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Executive Summary

Located in the Caucasus region between Asia and Europe, Armenia has a highly educated workforce and the Government of Armenia (GOA) officially welcomes foreign investment. In 2015, Contour Global acquired the Vorotan Hydroelectric Cascade, a major U.S. investment in Armenia’s energy generation sector. In 2016, Lydian International benefited from the largest U.S. private equity investment in Armenia from Orion Mine Finance and Resource Capital Fund for its Amulsar gold project. However, Armenia’s investment climate poses several serious challenges through its small market (Armenia has a population of less than three million); relative geographic isolation due to closed borders with Turkey and Azerbaijan; per capita gross national income (GNI) of about USD 3,900; and high levels of corruption. It has been two years since Armenia formally entered the Eurasian Economic Union trading bloc, a single economic market of 176 million people between Armenia, Belarus, Kazakhstan, Kyrgyzstan, and Russia. In May 2015, Armenia signed a Trade and Investment Framework Agreement (TIFA) with the United States. The TIFA establishes a United States-Armenia Council on Trade and Investment to discuss bilateral trade and investment and related issues and examine ways to strengthen the trade and investment relationship between the two countries, though little progress has been registered so far.

Armenia does not limit the conversion and transfer of money or the repatriation of capital and earnings, including branch profits, dividends, interest, royalties, and management or technical service fees. However, there are now differences in dividend taxes between foreign and domestic entities (5% for Armenian nationals and 10% for non-nationals including U.S. citizens) under a provision of the new tax code. The provision entered into effect January 1, 2017 for non-nationals and will enter into effect January 1, 2018 for Armenian nationals. The banking system in Armenia is sound and well-regulated, but Armenia’s financial sector is not highly developed. Foreign individuals who do not hold special residence permits cannot own land, but may lease it; companies registered by foreigners in Armenia as Armenian businesses have the right to buy and own land. There are no restrictions on the rights of foreign nationals to acquire, establish or dispose of business interests in Armenia. The U.S.-Armenia Bilateral Investment Treaty (BIT) provides that if a dispute arises between an American investor and the Republic of Armenia, the investor may choose to seek remedy through binding international arbitration. Although Armenian legislation complies with the Trade Related Aspects of Intellectual Properties (TRIPS) Agreement and offers protection of intellectual property rights (IPR), enforcement efforts and recourse through the courts still require improvement.

The Armenian regulatory system lacks transparency. Major sectors of Armenia’s economy are controlled by well-connected businesspeople enjoying government-protected market dominance. Corruption remains a significant obstacle: although the government has introduced a number of reforms over the last few years, and the overall investment climate seems to be incrementally improving, corruption remains a problem in critical areas such as the judiciary, tax and customs operations, health, education, military and law enforcement. Tax and customs procedures, while having recently improved, still lack transparency. Although the use of reference prices during customs clearance has reduced, it is still not uncommon to see manipulation of the classification of goods that increases costs for economic operators. The court system lacks independence, making it an unreliable forum for resolution of disputes.

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2016 113 of 176
World Bank’s Doing Business Report “Ease of Doing Business” 2017 38 of 190
Global Innovation Index 2016 60 of 128
U.S. FDI in Partner Country ($M USD, stock positions) 2015 1
World Bank GNI Per Capita 2015 3,880

Policies towards Foreign Direct Investment

The GOA officially welcomes foreign investment; the country has received improved and respectable rankings on some global indices measuring the business climate. Armenia’s investment and trade policy is relatively open; foreign companies are entitled by law to the same treatment as Armenian companies (national treatment). Armenia has strong human capital and a well educated population, particularly in the Science, Technology, Engineering and Math (STEM) field. The high-tech and information technology (IT) sectors have in particular attracted foreign investment. Many international companies have established branches or subsidiaries in Armenia to take advantage of the country’s pool of qualified specialists. However, Armenia’s investment climate poses several challenges as a result of its small market (Armenia has a population of less than three million); relative geographic isolation due to closed borders with Turkey and Azerbaijan; per capita gross national income (GNI) of about USD 3,900; and high levels of corruption. Foreign businesses must frequently contend with non-transparent tax and customs procedures that increase costs; the application of reference prices and misclassification of imported goods during customs clearance prevents a level playing field for all businesses.

Major sectors of Armenia’s economy are controlled by well-connected businessmen enjoying government-protected market dominance, creating barriers to new entrants. The Armenian government is perceived to have on occasion deployed government agencies, including the tax and customs services, for political motives. The seemingly open legislative framework and the government’s visible effort to attract more foreign investment are complicated by instances of alleged unfair tender processes and preferential treatment. The state’s failure to ensure full investigations into abuse and poor judicial review has undermined the government’s assurances of equal treatment and transparency. However, in 2011 the Republic of Armenia became the first country among the Commonwealth of Independent States (CIS) to accede to the WTO’s Government Procurement Agreement (GPA 1994). Armenia joined the GPA 2012 version in June 2015. Currently the Armenian Government is revising the Law on Foreign Investment to modernize it and strengthen the protection of foreign investors.

The Development Foundation of Armenia (DFA) is Armenia’s national authority for investment, export and tourism promotion that provides services and information to foreign investors on business climate, investment opportunities and the legislation, support for investors’ visits, as well as liaison with governmental institutions. More information about the legislation, procedures and registrations can be obtained from DFA (  , E-mail: ;  ).

