Partner Guide on Registration & VAT Exemption in Armenia

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September 2007

This guide provides general information to US organizations on establishing and operating in Armenia as a USAID partner organization. It neither is legal advice nor is it designed to be comprehensive. USAID partners are expected to be familiar with the laws and regulations that govern their operations.

I. Registering in Armenia

The 1999 Civil Code provides for establishment of two types of legal entities: commercial organizations and noncommercial organizations. The difference relates primarily to whether profits are sought. US organizations may establish themselves in Armenia through subsidiaries, branches or representative offices. USAID expects its contractors and grantees to comply with all applicable laws regarding formation and registration so that they may legally operate in Armenia. Further information is available in the Commercial section of the Embassy and also at the NGO Center in Yerevan ("NGO Legal Handbook"). Partners are also encouraged to seek legal advice from an Armenian law firm or lawyer.

A legal person (commercial/non commercial) is established by action of its founders through the filing of certain documents. Registration requires submission (in Armenian or with a notarized Armenian translation) of an application for state registration of an organization, minutes of the organization’s founders’ meeting establishing a legal entity, a charter and a fee. As a matter of Armenian law, an entity does not become a "legal person" (or "juridical person") until the date of its registration. In the Republic of Armenia, the registration of legal entities is performed by the State Registry of Legal Entities (or its territorial offices) of the Ministry of Justice (hereinafter referred to as State Register). A certificate will be issued to the registered legal entities by the State Register.

Legal entities having a foreign founder (participant) must also submit a statement from the trade register of the given country or an equivalent document on the legal status of the foreign investor and its founding documents or relevant statements, which must be validated and translated into Armenian.

The State Register will enter the data onto the state registration card, attach a code to the legal entity, grant a registration number, sign and seal the card with a stamp. A state registration certificate will then be issued to the legal entity. The data contained in the General State Register Book is accessible to the public.

Once an entity (commercial/noncommercial) is registered and receives its registration certificate, it must obtain a seal for use in all official transactions, by applying to the Ministry of Internal Affairs (specifically, to the State Seal JSC). It takes from one to 30 days to obtain a company seal. The fee structure varies according to the time taken.

Within a month of registration, an entity must also obtain a tax identification number (TIN) by registering with the local tax inspectorate. A TIN is a unique eight digit number that cannot be changed during the time the entity operates in Armenia. The tax authorities are requested to act on the registration application within two weeks of its receipt. Social security registration is now also performed by the tax authorities. A TIN is necessary for a USAID partner to take advantage of the tax exemptions and procedures under the Bilateral Agreement.

II. Taxes, Duties and Exemptions

A 1992 treaty between the Governments of the United States and Armenia creates different levels of tax and duty exemptions for USAID partners ‑US, foreign and local. The table below outlines the most important exemptions. Note that the exemptions apply only to costs incurred under United States Government assistance programs. Thus, an organization working with both USG and private funding must ensure that it does not improperly claim exemptions for privately‑funded activities and risk prosecution for tax evasion. Also note that the 1992 treaty does not exempt USAID partners from registration, accounting, withholding or other requirements not specifically exempted by law. 

A ‑ US government or US private organizations

B ‑ Other organizations (Armenian and non‑US foreign)

C ‑ Employees of A who are not Armenian citizens and who are not ordinarily resident in Armenia

It should be clear that USAID partners, regardless of their nationalities, are not exempt from withholding income tax and employee social taxes with respect to their Armenian employees.

III. Procedures for Obtaining VAT and Duty Exemptions

As a result of several USG initiatives, the Government of Armenia has reformed the procedures for obtaining VAT and duty exemptions on specific import and purchase transactions.

US organizations now have the benefit of no longer being required to obtain Humanitarian Assistance Coordination Committee (HACC) approval for programs and particular exemptions. Based on Law No. HO‑81 adopted July 6, 2000, such organizations obtain tax exemptions pursuant to the State Tax Service of the Government of the Republic of Armenia (STS) regulations. The STS regulations became effective on September 27, 2000 (State Registration No.12400089). US organizations should assert income, profit and social tax exemptions based on the law and implementing regulation, rather that the 1992 treaty, to avoid confusion. Please note the reporting and other requirements in the regulation.

The September regulation, as amended, specifies how implementing organizations may obtain VAT and duty exemptions. According to paragraph 8 of the regulation, an organization must submit a certificate (a sample of which is attached to the regulation as Attachment 1) with supporting documentation to the vendor or customs official from whom an exemption is sought for each transaction. The original of the certificate stays with the organization, one copy is given to the vendor/official, and another copy is later submitted to the STS according to the schedule in the regulation. There is also an advance notice process for imports that is described below. USAID provides its partners with a general "To Whom It May Concern" letter, a copy of which may be used to support the certificate. No "approval letter", HACC decision, or specific USAID communication is required for exemption of a specific transaction. An organization must have a TIN and seal to properly submit a certificate, however.

The US Government provides to STS and the State Customs Committee a list of contractors and grantees to allow the STS and State Customs Committee to check the validity of exemption claims, pursuant to a Memorandum of Understanding (MOU) executed in May 2001. Although USAID will make every effort to ensure that the list is updated, it behooves contractors and grantees to specifically ask to be included on the list as soon as they are registered in Armenia. Contractors and grantees should also ensure that their subcontractors and subgrantees that implement programs are included on the list. The same MOU establishes a procedure for notification of imports of goods from abroad to ensure simplified processing at customs points. Specifically, USAID forwards implementing organizations' notices of imports to the State Customs Committee. If the State Customs Committee receives a proper notice at least seven days in advance of importation, it is obligated to ensure unhindered duty-free processing of the import. Implementing organizations should send their notices - on letterhead, identifying the goods and their quantities in a particular import transaction, as well as the sender - to USAID at least fourteen days in advance of the expected arrival date. Please include an Armenian translation of each notice letter. Notices should not be sent directly to the State Customs Committee. Organizations funded by other US Government agencies must send their notices to their contacts in the US Embassy, not to USAID.

Organizations should ensure that their names appear on the bill of lading and other import documentation as the importing entity. Obtaining an exemption on goods imported in the name of a non-exempt organization (such as a vendor, purchasing agent or beneficiary) is extremely difficult.