Long-term tax breaks would be more favorable for development of hitech sector in Armeni- Andrey Movchan

YEREVAN, March 9. /ARKA/.  Long-term tax breaks would be more favorable for development of hitech sector in Armenia, according to Andrey Movchan, investment manager and founder of Movchan's Group.

"Armenian government has created preferential tax conditions for IT companies with zero profit tax and 10% personal income tax, while the rate for all others is 21%. These are quite good privileges, which could have worked, if not for the period of validity - three years with revision every three years," said Movchan, speaking at an economic forum hosted by the Russian-Armenian University in Yerevan last Sunday.

According to him, serious IT companies will not set up a business for just three years.  "By comparison, the Financial Center in Kazakhstan provides tax incentives to companies until 2066. I think in Armenia, providing long-term tax breaks for IT development would be very beneficial," the expert said. 

Movchan cited some figures regarding Armenia's IT sector compared to Israel.  "Armenia's technology exports in 2021 amounted to $40mln. For comparison, high-tech exports of Israel amounted to $30bln.

'According to our data, at the beginning of 2023 about 25 thousand people were involved in high-tech sector of Armenia. This is 0.8% of the country's population and 10 times less than the percentage in Israel. Armenian high-tech accounts for only 2.6% of budget revenues," he informed.

According to his calculations, a 10-fold growth of the IT inmdustry in Armenia would increase the GDP by 50%, and that's not counting the secondary effects.

"In 2022, about 1,000 Russian branches of foreign IT companies moved to Armenia. That's actually the boom that would be good to catch and use," Movchan believes.

Forbes estimates that Armenia has been recording a 25% annual growth in the IT sector over the past decade. According to Dsight, at least 25 offices and 18 innovation centers of international corporations, including Microsoft, SAP, Cisco, Siemens and others operate in the country. Internationally recognized young companies such as EPAM and Nvidia feel at ease here.

This year's Fraser Institute Global Economic Freedom Index put Armenia on an honorable 11th place out of 165. International think tank StartupBlink ranked Armenia's startup ecosystem as number 16 out of 74 among Eastern European countries. Yerevan's capital Yerevan is 244th on the list of 1000 most developed startup ecosystems in the world. --0—

Read the news first and discuss them in our Telegram

18:53 03/10/2023