Limits on Foreign Control and Right to Private Ownership and Establishment

There are no limitations on foreign ownership and control of commercial enterprises. There are also no sector specific restrictions.

The Armenian government does not screen foreign direct investments.

Other Investment Policy Reviews

Armenia has not undergone Investment Policy Reviews by either the Organization of Economic Cooperation and Development (OECD) or the UN Conference on Trade and Development (UNCTAD). The World Trade Organization (WTO) conducted a Trade Policy Review in 2010, which can be found at .

Business Facilitation

Companies can register electronically at . This single window service was launched in 2011 and allows individual entrepreneurs and companies to obtain the name reservation, business registration and tax identification at a single location and at the same time. The legal time limit for the process is two working days, but the application may be dealt with in one day. However, electronic signature is needed in order to be able to register online. Foreign citizens can obtain an e-signature and more detailed information from the e-signature portal at Companies in Armenia are free to open and maintain bank accounts in foreign currency and there are no minimum capital requirements for foreign or domestic companies.

Outward Investment

The Armenian Government does not restrict domestic investors from investing abroad.

Provisions regulating American investments are set by the U.S.-Armenia Bilateral Investment Treaty (BIT) in force since 1996, and by the 1994 Law on Foreign Investment. The U.S. – Armenia BIT sets forth requirements for treatment of investors of each party to be no less favorable than for national investors (national treatment) or for investors from any third state (most favored nation), as well as providing the option of international arbitration in the case of investment disputes. Armenia has BITs in force with 36 countries: the U.S., Argentina, Austria, Belarus, Belgium, Bulgaria, Canada, China, Cyprus, Egypt, Finland, France, Georgia, Germany, Greece, India, Iran, Italy, Israel, Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania, The Netherlands, Luxembourg, Romania, Russia, Spain, Sweden, Switzerland, Syria, Ukraine, the United Kingdom, Uruguay, and Vietnam. According to the U.N. Conference on Trade and Development (UNCTAD), Armenia has also signed BITs with Iraq, Jordan, Kazakhstan, Qatar, Tajikistan, Turkmenistan, and United Arab Emirates, but these agreements have not yet entered into force. Armenia is a signatory of the CIS Multilateral Convention on the Protection of Investor Rights.

Armenia became a member of the Russia-led Eurasian Economic Union (EAEU) in January 2015, together with Russia, Belarus, Kyrgyzstan and Kazakhstan. As an EAEU member, Armenia is currently engaged in negotiations on temporary free trade agreement between the Eurasian Economic Union and Iran.

There is no free trade agreement between the U.S and Armenia; however, the U.S. includes Armenia in its Generalized System of Preferences program. Also, in May 2015, Armenia signed a Trade and Investment Framework Agreement (TIFA) with the United States. The TIFA establishes a United States-Armenia Council on Trade and Investment to discuss bilateral trade and investment and related issues and examine ways to strengthen the trade and investment relationship between the two countries.

Tax Treaty: Armenia does not issue foreign tax credits and does not recognize the existing 1973 double taxation treaty signed by the Union of Soviet Socialist Republics (USSR) and the United States. The United States considers Armenia a party to this treaty by virtue of state succession to treaties, and Armenia’s declaration of its commitment to fulfill the international treaty obligations of the former U.S.S.R. as expressed in the Alma Ata Declaration of 1991.

According to Armenia’s new Tax Code, starting from January 1, 2017 foreign individual investors will pay a higher dividend tax of 10% compared to 5 % dividend tax for local individual investors, which will become effective in January 2018.

Transparency of the Regulatory System

The Armenian regulatory system is still not implemented in a sufficiently transparent manner. A small cadre of businesses dominates particular sectors and suppresses full competition. The inconsistent application of tax, customs (especially with respect to valuation and classification), and regulatory rules (especially in the area of trade) undermines fair competition and adds uncertainty for less politically-connected businesses, particularly small-and medium-sized businesses and new market entrants. Armenia’s legislation and mandate of its competition authority are not compatible with international standards. Furthermore, the legislation does not clearly define violations of fair competition, dominant role, or prevention of competition violations. The efforts of the State Commission for the Protection of Economic Competition (SCPEC) have not been effective in ensuring a level playing field. Banking supervision is relatively well developed and largely consistent with the Basel Core Principles. In early 2006, the CBA became the primary regulator for all segments of the financial sector, including banking, securities, insurance and pensions.

Safety and health requirements, most of them holdovers from the Soviet period, generally do not impede investment activities. Bureaucratic procedures can nevertheless be burdensome, and discretionary decisions by individual officials still provide opportunities for petty corruption. Despite persistent problems with corrupt officials, both local and foreign businesses assert that a sound knowledge of tax and customs law and regulations enables business owners to deflect the majority of unlawful bribe requests. The unified online platform for publishing draft legislation was launched in March 2017, available at  . The proposed legislation is available for everybody to view and the registered users can send feedback and get a summary of comments on draft legislation. However, the time period devoted to public comments in Armenia is often not sufficient for proper feedback. The results of consultations have not been reported by the government in the past.

International Regulatory Considerations

Armenia is a member of the Eurasian Economic Union (EAEU) and adheres to the technical regulations adopted within the EAEU. Armenia is also a member of the WTO and the Armenian Government notifies draft technical regulations to the WTO Committee on Technical Barriers to Trade.

