislation territory of Armenia (Articles 5, 7). For these establishes minimum authorized capital for enterprises the Republic of Armenia estab- Joint Venture's status receiving A Joint lished tax holidays, customs, and other tax Venture must have at least one foreign privileges. If these enterprises have legal entity partner. Joint Ventures are granted tax, status they may enjoy the privileges customs, revenue transfer and other type of established for Joint Ventures. All of the privileges. enterprises, branches and representative offices operating in the territory of Armenia Foreign-owned Enterprises (Article 27) must be registered in an appropriate authorized district council. The official registration All enterprises belonging to foreign certificate should be received at the Central citizens or organizations can be officially Board for Registration within 25 days. The registered and can perform entrepreneurial enterprise is considered legal from the date of activities in Armenia in accordance with registration If the founder of the enterprise this law. The legislation has determined does not receive the official registration refusal tax, customs, and other privileges for these within 45 days from the date of the enterprises. If these enterprises have legal application, the enterprise is recognized as entity status they may enjoy the privileges legally established and is entitled to a established for Joint Ventures. registration document (Articles 10, 11, 12) The documents needed to apply for the Joint-Stock Companies (Article 20) initial registration generally include; Joint-Stock Company is an • an application for registration enterprise founded on collective or mixed • enterprise founding documents property. It is a legal entity with the compiled in accordance with existing laws obligatory property participation of its • license for a particular type of owners. The authorized capital is divided activity into shares, with the quantity and value • other documents required by established by the founders. The Joint- appropriate laws for state registration of a Stock Company must have at least two particular legal type of enterprise. Foreign founders. Foreign citizens, enterprises and partners must also submit their incorporation organizations and individuals without certificate and a letter of solvency from its citizenship have the same rights for banks. establishing Join-Stock Companies as For the most recent information, Armenian citizens. please, contact: State Office of Statistics, State The liabilities of participants in a Register and Analysis Joint-Stock Company are limited to the 3 Government Building, nominal value of the participants shares. Room 616; Prior to registration the participants 375010, Yerevan must deposit money in a special account at tel. 524516,524600 a bank. The Joint-Stock Company is fax: 521021 considered an Open Stock Company if the

14 shares of the enterprise are distributed of the Production Cooperative. A member publicly, through free subscription, and a of the Cooperative can make property Closed Stock Company if the shares are contributions which are registered, but do distributed only between the participants. not define the rights of such members in the field of management and in the Joint-Stock Company may participate distribution of profits. in Armenia and other countries' Limited Liability Companies and Economic The Production Cooperative may Partnerships, as well as establish affiliates in attract an unlimited number of hired Armenia and abroad. workers on the basis of labor contracts. The property of a Production Cooperative Limited Liability Company (Article 21) belongs to its members as collective property. A Limited Liability Company is an The liabilities incurred by a enterprise founded on collective or mixed Production Cooperative are secured by its property and has the status of a legal entity own property and in case of insufficiency with obligatory participation by the owners of means - by the sum of annual profit. with property. A Limited Liability Company must have at least two founders. It may continue its activity even if only one Personal/Family Enterprises (Article 15) shareholder remains during the course of the Personal Enterprises are those enterprise's activity. unincorporated enterprises which belong Foreign citizens, enterprises and 10 an individual according to personal organizations and individuals without ownership rights. Family Enterprises are citizenship can establish Limited Liability those unincorporated enterprises which Companies and have the same rights as belong to members of a family or other Armenian citizens, enterprises and individuals, with their joint ownership organizations. This Company participant's rights. Personal/Family Enterprises liability is limited to the nominal value of the operate, as a rule, on the owners' personal shares held by that participant. The partners work. These enterprises can hire workers. are not liable for the Company beyond the Personal/Family Enterprise may be amounts that they have contributed. established by the citizens of Armenia and Before the registration process, the other countries as well as by individuals founders of the Company must deposit money without citizenship. The name of a Per- in a special account at a bank sonal/Family Enterprise must include the owner's name Foreign citizens and A Limited Liability Company may be individuals without citizenship have the the founder or participant of other companies same rights for establishing these or partnerships, as well as establish affiliates in enterprises as Armenian citizens The Armenia and abroad. owner of a Personal/Family Enterprise takes complete property responsibility for Production Cooperative (Article 17) all liabilities incurred by this enterprise. The Production Cooperative is an enterprise founded on the collective Labor relations (Article 47) ownership, with legal entity status, operating Issues regarding the process of with the obligatory business activity of its recruitment, number of employees, work members. Citizens of the Republic of Armenia and vacation conditions, salaries, forms of and other countries as well as individuals payment, rules regarding salaries and other without citizenship are eligible to be members forms of income that employees might

15 receive form the enterprise are all regulated by taxable The foreigners are taxed according individual and collective labor contracts. The to the same tax rates The tax for non- income of hired workers are not limited. residents is 20%. The Legislation establishes the minimum wage limits, the maximum working Social Security tax hours/day, privileges and guarantees for some groups of workers (including pregnant women, This tax is paid by an enterprise juveniles, disable persons etc), minimum from its taxable profit and is equal to 37% vacation time, minimum social security and from the total sum of wages/salaries paid other insurance payments, obligatory for all to the employees (2% goes to the state enterprises registered in Armenia. social security fund and 35% - to the state pension fund) The social security tax is levied 7. TAXES AND DUTIES equally on the local and foreign-owned enterprises After the payment of the The taxation system in Armenia is income tax and social security tax, Joint based on the "Law on Taxes and Duties", Ventures and Foreign-owned enterprises adopted in April of 1992, which lists 14 may freely transfer their profits abroad different types of taxes: profit tax, income tax, There is no transfer tax. property tax, social security tax, local taxes, excise tax, value-added tax, land tax, turnover tax, inheritance tax and others. However, the Value-added tax (VAT) quantity and rate of taxes, the terms of payment undergo some changes For the most This tax is levied on the circulation of goods and services, including import recent information, please, contact State Tax Inspection 3, Movses Khorenatsi str., 375015, sales. The urban transport, purchase of real property, drugs, milk and agricultural Yerevan tel 538101 fax: 151967 products, domestic electricity consumption, as well as import of certain Profit Tax foodstuffs are tax exempt The current VAT is 20%. This tax is levied on the profits, earned in Armenia and abroad by enterprises which have status of legal entity. The tax scale in- Excise tax cludes four rates of tax: 1.2%, 18%, 25% and This tax is levied on the specific 30%. products (See Table 2). The excise tax The profit of foreign legal entities rates range from 15% to 75% from the operating in Armenia, are taxed by the rates wholesale price of goods The tax for established for Armenian legal entities. The imported goods is collected at customs banks and insurance companies are subject to upon entry No excise tax is levied on the 45% tax. goods exported to the non-CIS countries.

