Being a unique combination of an ancient people and a young developing state Republic of Armenia is currently becoming more attractive for foreign investors. That has been the reason for us to select regulation of foreign investments as the topic for the present short article. From the very first years of independence the legislators undertook to establish an investor-friendly legislation, which has been developing over the years. Nowadays Armenian investment legislation may positively be called a liberal one, taking into consideration both the quantity and quality of privileges and legal guarantees stipulated for foreign investors. These privileges and guarantees lie in various fields – from taxation to labor issues and from regulation of property right to customs regulations.

Investment legislation in

Armenia derives from the national treatment principle. The law of Republic of Armenia “on foreign investments” guarantees foreign investors a legal regime no less favorable than that of nationals, unless a more favorable regime is provided by a respective treaty. As to such treaties – there is quite a large of bilateral investment treaties ratified by Armenia. Particularly, Armenia has signed and ratified treaties on excluding double taxation of income (profit) and property with about 30 states in Europe, Asia and North America.

It can hardly be disputed that probably the most serious threat to a foreign investment is and has always been expropriation. (Ref: Kaj Hober, Investment Arbitration in Eastern Europe: Recent Cases on Expropriation, 14th American Review of International Arbitration, page 380) With that regards Armenian legislation explicitly prohibits expropriation of foreign investments, with the exception for compensable confiscations in legally established times of emergency. The investment legislation also grants the right to claim from the state damages caused by undue performance by state organs or officials of their obligations towards the investor under the law.

But what makes Armenian investment legislation especially attractive for investors is not so much the guarantees but rather the privileges. Particularly, substantial profit tax exemptions are currently provided for companies with large foreign investments. There also are privileges which might not seem so substantial, but for sure practical. For example an exception from the requirement to have a work permit has been recently established for representatives of foreign investors and executives of companies with a foreign investment.

All the above-mentioned provisions, together with the many more which are not discussed in the present short article, create a quite favorable investment legislation, which, by the way, may upon the request of the investor be applied as it was at the moment of investment, despite any possible change, within 5 years from such investment (grandfathering clause).

Tags: a unique combination, foreign investors, mentioned provisions, national treatment principle, Republic of Armenia

Posted on: January 20, 2010

Filed under: International Law