Legal System and Judicial Independence

Armenia has a hybrid legal system that includes elements of both civil and common law. Although Armenia is developing an international commercial code, the laws regarding commercial and contractual matters currently are set forth in the civil code. Thus, because Armenia lacks a commercial court, all disputes involving contracts, ownership of property, or commercial matters are resolved by litigants in the courts of general jurisdiction, which handle both civil and criminal cases. However, the courts which handle civil matters are overwhelmed by the volume of cases before them and are seen by the public as corrupt. Despite the ability of courts to use the precedential authority of the Court of Cassation and the European Court of Human Rights, many judges do not do so, making civil court decisions unpredictable.

Many Armenian courts suffer from low levels of efficiency, independence, and professionalism, creating a need to strengthen the Armenian judiciary. Very often in cases when additional forensic expertise is requested during the judicial proceedings, the court may suspend the process until the forensic opinion is received, which may take months. Litigants are wary of turning to Armenian courts for redress because of the lack of judicial independence. Judges at the court of common jurisdiction are reluctant to make a decision without getting advice from high court judges. Thus, decisions may be influenced by factors other than the law and merits of the cases. In general, the government honors judgments from both arbitration and Armenian national courts.

Due to the nature and complexity of commercial and contractual issues and the caseload of the civil courts, many matters involving investment/commercial disputes take months or years to work their way through the civil courts. In addition, because of the inherent inefficiencies and institutional corruption of the courts, matters are often delayed and outcomes are not predictable. Even though the Armenian Constitution provides investors the tools to enforce awards and their property rights, there is little predictability in what a court may do.

Laws and Regulations on Foreign Direct Investment

The Development Foundation of Armenia (DFA) is Armenia’s national authority for investment, export and tourism promotion that provides services and information to foreign investors on business climate, investment opportunities and the legislation, support for investors’ visits, as well as liaison with governmental institutions. More information about the legislation, procedures and registrations can be obtained from DFA (  , E-mail: ;  ).

Competition and Anti-Trust Laws

The State Commission for the Protection of Economic Competition reviews transactions for competition related concerns. The law, regulations, commission decisions and more information can be found at 

Expropriation and Compensation

Under Armenian law, foreign investments cannot be confiscated or expropriated except in extreme cases of natural or state emergency, upon obtaining an order from a domestic court. In all cases, proper and fair compensation is owed to the property owner. The U.S. Government is not aware of any confirmed cases of expropriation.

Dispute Settlement

ICSID Convention and New York Convention

Armenia is a member of the ICSID convention and a signatory to the convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention).

Under Article 6 of the Armenian Constitution, international treaties are a constituent part of the legal system of the Republic of Armenia. When an international treaty is ratified, if it stipulates norms other than those present in the domestic laws, the guidelines of the treaty shall prevail.

Investor-State Dispute Settlement

According to the 1994 Foreign Investment Law, all disputes that arise between a foreign investor and the Republic of Armenia must be settled in Armenian courts. A new law on Commercial Arbitration was enacted in 2007, which provides investors with a wider range of options for resolving their commercial disputes. The U.S.-Armenia BIT provides that in the event of a dispute between an American investor and the Republic of Armenia, the investor may take the case to international arbitration. As an international treaty, the BIT supersedes Armenian law, a point which Armenia’s constitution acknowledges and which holds in actual practice. While there have been a few investment disputes involving U.S. and other foreign investors, there is no evidence of a pattern of discrimination against foreign investors in these cases.

International Commercial Arbitration and Foreign Courts

Commercial disputes may be brought before an Armenian or any other competent court, as provided by law or in accordance to party agreement. Commercial disputes are heard in courts of general jurisdiction. The specialized administrative courts adjudicate cases brought against state entities. Final judgments may be appealed to the Court of Appeal and Court of Cassation, the highest judicial authority in Armenia.

The Law on Arbitration Courts and Arbitration Procedures provides rules governing the settlement of disputes by arbitration. Armenia is a member state to the International Center for Settlement of Investment Disputes (ICSID Convention) and convention on the Recognition and Enforcement of Foreign Arbitral Awards (1958 New York Convention). The stipulations of the New York convention have been incorporated into Article 6 of the Armenian Constitution which requires domestic courts to recognize foreign arbitral awards.

According to the 1994 Foreign Investment Law, all disputes that arise between a foreign investor and the Republic of Armenia must be settled in Armenian courts. A new law on Commercial Arbitration was enacted in 2007, which provides investors with a wider range of options for resolving their commercial disputes. The U.S.-Armenia BIT provides that in the event of a dispute between an American investor and the Republic of Armenia, the investor may take the case to international arbitration. As an international treaty, the BIT supersedes Armenian law, a point which Armenia’s constitution acknowledges and which holds in actual practice. While there have been a few investment disputes involving U.S. and other foreign investors, there is no evidence of a pattern of discrimination against foreign investors in these cases.

Armenia has had plans to develop an alternative dispute resolution (ADR) mechanism that will include mediation and arbitration. ADR is expected to be used not only in commercial matters, including those involving mobile property and secured transactions, but also in cases involving family and labor disputes. While ADR options are available for those who seek alternatives to litigation, they currently are not widely used.

