Artsakh Investment Guide Republic of Artsakh – Country overview General information Area: 4 457 sq. miles (11 500 sq. km) Population: 148 100 people Life expectancy: 74,2 years Official language: Armenian Capital: Stepanakert Communities Regions Literacy: 100% 251 (363 villages) 7 regions Currency (code): Dram (AMD) Totally 263 Totally 8 Borders with: Armenia, Iran, Azerbaijan 13 (+ Stepanakert) Stepanakert Energy system: 100% renewable energy Main indicators of social and economic situation GDP, billion AMD Per capita, mil AMD Specific economic results, billion AMD 2013 2014 2015 2015 209,3 2015 1,4 44,3 52,0 53,5 2014 188,8 2014 1,2 2013 168,6 2013 1,1 55,2 57,3 64,3 0 100 200 300 0 0,5 1 1,5 45,2 49,7 50,1 Import / Export, mil USD Trade turnover, billion AMD 252,5 2015 62,1 113,5 116,3 116,3 Investments in real assets, billion AMD 302,0 2014 64,7 56,2 59,5 68,0 Consumer price index, % 268,8 2013 59,6 105,9 104,5 100,2 0 50 100 150 200 250 300 350 Labour market overview Education Labour market Economically active population, thou people Number of employed people, thou / year 64 63,6 62,5 62,2 63,4 5 Universities 63,5 62 63 61,5 61 62,5 61 62 61,6 60,5 60,1 61,5 60 4 758 students 61 59,5 60,5 59 2013 2014 2015 2013 2014 2015 Registered unemployment, thou people Average monthly wages, thou AMD 3 2,6 155 151,1 2,5 150 145 141,2 2 5 Colleges 1,5 140 1,5 1,2 135 128,6 1 130 125 0,5 120 0 115 2013 2014 2015 2013 2014 2015 1 648 students The official unemployment rate in 2015 = 1,9% (4% in 2013) Investment data The dynamics of investments realized in real assets, mil AMD The structure of investments by sectors, 2015 Other 6 628,7 Transport and 8,0% 2015 communications 68 005,3 16,7% Industry 39,4% 9 838,9 2014 59 476,8 2 009,1 2013 56 162,7 Agriculture 2,1% Construction 0 10000 20000 30000 40000 50000 60000 70000 80000 33,8% Foreign investments Total investments Companies establishment and licensing procedure Licensing procedures and prices 3 types of legal entities Annual rates of state fees Activities Type of license • JSC (joint-stock company) private and public AMD USD • LLC (limited liability company) Urban development Capital construction by civil, • JVC (joint venture company) general and limited transportation, hydro technical, energy Complex 100 000 211 and communication Simple license Complex license Food production Distilled alcoholic drinks Simple 50 000 – 3 000 000 105 – 6 320 The license is granted on the basis The license granted without a term and of the ruling of the Licensing Wine, cider, other fruit / berry wines Simple 25 000 53 ruling of the Licensing Committee Committee Beer Simple 100 000 211 Granted by the Artsakh Republic Granted by the corresponding Ministry of Finance within 5 working authorized state bodies within 23 Agriculture days after submitting the required working days after submitting the Production of bio drugs for veterinary Complex 100 000 211 documents required application purposes Production of cultivated grain seeds Complex 30 000 63 Average cost of company establishment (including corn) Procedure Price in AMD Price in USD Energy Registration of trade Construction and repair of electric 17 000 36 Complex 50 000 – 6 000 000 105 – 12 640 company power stations, production of electricity Minimal authorized capital Construction and repair of thermal Not assigned Complex 50 000 105 (trade company) stations, production of thermal power Registration of company’s Communication 5 000 – 12 000 11 – 25 movable property Operation of public electronic Complex 100 000 – 600 000 211 – 1 264 communication network State registration of rights to Provision of data transmission and movable property (except 30 000 – 60 000 63 – 126 Simple 20 000 42 Internet access services agricultural purposes) Healthcare State registration of rights to 5 000 – 10 000 11 – 21 land for agricultural purposes Production of drugs Complex 200 000 421 Taxes and investment allowances Investment allowances -100% during the first 3 years 100 tax Indirect ≥ million -50% during the next 3 years Excise tax = depending on AMD but not more than 10% of the volume Payments Profit total cost of the investment. VAT = 20% Payments for construction, repair and maintenance of roads Investments in the charter capital of a resident at the moment of Automobile transportation services = 2% state registration or during the following three years except for credit The mining industry = 1% companies, banks, insurance and reinsurance organizations, Other activities = 0,4% professional participants of security market, pawnshops, persons Direct Payments for the use and protection engaged in the foreign currency purchase and sale, broker-dealer of natural resources purchase, sale of foreign currency. Income tax Wage and salary = 21% Taxes