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The initiative proposes to define a number of directions of state support and some tax privileges in the field of high technologies.

In particular, according to the draft law on State Support of the High-Tech Sector it is designed to provide state support to the organizations and individual entrepreneurs involved in the high-tech sector in the following directions: first, for the involvement of labor migrants who perform professional work and are considered the hired employees of the given economic entity. Moreover, the state support will be provided to the economic entity in the amount of 50 percent of the income tax calculated on the migrant worker’s salary and other payments equal to it. Second, state support will be provided to attract new workers. If the quarterly average number of all hired employees of the entity does not exceed 30, then the support will be in the amount of 100 percent of the income tax calculated on the salary of new employees and other payments equal to it. If the quarterly average number of all hired workers is 31 or more, the support to be provided will be 50 percent of the amount of income tax calculated on the salaries of new workers and other payments equal to it.

The RA Minister of High-Tech Industry Mkhitar Hayrapetyan underscored that fact that in case of new employees, state support will be provided for three calendar years from the time of the employee’s first employment.

Third, state support will also be provided for the purpose of compensating the educational costs incurred by the economic entity for the preparation and training of personnel performing professional work. It was noted that support will be provided in the amount of 50 percent of the income tax amount calculated on the salary of the hired employees performing professional work and other payments equal to it, if the quarterly average number of hired employees of the organization or individual entrepreneur does not exceed 30.

“In the case of small organizations with up to 30 employees, it is also proposed to compensate the business trip expenses incurred by the business entity for the purpose of personnel training and training, for which the sub-legislative legal acts provide for an upper limit of no more than two million drams,” the Minister detailed and added that the business entity compensation in the amount of 25 percent of the income tax calculated on the subject’s salaries of the employees performing professional work and other payments equal to it will be provided, if hired employees’ quarterly average number is 31 or more.

It is proposed by the initiative that the amount of assistance provided in the abovementioned three directions for the accounting period cannot exceed 50 percent of the amount of the income tax calculated and paid for the employees for the same accounting period. According to the rapporteur, after the adoption of the package, by-laws will define the types of activities subject to state support of the high-tech sector, according to the provision of support for economic activity classifiers and other necessary orders.

As Mkhitar Hayrapetyan informed, the state support will be carried out through a self-service platform, which is designed to be launched by July 1, 2025. Before the launch of the platform, the process of accepting applications will be regulated by the order of the head of the authorized body.

The assistance provided by the legislative package will be provided to organizations operating in the general taxation system and the turnover tax system, and to individual entrepreneurs for the period from January 1, 2025 to January 1, 2032.

The initiative also proposes to reduce the turnover tax rate for high-tech companies by 2.5 times, setting it at 2 percent instead of 5 percent. Also, it is designed to additionally reduce the gross income for the purpose of taxing with profit tax in the amount of 200 percent of the salary paid to the staff performing professional work, but not more than 50 percent of the calculated tax base. It is proposed to halve the rate of income tax on the salary and income equal to the professional staff involved in scientific research and experimental development, from 20 to 10 percent.

The tax privileges also will be provided for 7 years.

According to the rapporteur, as a result of the adoption of the package, it is expected to form favourable conditions for the progressive development of the high-tech sector, as well as for the implementation of scientific research works in our country. “It is also expected that it will serve as an incentive to increase the productivity and competitiveness of the economy in our country, the development of the knowledge-based economy, the formation of the information society and its various components, the involvement of foreign investments, the export of local companies’ products and services, and the promotion of Armenia as a country with a developed high-tech sector in the world market. to increase the rating,” the Minister said.

Mkhitar Hayrapetyan reminded that taking into consideration the importance of high technologies for the economy and security of the Republic of Armenia, the RA Government will continue to promote the development of the innovative system and comprehensive investments in various fields. A strategy for the development of the high-tech sector will be developed, aimed at increasing the volume of the high-tech sector, involvement in the sector, ensuring the growth of revenues from the operating activities of companies, increasing the specific weight of this indicator in relation to the Gross Domestic Product (GDP), commercialization of innovative ideas, promotion of entrepreneurship, technological progress and wide application of technological solutions. economy and public spheres.

Mkhitar Hayrapetyan answered the deputies’ question, touching upon the steps taken by the Government to the development of the sector.

The NA Vice President Hakob Arshakyan and the deputy Khachatur Sukiasyan presented proposals on the initiative. Mkhitar Hayrapetyan noted that the proposals will be additionally debated during the period from the first to the second reading.

The package of bills on State Support of High Technologies Sector and on Making Amendments and Addenda to the RA Tax Code debated in the first reading was debated at the extraordinary sitting of the Standing Committee on Economic Affairs on November 11 and was endorsed.

Parliamentary hearings on Making Addenda and Amendments to the Tax Code of the Republic of Armenia and on Amending the Tax Code of the Republic of Armenia will be held in the NA Session Hall by the decision of the Committee on November 19, 2024 at 11:00.