Bankruptcy Regulations

According to the Law on Bankruptcy adopted in 2006, the creditors, equity and contract holders (including foreign entities) have the right to participate and defend their interests in the judicial proceedings of a bankruptcy case. Creditors have the right to access all materials relevant to the case, submit claims to the court in relation to the bankruptcy, participate in creditors’ meeting, and nominate a candidate to administer the case. Monetary judgments are usually made in local currency. The Armenian Criminal code defines penalties for false and deliberate bankruptcy, for concealment of property or other assets of the bankrupt party, or for other illegal activities during the bankruptcy process. Armenia amended its bankruptcy law in 2012 to clarify procedures for appointing insolvency administrators, reducing the processing time for bankruptcy proceedings, and regulating asset sales by auction.

According to the World Bank’s 2017 Doing Business Index, resolving insolvency takes 1.9 years on average and costs 11 percent of the debtor’s estate, with the most likely outcome being that the company will be broken up and sold. The average recovery rate is 36.2 cents on the dollar. Globally, Armenia stands at 78 in the ranking of 190 economies on the ease of resolving insolvency in Doing Business 2016 ( ; ).

Investment Incentives

Armenia currently offers incentives for exporters (no export duty, VAT refund on goods and services exported) and foreign investors (income tax holidays, the ability to carry forward losses indefinitely, VAT deferral and exemptions from customs duties for investment projects). The Government of Armenia amended the VAT law in 2005 to allow companies to delay VAT payments for one to two years on certain imported goods used in production and manufacturing. After the 2008 global financial crisis, the government made further amendments to the same law, and VAT payments for capital investment-related imports may be deferred for up to three years. In 2015, the Armenian Government exempted from customs duties investment-related import of equipment and raw materials from non-Eurasian Economic Union member countries. VAT payment deferral and exemption of customs duties are implemented based on Government’s decision made on a case-by-case basis. Also, in accordance with the Law on Foreign Investment, several ad hocincentives may be negotiated on a case-by-case basis for investments targeted at certain sectors of the economy and/or of strategic importance to the economy.

Foreign Trade Zones/Free Ports/Trade Facilitation

In June 2011, Armenia adopted a Law on Free Economic Zones (FEZ), and developed several key regulations at the end of 2011 to attract foreign investments into FEZs: exemptions from VAT (value added tax), profit tax, customs duties, and property tax. The “Alliance” FEZ was opened in August 2013, and currently has nine businesses taking advantage of its facilities. The focus of “Alliance” FEZ is on high-tech industries which include information and communication technologies, electronics, pharmaceuticals and biotechnology, architecture and engineering, industrial design and alternative energy. In 2014 the government expanded operations in the Alliance FEZ to include industrial production as long as there is no similar production already occurring in Armenia. In 2015, another “Meridian” FEZ, focused on jewelry production, watch-making, and diamond-cutting opened in Yerevan, with six businesses operating in it. The investment programs for these companies must still be approved by government. The Armenian Government approved the program to construct the Meghri free economic zone at the border with Iran, which is expected to open in 2017.

Performance and Data Localization Requirements

In the past, the GOA has imposed performance requirements for investors as part of privatization agreements, especially for the privatization of large state-owned enterprises like mines or the telecommunications network. There are no performance requirements for investment in terms of mandating local employment. The processes for obtaining visas, residence or work permits, etc. are quite simple. There are no government imposed conditions on permission to invest, including tariff and non-tariff barriers.

Armenia does not follow any policy which would force foreign investors to use domestic content in goods and technology. There are no requirements for foreign IT providers to turn over source code or provide keys for encryption. There are also no requirements to store data within the country.

Real Property

Armenian law protects secured interests in property, both personal and real. Armenian legislation provides a basic framework for secured lending, collateral and pledges, and provides a mechanism to support modern lending practices and title registration. In the World Bank’s Doing Business 2017 report Armenia ranked 13th among 190 economies on the ease of registering property. Lack of clear title to land in Armenia is not an issue.

Intellectual Property Rights

Armenia has a strong intellectual property rights (IPR) framework. Domestic legislation, including the 2006 Law on Copyright and Related Rights, provides for the protection of IPR on literary, scientific and artistic works (including computer programs and databases), patents and other rights of invention, industrial design, know-how, trade secrets, trademarks, and service marks. The Intellectual Property Agency (IPA) in the Armenian Ministry of Economy is responsible for granting patents and for overseeing other IPR related matters. Armenia requires no state registration for copyright. The collective management organization ARMAUTHOR manages authors’ economic rights. Trademarks and patents require state registration by the IPA. There is no special trade secret law in Armenia, but protection of trade secrets is partially covered by patent registration. Formal registration is easy and transparent, the database of IPR registrations is public, and applications to register intellectual property are published online for two months for comments by third parties.

Armenia’s legislation is in compliance with the Trade Related Aspects of Intellectual Properties (TRIPS) Agreement. In 2005, Armenia created an IPR Enforcement Unit in the Organized Crime Department of the Armenian Police, which does not, however, have ex-officiorights and acts only based on complaints from right holders.

Despite the existence of relevant legislation and executive government structures, the concept of IPR remains unrecognized by a large part of the local population. The onus for IPR complaints remains with the offended party. The police assert that the majority of cases are settled through out-of-court proceedings. While the GOA has made some progress on IPR issues, strengthening enforcement mechanisms remains necessary.