Income tax Customs

This tax is levied on wages/salaries, the All exports from Armenia are duty income of enterprises, which are not consi- free. Import tariffs apply only to certain dered legal entities The rate of taxable income products No duties are levied on: Excise tax varies from 12% to 30% depending on the a-mount of income The minimum wage • import from the USA with which Armenia has established customs unions officially established by the government is not

16 Table 2 Name of the product Domestic products (%) Imports (%) Caviar 50 50 Wine and vodka 50 75 Beer 50 75 Grape wine 25 50 Tobacco products 50 50 Petrolum (Gas) 25 25 Jewelry 25 25 Fur garments 25 25 Clothing made from natural 25 25 leather Porcelain and crystal 25 25 Hand-made carpets 50 50 Tires for motor cars 25 25 Motor cars 0 15 • goods imported temporarily under ption does not apply to those enterprises customs control and appropriate customs which are engaged in the following spheres regime trade, finance, insurance, banking, tourism, • imports of goods necessary for entertainment, alchohol production. The construction projects stipulated by taxable profit is reduced for enterprises intergovernment agreements on investments engaged in charity activities, or investment in science, health care, sports and • imports made on credits given to the environment protection Government, the slate budget and slate funds. The taxable profit is reduced as well The hard currency imports to Armenia if the enterprises employ disable persons. are not limited. The customs processing fee for The Joint Ventures are subject to a import/export transfer is 0,15% of the goods' 50% discount on the taxable profit, if the estimated cost No fee is collected for deli- share of foreigners is more than 50%, and veries made on credits to the Armenian Go- a 30% discount, if the share of foreigners vemment, for humanitarian aid and deliveries is 30-50%. In this case, the enterprises are made on the basis of international agreements entitled to this privilege from the third to Customs duties for CIS countries are tenth year of operation. annuled according to the Decree adopted on Foreign-owned enterprises doing April 16, 1994, on CIS Prime Ministers business in Armenia enjoy the same Meeting. privileges. The "Law on Foreign Investments" Tax holidays and other tax privileges grants to the foreign businessmen some The foreign-owned legal entities may privileges including exemption from be exempt from full payment of profit tax, if customs duties regarding the importation the corresponding foreign state provides such of authorized capital, raw materials, semi- privileges to Armenian legal entities doing finished products and other items integral business in that country. The new enterprises to the production process The reduction of are exempt from profit tax in the course of the the tax paid to the budget doesn't have to first two years of profitability This" tax exem- exceed 60%.

17 8. SECURITIES MARKET Following the European experience the YSE has worked out the optimal The Yerevan Stock Exchange (YSE) version of the division of the privatized was established in May of 1993 in the form of enterprises stocks in three segments: an Open Stock Company. • quoted market-to quote shares of Today, just like it was in the period of stock companies with high liquidity capital formation all over the world, the real • regulated market-to quote the market rate of the national currency - the shares of average stock companies with Dram, is formed in the Stock Exchange, which low level of liquidity, but of some interest helps the Central Bank to regulate the official for investors. rate of foreign currencies. • free market to put into circulation any securities of stock companies, issued The end of 1994 and the beginning of according to the legislation. 1995 was the most severe period for financial institutions of Armenia. The stabilization of At present time, the market of state the Dram and the justified severe anti- securities - bonds and bills, is the most inflationary and credit policy of the Republic developing sector of the stock market. resulted in shocks in banking and finance These securities have high-level reliability, spheres. Dozens of small commercial banks liquidity and profitableness. had been declared bankrupts, which adversely However, the public sale of these affected the Stock Exchange The supply securities is not very significant. It may be surpassed the demand, and only the explained by the lack of practice availability of hard insurance assets helped the area, lack of due regard for specific Yerevan Stock Exchange to stand this severe demands of stock exchange as well as trial. small volume of emissions. The most The 1995 was marked by the first steps attractive financial papers, sold by auction in the market of state short-term bonds and on the floors of YSE, are the bills issued in bills issued by Ministry of Finance. 1995 by the Ministry of Finance to clear the debts of the Government To the end of. The Yerevan Stock Exchange put into 1996, the Ministry of Finance will put into circulation the first issue of inscribed stocks. circulation the bonds for total sum of 2,5-3 The major enterprises, banks, financial billion drams. The experts believe that the institutions, physical persons, foreign attractiveness of the state bonds and bills companies, and private persons become will arise in accordance with further holders of these securities. Today, 45 bank financial stabilization. They also believe brokerage offices and 17 independent that in 1996 the stocks of the banks shall brokerage firms are registered in YSE show up on the stock market However, It is necessary to mention that the until now, not a single commercial bank increase of the number of brokerage showed up with its stocks, because these companies and the decision of the Central stocks haven't yet market price. The Bank to give an opportunity to independent commercial banks are forced to increase brokers to take part in auctions of hard the number of their stockholders and to go currency in YSE, aroused an interest for these through a listing procedure in YSE to meet stocks. the requirements of the Central Bank to The securities market in Armenia is in increase until 2000 the capital up to one its initial stage of development Its activization million USD. is expected in one-two years when the YSE In 1994, auctions of credit will start to quote the first stocks of the resources were carried out pretty good, privatized enterprises with the participation of all banks which

18 have brokerage offices, including the Central Thus, in the nearest future, the Bank. The total sum gained on these auctions common stock floor shall be created to composed 200 250 000 drams and 250000 unite the capital of the Republic with the USD. most active business centers - Vanadzor, Because of speculative operations and Gumri, Meghri. Gumri and Vanadzor bankruptcy of a number of banks, the situation connect Armenia with Georgia and Russia, on the credit market becamcritical, and above and the ports on the Black sea Batumi and all, the confidence in partners was lost. Poti; Meghri - with Iran and the Asian - Pacific Ocean region. As a result, in the beginning of 1995, the credit floor in YSE was temporarily The dynamic formation and suspend. development of the YSE on the Armenian economic market has aroused interest of From the beginning of 1996, the experts and specialists of Stock markets in Central Bank of Armenia began to grant short- CIS and abroad. term (28 days) and ultra-short-term (7 days) credits under the conditions of high liquidity With the assistance of the mortgage availability. Armenian Embassy in the USA, had been carried on negotiations between YSE and The specialists of YSE are positive that such major brokerage and investment the civilized credit market, including companies in the USA, as "Merill-Linch" commercial credit market, will be formed in "Solomon Brothers", "Ber Stein", "OPIC", Armenia in the second half of 1996 to 1998. "American Banknote Corporation" The Taking into account that the simple YSE is one of the first among Stock reason for the credit market's stagnation is its Exchanges in CIS which was included in riskiness and lack of risk insurance mechanism "Stock Markets" - the most prestigious in Armenia, the YSE together with three major analytical annual magazine of the Inter- banks "Ardshinbank", "Armimpexbank" and national Monetary Fund and the World "Credit-Yerevan" bank, established the Bank. Armenian financial Insurance Company. In December of 1994 very The Armenian Financial Insurance important negotiations and meetings were Company, as Open Stock Company, has begun held in Paris with the managers of the the subscription to its stocks at market price Paris Stock Exchange, the Central The shareholders of this company may insure Depository, the banks and businessmen of their financial operations on preferential terms. France. The regional policy of the Yerevan The YSE was invited to take part in Stock Exchange is based on the necessity to the establishment of the Federation of create a common stock market in Armenia. Euro-Asian Stock Exchanges. The Taking into account that more than 70 per cent Federation was established in May of 1995 of the production facilities of the Republic, as by the Stock Exchanges of 12 countries. well as the most of commercial banks and Today, 24 countries are the members of business centers are concentrated in Yerevan, this Organization. the Management of YSE decided to adopt in The training of specialists in its regional policy the Swiss model - "center- foreign countries had a great importance regions". for the formation of the YSE The In February of 1994 the branch of YSE knowledge acquired by these specialists was established in Vanadzor (former favored the development of auctions Kirovakan), and in the first half of 1995 the mechanism branch of YSE was established in Gumri Certainly, the visits and contacts (former Leninakan). with foreign colleagues have cognitive

