On 24 September 2021, AmCham in Armenia held a Tax, Customs, and Fiscal Policy (TCuFP) Committee meeting in Holiday Inn Express. 3 AmCham Board Directors, 7 TCuFP Committee members, and 3 special guests, namely Haykanush Chobanyan, State Migration Service of MTAI; Hovhannes Aleksanyan, the Office of the High Commissioner for Diaspora Affairs, and Vardan Marashlyan, “Repat Armenia” Foundation were present at the meeting. The meeting was chaired by Gagik Gyulbudaghyan
The Executive Secretary of the Meeting welcomed the TCuFP Committee participants and briefly presented the main topic of the discussion which was about Repatriation/Immigration Promotion of Armenians from abroad via tax privileges.
The Committee members mentioned a couple of questions to focus on when organizing a successful Repatriation:
1. The domiciliation of a business/company incorporated abroad to Armenia.
2. The motivation of enterprises to hire a competitive, highly-paid workforce
3. The conceptualization and understanding of who is the Repatriation/Immigration and Integration project target group.
Hovhannes stated that some institutional changes took place lately. He presented what has been done till now, mentioning that Armenia has security, demographics, resources, social-economic, modernization, and other problems that should be solved through repatriation.
Tigran Jrbashyan raised Diaspora, Repatriation, Migration, and Integration spheres to focus on while developing the proposal to be coordinated by a single institution.
Haykanush Chobanyan presented what institutional reforms have been done till now and what documents are in the process of development in the framework of MTAI, State Migration Service.
She stated that:
1. It is planned to establish a Ministry of Internal Affairs, which will have the Migration and Citizenship Service, which in its turn will unite today’s Migration Service of MTAI and Passport and Visa Department (PVD), estimated to be implemented in early 2022.
2. There is a draft Strategy under the approval of the GoA on the Integration and Reintegration issues. The Strategy document is for 2021-2031 with its implementation Action Plan for the 2021-2025 period. The strategy has been drafted by an Interagency Working Group, chaired by the Migration Service and the document has already been submitted to the Government for approval. The strategy outlines goals related to shelter and living conditions, rights and social assistance, access to healthcare and education, investing in and developing human capital, cultural integration, and cultivating a conducive environment, capacity building for structures, and development of competencies of the staff involved in integration and reintegration.
3. The next project is the online page of “TunDardz”, where all the people migrating/returning to Armenia and all the questions in this regard are covered. It is planned to create an Information Centre at the Airport as well, to support people returning to Armenia.
4. There is a plan to create an Integration Center, which will be under the responsibility of The Office of the High Commissioner for Diaspora Affairs. The work is underway.
Haykanush noted that Migration Service targets immigrants, refugees, asylum seekers, and returnees whereas The Office of the High Commissioner for Diaspora Affairs targets Repatriates issues only.
It was decided that the WG will develop a suggestions package and meet with the government and other stakeholders to discuss and develop the final Policy Paper on Repatriation/Immigration and Integration, specifically State Revenue Committee, Ministry of Finance, Deputy Prime Minister.
The specific tax benefits’ package to promote repatriation/immigration of Armenian diaspora based on the research from a couple of countries done by AmCham TCuFP Committee members is presented below:
The committee suggests establishing the Ministry of Repatriation/Immigration and Integration (not the Ministry of Diaspora).
1. Armenian immigrants will receive a 10-year tax-exempt holiday for income from foreign sources (regular income and capital gain).
2. Repatriates / previous Armenian residents that stayed out of Armenia for more than 10 years also are eligible for the same tax holidays as new immigrants.
3. They are also exempt completely from reporting on their foreign income or assets (so for example a new immigrant or a repatriate, that has a company abroad and receives a dividend from that company – is exempt from tax on the dividend and exempt from reporting on that income).
4. Interests earned from immigrates’ deposits in Armenian banks will be exempted from income tax for 10 years.
5. Furthermore, if they have income from Armenian sources they are eligible for extra “credit points” (which offsets their tax payment for 3 years).
6. Exemptions from taxes on foreign pensions received (check with SRC, could already exist).
7. Immigrants and repatriates are also exempt from customs and importation taxes, mainly to import goods for the house or private cars (check with SRC, could already exist).
8. Reactivate the legislation related to domiciliation to Armenia: a process where a company transfers its registration from one jurisdiction (country) to Armenia. This is different from the company setting up an overseas branch, or incorporating a subsidiary in the foreign country. This legislation has been in force in Armenia for 7 years, but still, there is no application. This will support smoothly transferring SME businesses and its assets to Armenia and support their legal integration into the Armenian business field.
9. Introduce Special Assignee Relief Programme (SARP) for Armenian individuals repatriating to Armenia. This program will encourage the relocation of key specialists to work in Armenia. The 50% of taxable employment income of 2,000,000 AMD and over (gross monthly salary) will be disregarded for income tax purposes. Income, which is disregarded for income tax is not exempt from other applicable social charges.
For recognition of being Tax Resident in Armenia:
1. The person is a tax resident of Armenia if he/she stays more than 183 days in Armenia, but there should be another technical test, which is 425 days tested over 3 years (the tested year plus the previous 2 years if the individual stayed in Armenia for at least 30 days in the tested year).
2. Another argument for becoming a Tax Resident in Armenia is the “center of life” tests, which should examine the different family, economic, business, and social ties the individual has to Armenia.