are not imposed on: Reimbursement of value added tax: Insurance contributions of foreigners = 5% Interest received = 5% Royalty from not private entrepreneurs = 6% Agriculture Legal entities and individuals engaged in Profit tax (residents 10%, others = 20%) processing of agricultural products in the Simplified tax regime for Property tax (evaluated cadastral value) Artsakh Republic are reimbursed the certain types of activities Social and productive structures = 0,3% Trade tax (3% of sales turnover) Carpet amount of value added tax from the sale Residential buildings = 0% – 0,8% Fixed payments production of these products paid to the AR budget. Land tax (evaluated cadastral value) Patent payments Net income for agricultural land = 10% Dividends received by individuals (including foreign ones) are not For non-agricultural land = 0,5% – 1% subjected to taxation. Overview of Artsakh logistics sector 4 m market + EU and USA NORTHERN ROAD Stepanakert – Vardenis – Sadakhlo 393 km TO GEORGIA *Connected to the Armenian railway CENTRAL ROAD Stepanakert – Goris – Yerevan 329 km 3 m market + EAEU TO ARMENIA *Connected to the Armenian railway SOUTHERN ROAD Stepanakert – Hadrout – Agarak 213 km TO IRAN STEPANAKERT INTERNATIONAL AIRPORT Runways 1 unit Length 2,2 km 77 m market + India and China Surface Asphalt Stepanakert city Regional economy vs National economy 100% Territory 29,1 km² 80% 60% 83,20% 40% 74,80% Population 55 800 people 49,70% 29,40% 20% 2,10% 0% Industry Agriculture Construction Retail Service Communities 1 Educational establishment Political and economic center of Rivers Karkar Artsakh Preschool educational Schools and Higher educational establishment colleges establishment 7 21 7 Main road Stepanakert – Yerevan Medicine Transport system Central road Ivanian Airport 11 km from Mountains Artsakh mountains Stepanakert Hospitals Doctors Other personnel 9 271 658 Height, m. 850 above the sea level Investment opportunities Arable lands 508,9 hectares Food production, shoes and textile production, services, consulting, IT and Programming, assembling of technical equipment, stones processing, alcoholic drinks, juice, furniture. Askeran region Regional economy vs National economy 100% Territory 1 191,4 km² 80% 60% 40% Population 18 120 people 20,60% 5,70% 3,80% 2,80% 20% 2,50% 0% Communities 42 (1 city and 41 rural) Industry Agriculture Construction Retail Service Regional center Askeran (2 298 people) Establishments Tigranakert Rivers Karkar, Kolatak, Badara I century BC Historical heritage Main road Stepanakert – Yerevan Transport system Central road Tatik Papik 1967 Schools and Hospitals and First-aid posts National monument of colleges rural ambulatories Agriculture Grain, potato, vegetables Artsakh 35 5 38 Industry Food processing, winery, beverages production Investment opportunities Metallurgy, stones processing, wood processing, eco tourism, production of technical Metallic Copper, Molybdenum Non-metallic Limestone, loam, copal, equipment, production of construction materials, agriculture, dried, frozen and canned food gravel, basalt, porphyrite production. Hadrut region Regional economy vs National economy 100% Territory 1 876,8 km² 80% 60% Population 13 507 people 40% 15,10% 3,30% 3,20% 3,00% 20% 1,70% 0% Communities 30 Industry Agriculture Construction Retail Service Regional center Hadrut (3 872 people) Arable lands share Kataro Monastery (IV century), Ktesh Monastery (VIII century), Rivers Karkar Hadrut region 20% Ochti Drni Monastery (VII century) Historical and religious heritage Main road Hadrut – Agarak Transport system Southern road Azokh Cave Other Living site of a stone-age man regions Historical heritage 80% Mountains Dizapait (2 480 m) Investment opportunities Metallic Copper, Iron ore Tourism, wood processing, organic agriculture, natural resources processing, cattle farming, Non-metallic Limestone, loam, copal, production of construction materials, mining, wine making, grain and vegetables production, gravel, felsite, porphyrite cheese making. Martakert region Regional economy vs National economy 100% Territory 1 795,1 km² 80% 60% Population 20 400 people 40% 42,80% 26,60% 6,00% 11,90% 20% 2,80% 0% Communities 43 Industry Agriculture Construction Retail Service Regional center Martakert (4 600 people) Region's share in Artsakh energy Gandzasar Monastery production, mln kW / 2015 XIII century Rivers Tartar, Khachen, Kolatak Cultural and religious heritage Reservoir Sarsang Martakert 39% Main road Vardenis – Martakert Transport system Northern road Totally Schools and Hospitals and First-aid posts 61% colleges rural ambulatories Mountains Mrav mountain range 38 8 37 Forests 50% of Artsakh’s forests Investment opportunities Metallurgy, energy production, fishery, wood processing, mountain