19 character. The results of these contacts will The term "bank" or any other word- show up in the future which is connected with combination with it, may be used only in the overcoming the crisis and the improvement the names of organizations registered in of the economic situation in the Republic the Central Bank of the Republic (Article There is a necessity for further laborious and 1). intensive work of all interested parties, and the The banks are independent from shareholders in the first place, to support the the legislative and executive bodies and. status of the YSE, as one of the most important are regulated in their activities by this law, institutions of the financial market of Armenia. own legislative acts and by-laws. The banks are not liable for the 9. BANKING AND FINANCE obligations of the Government, and the Government is not liable for banks' According to the law of the Republic obligations (Article 1). of Armenia "On Banks and Banking Activity", The transactions in foreign adopted on April of 1993, the banking system currency may be carried-out only in the includes the Central Bank, five major banks - case of licence availability drawn by the "Ardshinbank", "Agrobank", State Savings Central Bank (Article6). Bank, "Armeconombank" and "Armimpex- The legal entities and physical bank", and more than 40 commercial banks. persons, as well as enterprises of the Foreign banks are represented by Republic of Armenia and other countries Mellat Bank (Islamic Republic of Iran) and which don't have the status of legal entity, Midland Bank (United Kingdom) opened in may participate in the formation of the 1995. bank's authorized capital (Article 7).

20 The share of any shareholder doesn't declaration that no such permission is have to exceed 35 per cent of the authorized necessary. capital of the bank. b) foreign citizens: According to the decree of the Central • confirmation of the investor's Bank, adopted on March 30, 1994, the financial solvency by a recognized foreign minimum authorized capital of the banks is major bank equal to 100000 USD. • guarantee by at least two legal The banks are to be registered by the entities with confirmed solvency. Central Bank of Armenia. Documents required The areas where a bank may for the registration, include: operate include: • license application • loans • by-laws and other foundation • factoring documents • maintaining accounts • a business-plan, setting out the bank's • issue, buying and selling of expediency shares, bonds, letters of credit, cheques • an auditor's report in respect of • foreign currency transactions the founders • consulting services • curriculum-vifae of the proposed top • transactions involving precious management of the bank stones and metals and other valuables. • confirmation of payment of the required proportion of initial capital. This law prohibits banks from dealing in insurance. The licence can be withdrawn by the Central Bank on the following grounds The Central Bank of Armenia has (Article 15). the authority to carry out inspections and supervise the activities of the banks • discovery of incorrect details in the operating in the territory of Armenia. application documents • failure to commence banking The banks are obliged to submit to activities within one year of registration the Central Bank semi-annual and annual • failure to deposit the full initial financial reports, confirmed by auditor's capital within a year organization in a manner established by the • carrying out activities prohibited by Central Bank. the law "On Ranks and Banking Activity". The Central Bank has the right to The founders of the banks may appeal investigate, without any preliminary against the decision of the Central Bank in the notification the activities of a bank, Court. including its foreign branches (Article 29). The foreign banks, joint banks and their branches must produce, in addition, the following: 10. TELECOMMUNICATIONS a) foreign legal entity: AND TRANSPORT • lop management decision to establish a bank (or branch) in the territory of Armenia The current analogue system relies • confirmation from the relevant almost exclusively on former Soviet authorized body of a given foreign country equipment. By Eastern European standards confirming that there is no objection for that the density of the telephone network is juridical entity participation in the quite high. Upon the receipt of financing, establishment of a bank in Armenia, or the the Ministry of Telecommunications shall

21 modernize and expand the Yerevan telephone The Republic of Armenia has 6 network, establish modem telephone civil airports In 1992, the City Council of exchanges in the earthquake zone and Yerevan purchased two Russian IL-76 introduce a cellular phone service. cargo aircrafts which mainly are used for The long distance telephone system is government export and import programs, old and unreliable. However, those who wish and for bringing in humanitarian aid. Some to establish reliable international direct-dial companies lease cargo planes in Russia phone/fax communication have an opportunity and Ukraine for international shipment of to subscribe to a special, more expensive long- goods to and from the Republic of distance service which uses AT&T equipment Armenia. Air cargo is accessible through and satellite connection via Washington with the Yerevan International Airport - the rest of the world. "Zvartnotz", which can handle all types of The American Telephone & Telegraph planes, including the largest cargo aircraft Company (AT&T) has provided 200 new For the construction of modem cargo long-distance circuits into Armenia. At terminals and expansion of other services, present, this service is primarly used by the "Zvartnotz" airport has obtained government institutions, foreign embassies and financial assistance from the European missions, and leading firms in Yerevan. Bank of Reconstruction and Development. Because of partial blockade of Armenia by neighboring Turkey and Azerbaijan, and transport communications 11. LEGISLATIVE problems in Georgia, both rail and road FRAMEWORK FOR PRIVATE transport traffic is practically cut off For cargo transportation SECTOR DEVELOPMENT Armenia uses mainly the aviation The land connection is realized through Iran and Law on Ownership (October, 1990) Georgia. The only railway route which is This law sets the standards of presently in operation, is the Yerevan-Ayrum- private ownership development in Arme- Georgia branch-line which connects Armenia nia for Armenian citizens as well as for with Georgian ports on the Black sea Batumi foreign citizens. and Poti. Armenia uses these ports for international cargo shipment access on the Law on Enterprises and basis of intergovernment agreement with the Entrepreneurial Activities (March, Republic of Georgia. The trade with Iran is 1992) flourishing due to the bridge built over Araks This law provides the legal forms river on the borders with Iran. Armenia of enterprises that can be established in possesses a network of good highways. Armenia by either Armenian or foreign According to the information presented by the companies and individuals: personal/fa- Ministry of Transportation, by motor transport mily enterprises; production cooperatives; were transported: 2499.2 thous.t of goods in stock companies, limited liability compa- 1995 and 1371.7 thous.t - in 6 months of 1996. nies; foreign-owned companies; joint The goods turnover composed 59939,8 ventures. thous.t/km in 1995, and 27673,3 thous.t/km in the first half of 1996. By railroad were transported: 2152,1 thous.t of goods in 1995, Law on foreign Investments (July, 1994) and 834,8 thous.t in the first half of 1996 The This law regulates the rights and railroad freight turnover composed: 377659,0 obligations of foreign investors (See thous.t/km in 1995 and 168742,0 thous.t/km in Appendix 1). 6 months of 1996