A new Law on Copyright has been drafted and circulated within the Government. It includes provisions from new international agreements and provides additional detail on many of the provisions in the current law. Copyright contract rights are better defined and examples of contracts between the user and the right-holder are included. Phonogram producers’ rights are harmonized with copyright holders’ rights and are extended to 70 years. The new legislation also includes specific provisions from the Marrakesh and Beijing Treaty, regulating the rights of disabled artists and orphan works. The IPA and Ministry of Justice has also proposed changes to the Civil Code and Criminal Code to improve IPR protections by specifying in more detail what information the court should take into consideration when determining compensation, fair remuneration, and calculating damages. This new legislation will be submitted to the Parliament for approval in the fall of 2017.

The Armenian customs authorities track statistics related to the seizure of counterfeit goods, but the reports are not periodically updated. The latest relevant information can be found at:  and the descriptions of smuggling cases can be found in Armenian at: 

Armenia is not listed in USTR’s Special 301 Report or the Notorious Markets Report.

Resources for Rights Holders

Contact at Mission:

Raphael Sambou, Economic Officer

The American Chamber of Commerce in Armenia can be contacted at A list of local lawyers can be found at U.S. Embassy Yerevan’s web-page at:

For additional information about national laws and points of contact at local IP offices, please see WIPO’s country profiles at .

Capital Markets and Portfolio Investment

The banking system in Armenia is sound and well-regulated, but Armenia’s financial sector is not highly developed. IMF estimates suggest that banking sector assets account for about 90 percent of total financial sector assets. Financial intermediation is poor. Because Armenian banks charge service and other fees, the actual interest rate paid by the customer may be higher than the nominal interest rate quoted by the banks. Nearly all banks require collateral located in Armenia, and large collateral requirements often prevent potential borrowers from entering the market. This remains the main barrier for SMEs and start-up companies.

The GOA welcomes foreign portfolio investments and there is a system and legal framework for investments in place. However, Armenia’s securities market is not well developed and has only minimal trading activity through the NASDAQ-OMS exchange. Liquidity for the transfer of large sums can be difficult due to the small size of Armenia’s financial market and overall economy. The GOA is hoping that as a result of the 2014 pension reform, which brought two international asset managers (Amundi and C-Quadrat) to Armenia, the capital market will play a more prominent role in the financial sector of the country. Armenia respects IMF Article VIII by refraining from restrictions on payments and transfers for current international transactions. Credit is allocated on market terms and foreign investors are able to access credit locally.

Money and Banking System

The banking sector is healthy; non-performing loans are less than 10 percent which is within acceptable international standards. The top three Armenian banks by assets are Ameriabank – 718.2 billion AMD (1.5 billion USD), Ardshinbank – 504.7 billion AMD (1.05 billion USD) and Armbusinessbank – 404.4 billion AMD (0.84 billion USD). The Central Bank of Armenia has initiated consolidation in the banking system; As of January 1, 2017 the minimum capital requirements for banks increased from the 5 billion AMD (10.4 million USD) to 30 billion AMD (62.5 million USD). This is intended to allow the banks to issue bigger loans at lower interest rates and will further strengthen the Armenian banking system. There are no restrictions for foreigners to open bank accounts. Foreign banks and branches are allowed to establish operations in the country, being subjected to the same prudential measures and regulations as local banks.

Foreign Exchange and Remittances

Foreign Exchange

Armenia has no limitations on the conversion and transfer of money or the repatriation of capital and earnings, including branch profits, dividends, interest, royalties, or management or technical service fees. Most banks can transfer funds internationally within two to four days. Armenia maintains the Armenian dram (AMD) as a freely convertible currency under a managed float. The Central Bank of Armenia (CBA) sought to maintain the AMD through intervention in the foreign exchange market and through administrative measures in November– December 2014 to prevent market panic and drastic devaluation in the currency market. As a result, a 17% depreciation of the Armenian dram was roughly on par with the widespread decline of many currencies against the dollar over the same period. The AMD/USD exchange rate as of March 2017 fluctuated around 485 AMD to the USD.

According to the 2005 law on Currency Regulation and Currency Control, prices for all goods and services, property and wages must be set in AMD. There are exceptions in the law, however, for transactions between resident and non-resident businesses and for certain transactions involving goods traded at world market prices. The law requires that interest on foreign currency accounts be calculated in that currency, but be paid in AMD.

Remittance Policies

Armenia has no limitations on the conversion and transfer of money or the repatriation of capital and earnings, including branch profits, dividends, interest, royalties, lease payments, private foreign debt or management or technical service fees.

Sovereign Wealth Funds

Armenia does not have a sovereign wealth fund.

Most of Armenia’s state owned enterprises (SOEs) were privatized in the 1990s and early 2000s; yet SOEs are still active in geodesy/cartography and the energy sector. SOEs in Armenia operate as state-owned closed joint stock companies that are managed by the Department of State Property of the Armenian Government and state non-commercial organizations (schools, universities, forest enterprises). There are no laws or rules that ensure a primary or leading role for SOEs in any specific industry. Armenia is a party to the WTO’s Government Procurement Agreement (GPA) and SOEs are covered under that agreement. SOEs in Armenia are subjected to the same tax regime as their private competitors, and private enterprises in Armenia can compete with SOEs under the same terms and conditions. A public list of state-owned closed joint stock companies can be found online .

Armenian state owned enterprises adhere to the OECD Guidelines on Corporate Governance for SOEs. The enterprises owned by the state are providing public services, like geodesy or nuclear power generation, and hence do not impact the competitive environment in the country.

