Economy of Armenia

Exports and Imports

Armenia's exports continued their upward trend in 2023, with estimates reaching around $6.2 billion USD. Copper, gold, diamonds, and tobacco remain key exports, with Russia still the top destination. Imports also rose to an estimated $9.1 billion USD in 2023, resulting in a persistent trade deficit.

Balance of Trade

Armenia's trade deficit remains a challenge, though efforts are underway to boost exports. The government is looking for ways to close the gap, potentially through increased trade with non-EAEU partners.

Infrastructure Development

Road construction is a major focus in Armenia's infrastructure development plans. While the most recent data available is from 2020, the total road network is estimated to exceed 8,500 kilometers by now. Other projects include railway modernization and improving border infrastructure.

Fiscal Policy

Balancing government spending with tax reform is an ongoing priority for Armenia. The government aims to strike a balance between funding social programs and critical infrastructure development.

Monetary Policy

The Central Bank of Armenia continues to play a crucial role in managing inflation and maintaining financial stability. They use interest rates and foreign exchange reserves to stabilize the Armenian Dram.

Trade Agreements

Armenia's membership in the Eurasian Economic Union (EAEU) offers preferential trade access with Russia and other members. The country also continues to pursue additional free trade agreements to diversify its trade partnerships.

Environmental Regulations

Armenia is strengthening its environmental regulations to address air and water pollution concerns. They are also investing in renewable energy sources, like solar and wind power, to promote a more sustainable future.

Tax System in Armenia

capital gains tax. However, income from selling property continues to be subject to the unified income tax rate. The rate and exemptions may vary depending on the property type, how long you held it, and whether you sold it to a resident or individual.
Corporate tax rate: The attractive corporate income tax (CIT) rate of 18% remains unchanged. This flat rate applies to both Armenian companies and foreign businesses with a presence in the country.
Sales tax: Armenia still uses a Value Added Tax (VAT) system. The standard VAT rate remains at 20%, with some exemptions and a zero-rate for specific goods and services.
Property tax: Property tax on real estate is still levied, and rates can vary depending on the property type and location.
Payroll tax: A significant change here. As of July 1, 2023, the income tax rate for employees of microenterprises increased. Previously, they had a special tax of 5,000 AMD per month. Now, their earnings are taxed at the general income tax rate of 22%. This applies to most income types, including wages and salaries, with a portion funding social security.
Tax deductions and credits: Armenia continues to offer limited tax deductions and credits compared to some developed nations. There are still exemptions for specific income sources like interest on government bonds and some social security benefits.
Tax compliance: The Armenian government's efforts to improve tax collection efficiency are ongoing. While some progress has been made, challenges persist, particularly regarding the informal sector.
Tax burden: Armenia's tax burden is still considered moderate compared to other Eurasian countries. The flat tax rates and focus on reducing exemptions continue to aim for a simpler system that could encourage investment.