22 Law on Banks and Banking Activity (April, official information, as well as official 1993). translations, state symbols and signs. This law regulates the activities of Law on Bank's Secrecy (October, 1996) banks, registered in the territory of Armenia This law shall establish the information, (cooperative, stock commercial, foreign- which constitutes the bank's secrecy; the owned, joint, affiliates of local and foreign legal principles and rules for publication, banks). keeping and handing of that information, the rights and the obligations of bank's Law on Patents (August, 1993). secrecy parties, as well as the This law regulates the rights on responsibilities for violation of this law intellectual property According to this law, provisions. three types of patents may be registered in the The provisions of this law apply to all Republic of Armenia: inventions (up to 20 banks operating in the territory of the years) industrial designs (up to 15 years) and Republic of Armenia, including the industrial process (up to 10 years). branches of foreign banks. 12. INTELLECTUAL Law on Copyright and Neighboring Rights PROPERTY (March, 1996) This area of law has only been partially This law provides for the protection of addressed in Armenian legislation There is literature, music, art, architecture works, and no clear rules concerning the regulation of the rights of performers, producers, this form of property. broadcasting organizations. The computer According to this law three types of pa- programming software is also protected by this tents may be registered in Armenia inven- law The standards of this law correspond to tions, industrial designs and industrial the standards of international conventions and processes The patents should be registered protection of copyright and neighboring rights. in State Patent Office "ArmPatent". The law "On Copyright and Neighboring Law on Bankruptcy of Banks (June, 1996) Rights" was adopted by the Parliament on This law provides a legal basis for May of 1996 This law regulates the compulsory liquidation of an insolvent bank, relations connected with the creation and the procedure of liquidation, the rights and use of pieces of work in science, literature obligations of depositors. and art (copyright), as well as with If international treaties of the Republic neighboring rights (broadcasting, of Armenia establish rules which differ from performance, use of phonograms). If the ones in this law, the rules of the international treaties of the Republic of international treaties shall apply. Armenia establish rules which differ from the ones in this law, the rules of This law does not affect the folk arts, international treaties shall apply.

23 Appendix 1

THE LAW OF THE REPUBLIC OF Should international treaties of the ARMENIA "ON FOREIGN Republic of Armenia establish rules which INVESTMENTS" differ from the ones in this law, the rules of the international treaties shall apply to This law defines the legal, economic and the respective cases. organizational basis for the implementation of foreign investments in the territory of the Article 3. Forms of Foreign Investments. Republic of Armenia and shall be directed at Foreign investors shall be entitled to the provision of protection of the rights, lawful investment in the territory of the Republic interests, and property of foreign investors, of Armenia by means of: along with the creation of necessary conditions foreign currency, other currency for attraction of foreign material and financial values, and the national currency of the resources as well as investment and effective Republic of Armenia; use of foreign advanced technologies and movable and immovable property management and organizing experience. (structures, buildings, equipment and other material values and any property right SECTION I lated to that property; GENERAL PROVISIONS stocks, bonds, and other securities as Article I. Definitions established by legislation of the Republic "Foreign investor" shall mean any foreign of Armenia, any right to claim money or state, foreign legal entity, foreign citizen, the performance of contractual obligations; stateless person, citizen of the Republic of any valuable right to intellectual Armenia permanently residing out of the property; territory of the Republic of Armenia, as well a right, conferred by the legislation of as any international organization which the Republic of Armenia or by contract to engages, in accordance with the legislation of engage in economic activities, including the country of its location, in investment in the the right to explore, extract, develop, or Republic of Armenia. exploit natural resources; "Foreign investment" shall mean any type paid services; of property, including financial resources and and any other type of investment not intellectual values, which is being directly prohibited by legislation of the Republic of invested by a foreign investor in commercial Implementation of the established forms of and other activities implemented in the foreign investments may be prohibited or territory of the Republic of Armenia to gain limited only in accordance with the profit (revenue) or to achieve any other legislation of the Republic of Armenia. beneficial result. "Enterprises with foreign investment" Article 4. Methods of Implementing shall mean an enterprise of any organizational- Foreign Investments. legal type created in compliance with the legislation of the Republic of Armenia, the Foreign investors shall be entitled to founder of which or a participant in which is a implement investments through the foreign investor. following methods: a) creation of enterprises entire owned Article 2. Legal Regulation of Foreign by foreign investors, creation of branches, Invetsments. divisions and representative offices owned Relationships arising from foreign investment by foreign legal entities, and takeover of in the Republic of Armenia shall be regulated ownership of going concerns; by this law, as well as by other legislation of b) foundation of joint ventures with the Republic of Armenia and international legal entities and unincorporated enter- treaties. prises of the Republic of Armenia as well

24 as citizens of the Republic of Armenia, or acquisition of shares in going concerns; SECTION 2 c) acquisition, within the limits defined by legislation of the Republic of Armenia, of STATE GUARANTEES CON- stocks, bonds, and other securities as established by legislation of the Republic of CERNING THE PROTECTION Armenia, OF FOREIGN INVESTMENTS. d) attainment of the right to use land independently or with the participation of legal Article 6. Legal Status of Foreign entities or unincorporated enterprises of the Investment. Republic of Armenia as well as citizens of the The legal regime governing foreign Republic of Armenia and procurement of investments and the methods of their imp- concessions to use natural resources in the lementation in the territory of the Republic territory of the Republic of Armenia, of Armenia cannot be less than the regime e) acquisition of other property rights, and governing the property, property rights, f) other methods not prohibited by legislation and investment activities of citizens, legal of the Republic of Armenia, particularly the entities, and unincorporated enterprises of conclusions of contracts with legal entities or the Republic of Armenia. unincorporated enterprises of the Republic of To encourage foreign investments Armenia as well as citizens of the Republic of in the most significant fields of social and Armenia. economic development, additional privi- Implementation of foreign investments leges for such investments may be through the established methods may be established in a manner provided by prohibited or limited only as provided by legislation of the Republic of Armenia. legislation of the Republic of Armenia. The legislation of the Republic of Armenia may define those areas of the Republic of Armenia, wherein the Article 5. Appraisal of Foreign activities of foreign investors and enterprises with foreign investments are Investments limited or prohibited due to the requirements of national security. Foreign investments shall be appraised according to the foreign investor's choice, in Article 7. Guarantees in the Event of freely convertible foreign currency or the national currency of the Republic of Armenia. Amendments to the Legislation of the Republic of Armenia. The amount of foreign currency shall be estimated in the national currency of the In the event of amendments to the Republic of Armenia at the exchange rate no foreign investment legislation of the higher than the one established in the Republic Republic of Armenia, the legislation which of Armenia by Central Bank of the Republic of was effective at the moment of imple- Armenia at the moment of investing. mentation of investments shall be applied, upon the request of a foreign investor, during five years period from that moment.