Privatization Program

Most of Armenia’s state owned enterprises were privatized in the 1990s and early 2000s. Many of the privatization processes for Armenia’s large assets were neither competitive nor transparent, and political considerations in some instances trumped Armenia’s international obligations to hold fair tender processes.

The Department of State Property Management – SPM (  ) currently implements the 2015-2017 State Property Management Program, which specifies a list of state properties proposed for privatization within specific time frames. SPM publishes the announcements on tenders and auctions on its web-page. In the past, there have been reports that the process of privatization tenders and auctions is not always competitive and transparent enough.

There is not a widespread understanding of responsible business conduct (RBC) in Armenia, but several larger companies with foreign ownership or management are introducing the concept. It is rare to see examples of Armenian companies that contribute to their local community through charity, employee service days, or other similar programs, but those RBC programs which do exist are viewed favorably. There are no NGOs that actively promote or monitor responsible business conduct. Armenia has joined the EITI in March 2017, as a candidate country. Armenia does not adhere to the OECD Guidelines for Multi-National Enterprises (MNEs) or the UN Guiding Principles for Business and Human Rights, which address generally-accepted CSR principles.

Domestic laws related to labor, employment rights, consumer protection, and environmental protection are not always enforced effectively. These laws and regulations cannot be waived to attract foreign investments.

Corruption remains a significant obstacle to U.S. investment in Armenia. The government introduced a number of legislative reforms over the last few years, including the simplification of licensing procedures, civil service reform, amendments to the Criminal and Criminal Procedural Codes to criminalize illicit enrichment, a draft law on whistleblower protection and the introduction of a more targeted national anti-corruption strategy, as well as laws and regulations, including recently adopted law criminalizing illicit enrichment and a draft law on whistleblower protection. Nevertheless, corruption remains a problem in critical areas such as the judiciary, tax and customs operations, health, education, military, corrections and law enforcement. The Special Investigative Service is responsible for investigating corruption and the prosecutor general is responsible for prosecuting it. Both large scale and petty corruption are widespread and neither is routinely prosecuted. Armenia’s ability to counter, deter and prosecute corruption is hindered by the lack of independent, empowered Anti-Corruption body with both investigative and prosecutorial powers.

Priorities set by the national 2015 – 2018 Anti-Corruption Strategy, approved on September 25, 2015, included improvement of accountability the integrity of public servants, formation of a more transparent, accountable and participatory governance system across sectors, and effective measures for investigating corrupt practices. The government chose education, healthcare, state revenues, and law enforcement (specifically police services to citizens) as pilot sectors for the implementation of the strategy. The implementation of the strategy was contingent on the implementation of sectoral action plans in response to comprehensive corruption risk assessments in each of the four priority sectors. To date, the government has not completed the risk assessments. To our knowledge, there have not been any reviews of implementation progress.

To aid in implementing the Strategy, an Anti-Corruption Council (ACC) was established in July 2015. The ACC, designed to be inclusive with seats reserved for CSO, opposition party representatives and GOA officials, has been meeting more frequently after the change of government in September 2016. While opposition representative continued boycotting the ACC, anti-corruption CSOs decided to participate after the NGO membership was expanded from two to five (with three spots yet to be filled through a competitive selection process). One of the most notable actions taken by the Council thus far was the announcement by the Government of Armenia to join the Extractive Industries Transparency Initiative (EITI), a coalition of governments, mining companies, and civil society working to increase the transparency of business activities within the mining sector and ensure favorable competitive conditions. EITI also assists in strengthening accountability and good governance, as well as promoting greater economic and political stability. Armenia was accepted as an EITI candidate country on March 9, 2017 and is scheduled to submit its first report within 18 months.

Previously in July 2012, the President approved a strategy and action plan for Legal and Judicial Reforms for 2012-2016, which tried to address most of the problems in the judiciary, prosecutors’ office, and civil, criminal, and administrative legislation. These reforms, however, were not fully implemented. For example, the following items were delayed and not implemented (though they may be in the future, there is currently no indication they are forthcoming): Introducing objective criteria and procedures for the performance evaluation and promotion of judges, establishing limited and explicit grounds for holding circuit court sittings and mechanisms guaranteeing the right to fair trial in the event of holding such court sittings, examining the issue concerning jurisdiction over appeals filed to court against the decisions of the head of the penitentiary establishment, enhancing competencies of prosecutor’s office in the sphere of information and communication technologies, and improving the quality of secondary level and higher professional legal education and legal education requirements.

In 2016 the Armenian government initiated legislation on criminal penalties for noncompliance or filing of false declarations and illicit enrichment, which were approved and enacted by the Parliament in late 2016. The legislation is also set to reform the Ethics Commission, established in 2012 to collect and monitor the asset declarations of high level officials, into a broader anti-corruption body with prevention and public education functions.

Under the current law on high level officials ’declarations, adult family members living with the official are not required to file a declaration. This loophole allows officials to register and/or transfer their property to a minor child or a relative who does not reside in the same household in order to avoid reporting requirements. Furthermore, according to current practice, income, gifts or assets from undisclosed sources are not considered evidence of corruption, nor do they represent sufficient grounds for launching an investigation, although the law allows for it.

