YEREVAN -- Armenian President Serzh Sarkisian has announced that companies and entrepreneurs that launch innovative manufacturing operations in the country will be eligible for major tax breaks, RFE/RL's Armenian Service reports.
At a meeting with members of leading business associations in Yerevan on April 8, Sarkisian reaffirmed the government's pledge to improve the business environment in Armenia. He said the government will also draft fiscal measures to encourage job creation.
"I want to declare to everyone here that that any manufacturing operation that will be set up in the republic on an innovative basis...to put it simply, if it manufactures something that is not manufactured in the republic today, we as a state are ready to help it by all possible means," Sarkisian said. "We are ready to give tax privileges in the first instance.
"For instance, we are ready to exempt [those manufacturers] from profit tax for three to four years and postpone the payment of value-added tax (VAT)," he said. "We are ready to give other assistance."
The government already selectively delays the collection of VAT from industrial equipment imported by local firms. This privilege is not automatic and has to be approved by the ministerial cabinet on a case-by-case basis.
Under Armenian law, the rate of corporate income tax is fixed at 20 percent for all businesses.
Many businesses, especially large and lucrative firms owned by tycoons with ties to the government, have long been suspected of underreporting their earnings. Proceeds from profit tax accounted for less than 15 percent of the government's total tax revenues last year.
Sarkisian met with entrepreneurs at one of three industrial enterprises in Yerevan that he visited on April 8. He has shown a keen interest in economic affairs in the past month, discussing them with central and regional government officials and inspecting businesses around the country. Some observers link this activity with renewed opposition demonstrations.
Sarkisian told Prime Minister Tigran Sarkisian and other top officials on March 11 to adopt a more hands-on approach to economic development. He said it is essential for speeding up GDP growth and easing hardship in Armenia.