Article 8. Guarantees in the event of Nationalization and Confiscation. Foreign investments in the Republic of Armenia shall not be subject to nationalization. Government bodies cannot, also, confiscate foreign investments.

25 Confiscation may be allowed only as market of the Republic of Armenia, in an extreme means in case of emergency accordance with the legislation of the declared in accordance with the legislation of Republic of Armenia. the Republic of Armenia, and it may be applied only upon the judgment of a court of Article 11. Guarantees Regarding the law and with full compensation. Export of Property, Profits (Revenues) and other Means Related to Foreign Article 9. Compensation' for Damages Investments. Caused to Foreign Investors. Foreign investors and foreign Foreign investors shall be entitled to employees shall be entitled to and shall compensation, through a court order, for those have benefit of guarantees to freely export material and moral damage, uncluding lost their property, profits (revenues), and other profits, which damages are caused to them as a means legally gained as a result of result of illegal actions by Government bodies investments or as a payment for labor, or of the Republic of Armenia or their officials as as a compensation under Article 9 of this well as improper performance, by those bodies law. or their officials, of their obligations established by legislation of the Republic of Armenia toward a foreign investor or SECTION 3 enterprises with foreign participation All the damages caused to foreign CREATION OF ENTERPRISES investors as a result of actions identified in WITH FOREIGN INVESTMENT Article 8 and Article 9, Par I of this law shall AND TERMINATION OF be subject to prompt compensation at current ACTIVITIES THEREOF. market prices or prices determined by independent auditors. This compensation shall Article 12. Foundation and Registration be paid either in the currency invested, or in any other currency mutually agreed upon by of an Enterprise with Foreign the parties. Investment. For the period from the moment of Enterprises with foreign origination of the right to compensation investment, their divisions, branches, through the moment of its execution, an representative offices and economic interest in the due amount of compensation associations of enterprises, shall be shall be calculated at current rates for deposit founded and registered in a manner accounts as established on the loan market of established by the Law of the Republic of the Republic of Armenia. Armenia "On Enterprises and Commercial Activities" and other legislation of the Republic of Armenia. Article 10. Disposal of a foreign Investor's Profits (Revenues) and Other Means. Article 13. Termination of Activities of A foreign investor's profits (revenue), an Enterprise with Foreign Investment. after paying taxes and other fees established by legislation of the Republic of Armenia, Activities of an enterprise with shall remain under his/her disposal. foreign investment, its divisions, branches, and representative offices shall terminate Foreign investors shall be entitled to in a manner and in cases provided by their open in the banks of the Republic of Armenia founding documents and legislation of the current and other accounts authorized by Republic of Armenia. legislation of the Republic of Armenia, in a manner established by that legislation. Foreign investors shall be entitled to use legally obtained means to acquire foreign currency or commodities on the domestic

26 Republic of Arm^n.a and by international treaties Regulations regarding the SECTION 4 certification of exported products, works and services as the private products of the CONDITIONS OF ACTIVITIES OF above mentioned enterprises shall be FOREIGN INVESTORS AND established by legislation of the Republic ENTERPRISES WITH FOREIGN of Armenia. INVESTMENT Products, works and services being imported for the needs of the above mentioned enterprises shall be recognized Article 14. Fields of Activities of Enterprises as their own in a manner established by with Foreign Investment. legislation of the Republic of Armenia. Enterprise with foreign investment may Profits (revenues), including conduct economic activity which complies currency, gained by the above mentioned enterprises from exportation of their own with the goals and objectives stated in its products, works and services, after charter and which is not prohibited by payment of taxes established by legislation legislation of the Republic of Armenia. of the Republic of Armenia, remains at the Certain economic activities, as defined disposal of those enterprises by legislation of the Republic of Armenia, may Exprotation and importation of be conducted by enterprises with foreign their products, works and services by investment only after obtaining a license in the enterprises with foreign investment shall established manner. be done on a basis generally established by legislation of the Republic of Arnmenia. Article 15. Customs Duties. Property imported by a foreign investor Article 17. Taxation of Enterprises with into the Republic of Armenia as the authorized Foreign Investment capital of a foreign investment enterprise, as Enterprises with foreign investment well as the property (raw materials, shall pay taxes and enjoy tax privileges in semifinished production, supplementary items, a manner established by legislation of the spare parts, etc.) intended for use in the Republic of Armenia. production process of such an enterprise, shall be exempted from customs duties. Article 18. Establishment of Privileges Property imported into the Republic of for Enterprises with foreign Investment. Armenia on an international contractual basis as a foreign investment shall be exempted Privliges established by this law from customs duties within the time-limits shall apply to those enterprises with established by the corresponding contracts. foreign investment where such investment Property imported into the Republic of is no less than 30 (thirty) percent at the Armenia by foreign employees of enterprises moment of foundation with foreign investment and intended for their For the purpose of drawing up the personal use shall be exempted from customs balance sheet and inventory, an enterprise duties. with foreign investment shall convert foreign currency into the national currency Article 16. Exportation and Importation of of the Republic of Armenia at the Products, Works and Services. exchange rate determined in accordance with Article 5 of this law and other Enterprises with foreign investment legislation of the Republic of Armenia. shall be entitled to export their own products, works and services for their own needs without any, license, with the exception of those cases defined by legislation of the

27 Article 19. Property Rights over Land and Article 24. The Settlement of Disputes. Other Natural Resources. All the disputes related to the The acquisition by foreign investors of foreign investments arised between foreign property rights over land and other natural investor and the Republic of Armenia are resources shall be registered by the relevant to be considered in the Courts of the legislation of the Republic of Armenia. Republic of Armenia in a manner established by the Legislation of the Article 20. Leasing of Property. Republic of Armenia. Disputes related to foreign investments in which the Republic Property may be leased to foreign of Armenia is not the interested party are investors and enterprises with foreign to be settled in the Courts of the Republic investment on the basis of lease contracts, in a of Armenia or other authorized bodies manner established by legislation of the settling economic disputes, and as well by Republic of Armenia. the mutual agreement by the Court of arbitration if it's not stipulated otherwise Article 21. Concession Contracts. by international treaties or by preliminary Any foreign investor shall be entitled agreement of disputing parties (in to exploit renewable and non-renewable constitutive documentations, economic natural resources on the basis of concession agreements etc) contracts signed by the foreign investor and the Government of the Republic of Armenia or Article 25. Foreign Investors' authorized governmental body, in a manner Responsibility and Obligations. established by the Republic of Armenia's legislation on concessions. Foreign investors are responsible Concession contracts may contain for the violation of the legislation of the exceptions from the legislation in force in the Republic of Armenia in accordance with Republic of Armenia. In such cases shall be this Legislation. subject to approval by the Supreme Council The property of the foreign (i.e. Parliament) of the Republic of Armenia. investor, including attracted means, property rights may be used for obligations Article 22. Rights on Intellectual Property. ensuring. Realization and protection of foreign Levon Ter-Petrosian investor's rights on intellectual property are The President of the Republic of provided by the Legislation of the Republic of Armenia Armenia. July 31, 1994 Article 23. Insurance of Property and Risk. Yerevan Insurance of foreign investor's property and risk is realized on his judgment if it's not stipulated otherwise by the legislation of the Republic of Armenia.