The Government of Armenia adopted the Unified Tax Code in late 2016, which will become effective in 2018. This document vouches for unified approach to taxpayers, and more simplified tax administration procedures. Also, both the Ministry of Finance and State Revenue Committee have established public-private dialog councils that include representatives of civil society organizations (CSOs), professional organizations, private sector and academia. These fora allow engaging public into tax related legal, administrative and operational issues discussions. Together with the passage of the Unified Tax Code, the creation of councils and automated electronic filing and e-services allowed for improved transparency and reduced opportunities for corruption.

The State Revenue Committee (SRC) SRC recently opened monitoring center, equipped with a state-of-the-art electronic control system, which is supposed to improve and upgrade the process of identification and risk analysis carried out in the SRC. The center will implement expanded and centralized analysis, monitoring of turnover declarations, payment processing and products, import, transport and so on. This will facilitate the process of identification of risks and improve surveillance. The targeted monitoring will allow the SRC to conduct fewer inspections and minimize the interaction of tax officers with the taxpayers. This has the potential of reducing opportunities for corruption.

The Law on Civil Service, in force since 2002, as well as the Laws on Municipal Service (2005) and on Local Self-government (2002), prohibits participation of civil and municipal servants, as well as local government elected officials (mayors and councilors) in commercial activities. However, powerful officials at the national, district, or local levels often acquire direct, partial, or indirect control over private firms. Such control is exercised through a hidden partner or through majority ownership of fully private parent companies. This involvement can also be indirect, e.g., through close relatives and friends. These practices promote protectionism, encourage the creation of monopolies or oligopolies, hinder competition, and undermine the image of the government as a facilitator of private sector growth. Because of the strong interconnectedness of political and economic spheres, Armenia is unable to differentiate between the two and introduce legislation to encourage strict ethical codes of conduct and the prevention of bribery in the business field.

Armenia is a member of the Council of Europe Group of States against Corruption (GRECO). A GRECO’s March 2016 Report notes that corruption remains an important problem for the Armenian society, although the fight against corruption has been on the political agenda for years. GRECO specifically recommends that the rules on the acceptance of gifts by parliamentarians, judges, and prosecutors, as well as on submitting regular asset declarations, on their control and enforcement be further developed and made more effective. Adopting a code of conduct for members of parliament, preventing circumvention of the restrictions on business activities by parliamentarians, are among other recommendations. By the end of April 2017, the Armenian authorities are to report back on measures taken to implement the 18 recommendations included in this report. According to the Transparency International (TI) 2016 Corruption Perception Index (CPI) report, Armenia with a score of 33 out of 100 ranked 113th among 176 countries, a steady decline since 2014.

No specific law on NGOs dealing with anti-corruption investigation exists. The government, in close coordination with civil society, has recently approved new legislation on Public Organizations that gives NGOs the right to engage in economic activities, allowing these organizations mechanisms for independent sustainability. The law replaced the 2001 law on NGOs that covered all aspects of the relationship between the GOA and non-governmental organizations

Western companies seeking to invest in Armenia are typically large enough that they do not, to our knowledge, need to get involved in corruption or bribe officials to facilitate their business. They follow the rule of law and are transparent in their dealings and demand the same of the government.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Armenia is a member of the UN Anticorruption Convention. While not a party to the OECD Convention on Combating Bribery of Foreign Public Officials in International Business Transactions, Armenia is, however, a member of the OECD Anti-Corruption Network for Eastern Europe and Central Asia, and has signed the Istanbul Action Plan. Armenia was included in the third round monitoring mission in 2014 and the report that came out in 2015 highlighted the absence of a truly independent body responsible for anti-corruption policy implementation with the power to prosecute. Armenia has also joined the global Open Government Partnership initiative.

Resources to Report Corruption

For investigating corruption:

Investigation Department of Corruption and Organized and Official Crimes
Special Investigative Service of Armenia
13A Vagharsh Vagharshyan Street
Yerevan, Armenia
[+374 11] 900 002

For prosecuting corruption:

Tigran Ambaryan
Head of Department for Combating Corruption and Economic Crimes
RA Prosecutor General’s Office
5 V. Sargsyan Street
Yerevan, Armenia
(37410) 511-655

For financial and asset declarations of high level officials:

Siranush Sahakyan
Ethics Commission
26 Baghramyan Street
Yerevan, Armenia
374 10 524689

Watchdog organization:

Varuzhan Hoktanyan
Executive Director
Transparency International (Armenia)
164/1 Antarayin Street
Yerevan, Armenia
374 10 569589

In the fall of 2014 and early 2015, increased violence against civic and political activists resulted in detentions and injuries. None of these incidents caused any damage to projects or installations nor did they impede the functioning of businesses in the country. On July 17, 2016 the armed group Sasna Tsrer stormed and occupied a police compound in Yerevan, killing three officers and taking police personnel hostage. During the two-week standoff that followed, Sasna Tsrer took additional police and medical personnel hostage, demanding political changes. During the standoff, numerous protests and demonstrations in support of Sasna Tsrer took place in Yerevan and other parts of the country. Law enforcement officers engaged in illegal detentions, disproportionate and excessive use of force toward peaceful demonstrators, abusive treatment of journalists, and other serious human rights abuses, especially on the night of July 29, when police forcefully dispersed a protest supporting Sasna Tsrer’s political demands. The GOA has been known to use tax audits, money laundering investigations, and other official mechanisms to retaliate against business people who support the political opposition, including members of parliament. At the same time, the GOA has used economic and administrative resources to reward political loyalists, provide them with political protection, and keep them above the law. This, in turn, has led to monopolies in many areas and a strong interconnection between the political and business spheres.