28 GOVERNMENT INSTITUTIONS Appendix 2

President of the Republic Ministry of Economy 26, Marshal Baghramian ave. 1, Government Building. Republic Square 375012. Yerevan 375010, Yerevan tel 520204 tel.: 527342 fax: 151152 fax: 151069 Chairman of the Parliament Govern, line: 6118 19, Marshal Baghramian ave. 375012, Ministry of Finance Yerevan 1, Melik Adamian str., tel 524614 375010, Yerevan fax: 529826 tel.: 527082 Govern, line: 6450 fax: 151154,523745 Prime-Minister Govern line: 6101 1, Government Building. Republic Square Ministry of Privatization and Foreign 375010, Yerevan Investments tel.: 520360 1, Government Building 375010, Yerevan fax 521274,525609 tel.: 520351 Govern, line: 6405 Ministry of Foreign Affaires Ministry of Industry 2, Government Building Republic Square 2, Government Building 375010, Yerevan 375010, Yerevan tel.: 512877, 520579 tel.: 523531 fax:151084,523564 Govern line: 6172 fax: 521796.527022 Ministry of Internal Affaires & National Ministry of Education and Science Security 13, Movses Khorenatsi str., 3 75015, 130 and 104, Nalbandian str. Yerevan 375015, Yerevan tel.: 524749; 526602 tel.: 560908. 529733. 525891 fax: 525317 fax 529388,151784 Govern, line: 6305 Govern line 5614,5416.6168 Ministry of telecommunications Ministry of Defence 28, Hanrapetutsian str, 30, Chaush str, Ashtarak highway 375010, Yerevan 375088. Yerevan tel 526632 tel.: 357881, 357830. 345675 fax: 538645 fax: 287203 Govern line: 5100 Govern line: 5383 Ministry of Culture, Youth and Sports Ministry of Public Health 5, Tumanian str., 8, Tumanian str., 37'500 I.Yerevan 375001, Yerevan tel.: 561920 tel.: 582413 fax, 523922 Govern line 6177 fax: 151097; 562923 Ministry of Justice Govern line: 6166 8. Khorrdaranayin str., Ministry of Energy 375010, Yerevan 2, Government Building. Republic Square tel.: 582157 375010, Yerevan fax: 582449 tel.: 521964 Govern, line: 6171 fax: 526365 Govern line 6126

29 Ministry of Construction fax; 529443 3, Government Building. Republic Square Govern line: 5447 375010, Yerevan State Administration for Statistics, State tel.: 589080 Register and Analysis 3, fax; 523200 Government Building, room 616 375010. Govern line: 5772 Yerevan Ministry of Social Security tel 524516,524600 69, Terian str., fax: 521021 375009, Yerevan Govern, line: 6255 tel.: 526831 State Tax Administration fax 151920 3, Movses Khorenatsi str., Govern line: 5182 375015, Yerevan Ministry of Trade, Services and Tourism tel.: 538313,538101 28, Hanrapetutsian str., fax; 151967 375010, Yerevan Govern line: 5951 tel.: 538081,538321 ArmPatent. State Patent Office fax: 538645,538321 3, Government Building, 6th floor Govern line 6134 375010, Yerevan Ministry for Environment Protection tel: 520673,561136 37, Moscovian str., fax:580631, 161126;151823 375002, Yerevan State Administration for Standards, tel.: 530741 Metrology and Certification fax: 534902:538613 49/2, Komitas ave. 3 7505 I.Yerevan Govern line: 6534 tel.: 235600; 234597 Ministry for Transportation fax: 285620 l0.Zakian str, State Customs Department 375015, Yerevan 35, Moscovian str., tel.: 563391 375010, Yerevan fax: 525268 tel: 533538,531831;533552;534073 , Govern line: 6121 fax 533538 Ministry of Agriculture Govern line: 6220, 6043; 6734 48. Nalbandian str., State Privatization Commission 375010, Yerevan 3, Government Building, 2nd floor tel.: 520321,524641 375010, Yerevan fax: 523793 tel: 589323 Govern line: 6555 fax: 151794; 565962 Minister for Regional Management and Board of Privatization and Inventory of Administration State Property 10, Republic Square 4, Tigran Metz ave, 4th floor, room 7 375010. Yerevan 375010, Yerevan tel.: 555274 tel.: 589101, 589782 fax: 529443 fax: 587103 Govern line: 6953 State Subscription Center State Administration for Extraordinary 8, Sayat Nova str, 375001, Yerevan Situations tel.: 521560 25, Pushkin str, 375010, Yerevan tel.: 531612

30 Appendix 3 Main Administration for Civil Aviation and BANKS Armenian Airlines Zvartnotz" airport 375042, Yerevan Central Bank of Armenia tel.: 270864,225444 6, Nalbandian str., fax: 151393 3 75010, Yerevan Govern. Line: 6569 tel 583841,583902;580052,561440 State Administration for Railroads fax:560441,561460;151107 50, Tigran Metz ave 375005, Yerevan Govern, line: 6267 tel.: 520428; 573234; 573630 fax: 573630 Commercial Banks Govern line: 6293 Armimpexbank State Administration for Television and 2, Nalbandian str., Radio 375010, Yerevan 5, Aiek Manukian str., tel.: 589906; 589518, 564617 375025, Yerevan fax: 565958 tel: 555033, 652332;558021 ArmAgrobank fax: 551513 7a, Movses Khorenatsi str., Govern line: 6272, 6756 375015, Yerevan Armenpress State Information Agency tel./fax: 534342 28, Isahakian str., 4th floor ArdShinbank 375009, Yerevan 3, Deghatan str, tel.: 526702; 526692; 526672; 526682 375010, Yerevan fax: 529262 tel.: 560616; 528513 Govern, line: 6271 fax: 151155 Constitutional Court ArmEconombank 10, Marshal Baghramian ave. 32, Garegin Njdeh str, 375019, Yerevan 375026, Yerevan tel.: 588133 tel:440511;447680 . State Arbitrage fax: 562705 18, Paronian str., ArmSnundbank 375015, Yerevan 4, Spendiarov str., tel,: 532411 375002, Yerevan Govern, line 6518 tel: 536220 Supreme Court of Armenia fax: 563220 6, Khorrdaranayin str., Aviabank 375010, Yerevan l,Sevakstr., tel.: 563594; 583231 375014, Yerevan Govern, line: 6181 tel:288857 fax: 281940 State Chief Prosecutor 6, Khorrdaranayin str., Akunkbank 375010, Yerevan 19a, Koryun str., 375009, Yerevan tel.: 580001; 583241, 585161 tel. 520792, 526357 Govern, line: 5615 fax: 526867 Arminvestbank 13, Vardanian str., 375010, Yerevan tel.: 570502; 570350 fax: 523718

31 Anelikbank Echobank 4, Hratchia Kochar str., 36, Avetisian str., room 31 375033, Yerevan 375012, Yerevan tel.: 221451; 221320, 226526; 228717, tel.: 271500; 271510,261256 226521; 226955 fax:271510;262900 fax: 226581 Elitabank 74, Avetisian str. Govern, line: 6949 375033, Yerevan Bank for Reconstruction and Development tel.: 220223, 223478, 223457, 226163, 31, Moscovian str., 375002, Yerevan .221273 , tel.: 531832 fax: 226163 Govern line: 5139 Felixbank Adanabank 3, Marshal Baghramian ave. 5, Nalbandian str, 375012, Yerevan 375010, Yerevan tel.: 589062, 280702 tel: 585980,567109;583864;(3743) 907157 fax: 280702 fax: 585980 Gladzorbank Aregbank 1/8, Charents str. 5, Aiek Manukian str., 375025, Yerevan 375025, Yerevan tel.: 558951; 551440 tel: 576750; 551515 Capitalbank fax: 576115 38a, Bagratuniats str., 4th Side str., 375106, Garnibank Yerevan .20, 40 Hakhtanaki Anniversary str tel.&fax: 484610 Abovian Conversebank tel.: (3 7461)213 34 49, Komitas ave. 375051, Yerevan Gevorgbank tel.: 281015; 236897; 235993 11, Hanrapetutsiari ave. Abovian fax: 285082 tel.: (37461)25877 Credit-Servicebank Haykhnaybank (Savings bank) 6, Shahumian str., room 45 28a, Movses Khorenatsi str. 375065, Yerevan 375018, Yerevan tel.: 772962; 775142; 522619; 530058 ' tel: 520458; 580451; 581101; 564925; fax: 770410, 522619 560725; 567664 Credit-Yerevan bank fax: 560766 2/8, Vramshapouh Arka str., Haykapbank 375010, Yerevan 22, Sarianstr., 1st floor tel.: 589065 375002, Yerevan fax: 580083 tel: 532080;532935; 538588 Davidbank fax: 536746 16, Kievian sir, room 609A 375028, Yerevan Hrazdanbank tel.: 262831, 262882, 277710, 391140 8, Spandarian str. fax: 353900 Hrazdan Erebunibank tel.: 23513 13, Tikhi Don str. 375087, Yerevan Inkobank tel.: 577249; 577256 14, Pushkin str. fax: 470980 375010, Yerevan tel.: 566754; 563725; 560751, 565974 fax:563725; 560751

32 Lendbank EMBASSIES of FOREIGN 4, Leningradian str. COUNTRIES IN ARMENIA 375038. Yerevan tel.: 399060 Embassy of Arab Republic of Egypt fax: 340273 72, Pionerakan str. Mellatbank Hotel "Hrazdan", 4th floor 1, Pavstos Byuzand str. 375002, Yerevan 375010, Yerevan tel.: 537304,530153,524522 tel : 581354, 581791; 581523, AT&T:151810 fax: 151160 fax: 151811 Govern, line: 5362 Menatepbank Embassy of Canada 19a. Koryun str., 8th floor 5, Marshal Baghramian ave, room 24 375009, Yerevan 375012, Yerevan tel: 529471;529572;520883; 529471 tel 526833 fax: 529572 fax 151866 Medzbank Embassy of China 12, Arshakuniats str. 12, Marshal Baghramian ave. 375023, Yerevan 375012, Yerevan tel./ tel: 560067,561234 fax:525310 fax: 151143,151125 Midlandbank Armenia Govern, line: 6361 1, Vramshapouh Arka str. Embassy of France 375010, Yerevan 8, Grigor Lusavorich str. tel.: 589518 375010, Yerevan fax: 151813 tel.: 561103 Govern, line: 5712 fax: 151105 Prometeusbank Embassy of Georgia 19, Hratchia Kochar str. 5, Nalbandian sir 375012, Yerevan 375001. Yerevan tel.: 273000; 273110 tel. 564357 fax: 274818 Embassy of Federal Republic of Riabank Germany 12a. Koryun str. 72, Pionerakan str 375009, Yerevan Hotel "Hrazdan". 7th floor tel.: 560132; 585536 375002, Yerevan Agrobank tel.. 536774; 536075; 536276; 536773 5, Yerevanian str. fax 151112 374814,Yeghvard telex: (64)243 138 AAERISU tel.: 280626 Govern, line: 5668 fax: 23645 Embassy of Greece Sipanbank 72, Pionerakan str., 5th floor 37, Mashtots ave. 375002, Yerevan Hotel "Hrazdan" tel.: 532601,534722; 536758 375002, Yerevan fax: 532601 tel: 530051, 537103 fax: 151170 Govern, line: 5895

33 Embassy of Great Britain and North INTERNATIONAL Ireland ORGANIZATIONS Hotel "Armenia", 6yh floor, room 619 375010, Yerevan Armenian office of the UN tel.: 580698,569619 14, Karl Libknekht str. Embassy of Islamic Republic of Iran 375001, Yerevan 1, Budaghian str. tel.: 566073; 560212; AT&T151452 37505 I.Yerevan fax:151453 tel:235833;529830;223320;280457 Govern, line: 7073 fax:151385 UNDHA. Armenian office of the UN Govern, line: 5743 Humanitarian Aid Embassy of Russian Federation 14, Karl Libknekht str. 72, Pionerakan str. 375001. Yerevan Hotel "Hrazdan", 3th floor tel.: 562355 375002, Yerevan fax 151749 tel.: 524522; 524446; 521378 UNDP. UN Program for Development fax: 521378 14, Karl Libknekht str. Govern line: 6046; 6625; 5237 375001. Yerevan Embassy of Ukraine tel 583194, 560340. AT&T: 151451 14, Zarobian str. fax 151452, 151453 375012, Yerevan Govern line 7073 tel.: 583116 UNICEF. UN Children's Fund Embassy of the United States of America 14. Karl Libknekht sir. 18, Marshal Baghramian ave 375001.Yerevan 375012, Yerevan tel.: 534783; 566497, tel.: 524661:527001; AT&T: 151550 580174,'AT&T:151698 fax 151138 fax: 151727 Govern, line: 5710 UN DPI. Armenian Office of the UN Public Information 14, Karl Libknekht str. 375001. Yerevan tel.: 560212, AT&T: tel /fax: 151647 UNCHR. Armenian Office of the Commission for Refugees Problems 14, Karl Libknekht str. 375001, Yerevan tel 530945; 537643, AT&T: 151451 fax 151450 Govern line 5206 UNWFP. UN World Food Program 14. Karl Libknekht str. 375001. Yerevan tel; 580538. 532358; AT&T:151572 fax: 151725 Govern, line 5934 INFOTERRA. UN Environment Program. Armenian Focal Point 49/3, Komitas ave.