A cease-fire with Azerbaijan has been in effect since 1994 for the conflict surrounding the disputed region of Nagorno-Karabakh. However, intermittent gunfire along the cease-fire line and along the border with Azerbaijan continues, often resulting in injuries and/or deaths. There was an increase in violence along the Line of Contact and Armenian-Azerbaijan international border April 2-5. The heavy clashes led to the highest death toll since the signing of the 1994 cease-fire agreement. There have been no threats to commercial enterprises from skirmishes in the border areas. It is unlikely that civil disturbances, should they occur, would be directed against U.S. businesses or the U.S. community. The Government of Azerbaijan has also suspended the importation and operations of U.S. companies in Azerbaijan if the companies’ products or services are provided in Nagorno-Karabakh. Because of the existing state of hostilities, consular services are not available to U.S. citizens in Nagorno-Karabakh.

Armenia’s human capital is one of its strongest resources. The labor force is generally well educated, particularly in the Science, Technology, Engineering and Math (STEM) field. Almost one hundred percent of Armenia’s population is literate. Enrollment in secondary school is over 90 percent, and enrollment in senior school (essentially equivalent to American high school) is about 85 percent. The official unemployment level is about 18 percent, but according to various expert estimations, the real unemployment level is closer to 30 percent.

Much of the new foreign investment in Armenia has occurred in the high-tech sector. High-tech companies have established branches or subsidiaries in Armenia to take advantage of the country’s pool of qualified specialists in electrical and computer engineering, optical engineering, and software design. There is a shortage of workers with vocational educations qualified in professions like welders and plumbers. About 20 percent of the non-agricultural workforce is employed in the informal economy, primarily in the services sector. Armenian law protects the rights of workers to form and to join independent unions, with exceptions for personnel of the armed forces and law enforcement agencies. The law also provides for the right to strike, with the same exceptions, and permits collective bargaining. The law stipulates that workers’ rights cannot be restricted because of membership in a union. It also differentiates between layoffs and firing with severance. Labor organizations remain weak because of employer resistance, high unemployment, and poor economic conditions; collective bargaining is not common in Armenia. Labor unions are generally inactive with the exception of those connected with the mining and chemical industries. Unions are tied closely to the government. Labor laws are not waived to retain or attract investments.

The current Labor Code is considered to be largely consistent with international standards. The law sets a standard 40-hour work week, with 20 days of mandatory annual paid leave. However, some private sector employees, particularly in the service sector, are unable to obtain paid leave and are required to work more than eight hours a day without additional compensation. Treatment of labor in free economic zones is no different than elsewhere in the country. Employers are generally able to adjust employment in light of fluctuating market conditions. Severance in general does not exceed 60 working days. Benefits for workers laid off for economic reasons, like unemployment insurance and social safety net programs, are mostly limited to offering qualification trainings to the unemployed and assistance in job search.

Individual labor disputes can usually be resolved through courts; however, the courts are often overburdened, causing delays. Collective labor disputes should be resolved through collective bargaining. The State Health Inspectorate at the Ministry of Health monitors health and occupational safety issues, but the enforcement is not always effective.

The latest amendments into Labor Code of Armenia entered into force in October 2015, which clarified the procedures of making changes in labor contracts, and the content of labor contracts, including the requirement to reflect probation period and duration of vacation in labor contracts, introduced the order of calculation of average hourly wage.

The current legal minimum wage is AMD 55,000 (USD 115) per month. Most companies also pay an unofficial extra-month bonus for the New Year’s holiday. Wages in the public sector are often significantly lower than those in the private sector.

Since 1992, Armenia has had in place an agreement with the Overseas Private Investment Corporation (OPIC). OPIC mobilizes private capital to help solve critical development challenges, providing investors with financing, guarantees, political risk insurance, and support for private equity investment funds. OPIC has been involved in several projects in Armenia, including expansion of the Yerevan Marriott, expansion of operations of First Mortgage Company and loans to FINCA Universal Credit Organization which is part of a multi-country, seven-year USD 45 million loan to FINCA Microfinance Holding for micro-lending. Armenia is also a member of the World Bank Group’s Multilateral Investment Guarantee Agency (MIGA).

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country
Statistical Source
USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2016 $10,547 2015 $10,530 
Foreign Direct Investment Host Country
Statistical Source
USG or International Statistical Source USG or international Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2015 $175.7 2015 $1 BEA data available at
Host country’s FDI in the United States ($M USD, stock positions) N/A N/A 2014 $2 BEA data available at
Total inbound stock of FDI as % host GDP 2015 36.4% 2014 56.7% N/A

Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data
From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 4,169 100% Total Outward 228 100%
Russia 1,921 46% Latvia 56 24.6%
Argentina 247 5.9% Bulgaria 36 15.8%
UK 244 5.8% United States 1 0.4%
Lebanon 243 5.8% N/A N/A N/A
United States 223 5.3% N/A N/A N/A
“0” reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

Portfolio investment data is not available for Armenia.

Raphael Sambou
Economic Officer, U.S. Embassy
American Avenue 1, Yerevan 0082, Armenia

2017 Investment Climate Statements: Armenia
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