34 375051, Yerevan ARMENIAN EMBASSIES IN tel. 236774:238027 FOREIGN COUNTRIES E-mail: [email protected] IFRC. International Red Cross Federation Embassy of the Republic of Armenia in 96, Djrashat str. Argentina 375019. Yerevan Avda Pte Rouge Saenz Pena 570, Piso-3 tel.: 522253. 561889; 1035, Buenos Aires/Argentina AT&T: tel/fax: 151791 tel.: 5413452051/3451282/345-2087; Govern line 5813 fax: 5413432467 ICRC. International Red Cross Committee Embassy of the Republic of Armenia in 41,0rbeli str Austria and Hungary 375028, Yerevan Neubahngasse 12-14/1/16 tel.: 273152, AT&T: 1070, Vienna/Austria tel./fax: 151092 tel.: 4315227479/5227980; Govern line: 5048 fax: 4315227981 WB. Representative Office of the World Embassy of the Republic of Armenia in Bank in Armenia Belgium Khorrdaranayin str. 15,7 Franz Merjay str. 375010, Yerevan B 1060, Brussels/Belgium tel : 520992, AT&T: 151686 tel./fax: 3223465667 fax: 151787 Embassy of the Republic of Armenia in Govern line 5060 Bulgaria IOM. International Organization for 20, April str. Migration 11.1606, Sofia/Bulgaria 14, Karl Libknekht str. tel./fax: 3592526046 375001, Yerevan Embassy of the Republic of Armenia in tel 585692; AT&T: Egypt and Morocco tel./fax: 151827 12, Lufti Hassuna Dokki Govern line 5508 Cairo/Egypt IMF. Armenian Office of the International tel:2023605625 Monetary Fund fax:2026300317 1, Melik-Adamian str. Embassy of the Republic of Armenia in 375010, Yerevan France tel.: 528532; 528960, AT&T: tel. 151704; 9, rue Viete tel./fax: 151700 75017, Paris/France Govern line: 5216 tel: 33142129800 fax: 33142129803 Embassy of the Republic of Armenia in Georgia 1, Dzitatze passage, Zonkatze 17 Tbilisi. Georgia tel.: 8832985535 fax: 8832990126 Embassy of the Republic of Armenia in Germany Viktoriastr. 15 3173, Bonn/Germany tel:49228352903

35 Embassy of the Republic of Armenia in Embassy of the Republic of Armenia in Great Britain and Ireland Turkmenistan 25A, Cheniston Gardens, Hotel "Yourileynaza", room 3.02 London W8 6TG, United Kingdom 6, Tegueranskaya sir tel.: 441719384514, 9385435 744012. Ashkhabad/Turkmenistan fax:441719382595 tel; 83632244812 Embassy of the Republic of Armenia in Embassy of the Republic of Armenia in Greece Ukraine 159, Sygrou Avenue, 1st floor, 17121 N. Hotel "Moskva", rooms 806/807 Smyrni 4, Instituskaya str. Athens/Greece Kiev/Ukraine tel/fax 3019345727 tel./ fax: 80442290806; 2290807 Embassy of the Republic of Armenia in Representative Office of the Republic of Islamic Republic of Iran Armenia in Geneva 1, Ostad Shahriar/Former Arfa str. 64, Route de Troinex-CH 11-1256 Troinex Corner of Razi, Jomhouri Eslami Aye, Geneva/Switzerland Teheran/Iran tel.; 41223004500 tel.: 9821674833 fax:41223004515 fax:9821670657 Embassy of the Republic of Armenia in Embassy of the Republic of Armenia in the United States of America Kazakhstan 1660L Street. NW, N210 579, Seifoulini ave. Washington D.C. 20036/LSA 80075 Alma Ata/Kazakhstan tel 12026285766 tel., 3272692932 fax: 12026285769 fax: 3272692908 Embassy of the Republic of Armenia in Lebanon Beirut tel.: 9611412733 fax:9611402952 Embassy of the Republic of Armenia in Romania and Moldova Bucarest, Calotestin 1, apt. 5 tel:4013215679 fax: 4013215930 Embassy of the Republic of Armenia in the Russian Federation 2, Armyanski per. Moscow 101000 tel: 0959241269 fax:09592445; 9283384 Embassy of the Republic of Armenia in Syria Adnan Maliki. Ibrahim Hananu Damascus/Syria tel./fax: (9631)13711757; (9631)13732902 Consultant in Aleppo tel/fax: (9632)1711360

36 HOTELS

Hotel "Armenia" "•**** Hotel "Ani" *** 1, Vramshapouh Arka str. 19, Sayat Nova str. 375010, Yerevan 375010, Yerevan tel 525393,528323 tel.: 520775, 582638, 520724 fax 151803 fax: 151528 Govern, line; 6656 Hotel "Dvin" *** Hotel "Hrazdan" **** 40, Paronyan str. 72, Pionerakan str. 375002, Yerevan 375015. Yerevan tel.: 536343; 534864 tel: 535332; 535302 fax:151528 fax: 537095 Hotel "Erebuni" *** (reservations require governmental 26/1, Nalbandian str. permission) 375010, Yerevan Hotel "Bass" (private) tel.: 564943; 584834; 583815; 560278 3, Aygedzori str. Yerevan Govern, line: 5227 tel.: 221353; 264156; 261080

RESTAURANTS & CLUBS

"Dzoragyugh" 375010, Yerevan 1, Paronyan str. tel.: 523407; 521744 375015, Yerevan "Paris" tel.: 537670; 527798 1, Melik-Adamian str. "Krakov" 375010. Yerevan 29, Tumanian str. tel: 526914 375009. Yerevan "Manhattan" tel.: 562020 375002, Yerevan "Ararat" tel: 562125,587755 Republic Square Bar "Moscow" (Russian cuisine) 375010. Yerevan 18, Abovian str tel : 527382 375001, Yerevan "Sunk" tel : 580883,525289 11 a, Kievian str. "Royal-Club" 375028, Yerevan 60. Chelyuskin str. "Kara" 375002, Yerevan 23, Koriyun str. tel: 580000 375009, Yerevan "Downtown Jazz Club" "Armenian Kitchen" 3, Pushkin str. 29, Telman str. 375010, Yerevan 375000, Yerevan "Tavush Music Club" tel 424202 7e, Kotchar str. "Pekin" 375033, Yerevan 5, Vramshapouh Arka str. tel.: 553366,555922

37 Armenian Research Institute for Scientific and Technical Information (ArmNIINTI) offers information services, makes publications of works from technical and applied sciences, different branches of national economy, medicine and so on.

Our address: 49/3, Komitas ave. 375051, Yerevan tel. 236774; 238747 E-mail; [email protected]

The Republican Scientific and Technical Library (RSTL) of Armenia is a depository of the unique funds of patent information from 50 countries of the world, technical standards, industrial equipments and products' Catalogues; as well as books, nwspapers, magazines of all branches of science and technics, industry and agriculture, marketing, accounting, hanking, economy, computer engineering and so OH. RSTL provides the individual readers and organisations with scientific and technical literature and documentation on subscription and in reading-room; makes copies, technical selections and bibliographical information; weekly exhibitions of latest publications, and renders methodical service to scientific and technical libraries. Please, visit us! RSTL works every day, except Sundays from 9 AM to 7 PM. In Saturdays -from 10 AM to 3 PM tel.: 236166; 235620; 237102

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