Foreign investment issues

Investment restrictions

What restrictions, fees and taxes exist on foreign investment in or ownership of a project and related companies? Do the restrictions also apply to foreign investors or creditors in the event of foreclosure on the project and related companies? Are there any bilateral investment treaties with key nation states or other international treaties that may afford relief from such restrictions? Would such activities require registration with any government authority?

According to Armenian law on foreign investments, the legal regime governing foreign investments and the methods of their implementation cannot be less favourable than the regime governing the property, property rights and investment activities of citizens, legal entities and unincorporated enterprises of Armenia. That means that no special taxes or fees exist on foreign investment.

At the same time, the law may define those areas of Armenia wherein the activities of foreign investors and enterprises with foreign investment are limited or prohibited due to requirements of national security.

Armenia has entered and ratified about 50 bilateral investment treaties that have provisions to promote the fair and equitable treatment of foreign investors.

Insurance restrictions

What restrictions, fees and taxes exist on insurance policies over project assets provided or guaranteed by foreign insurance companies? May such policies be payable to foreign secured creditors?

Pursuant to Armenian legislation, foreign companies may carry out insurance activities through a public offer without establishing a branch or subsidiary legal person within Armenian territory only if they are registered in states that are parties to agreements concluded within the framework of the World Trade Organization, to which Armenia has also acceded; moreover, they may only carry out insurance relating to the following risks:

  • maritime transport, civil aviation, launch of spacecrafts, freight (including the accompanying and service personnel). Such insurance may extend to the property being transported, the carrier vehicle and the responsibility arising from the transport, all together, as well as each of them separately;
  • international cargo transport; and
  • reinsurance, retrocession and other services relating to reinsurance.

The insurance may be carried out by a foreign company within Armenian territory through insurance brokers, or without them and must follow laws and other regulatory legal acts of Armenia.

There are no special fees or taxes that exist for foreign insurance companies.

Worker restrictions

What restrictions exist on bringing in foreign workers, technicians or executives to work on a project?

Foreigners shall have the right to freely manage their working skills, choose the type of profession and activities, and be engaged in economic activities not prohibited by the legislation, by complying with the restrictions prescribed by Armenian legislation. The principle of legal equality of the parties in employment relations, established by the Labour Code of Armenia, shall be guaranteed, irrespective of their sex, race, national origin, language, citizenship and other circumstances not related to the practical skills of the employee. However, employers shall be entitled to conclude an employment contract (contract on delivery of services) with a foreign worker and use his or her work based on the work permit issued for the foreign worker by the authorised body (Ministry of Labour and Social Affairs). When issuing a work permit for a foreign worker, the authorised body shall consider the needs and developments of the labour market. With a view of assessing the needs of the labour market, a time limit is established for the employer upon the decision of the government, during which the employer is obliged to fill the available vacancies with Armenian citizens. In the case of absence of candidates to be nominated by the authorised body within the time limit prescribed, who will meet the requirements of the employer, as well as in case of rejection by the employer of the nominated candidate, the employer may find a foreigner meeting these requirements and apply to the authorised body to issue a work permit for this specific foreigner for a certain time period, by submitting the necessary documents prescribed by the government decision. A foreigner shall have the right to carry out work-related activities in Armenia based on the work permit for a foreign worker issued to the employer by the authorised body.

Equipment restrictions

What restrictions exist on the importation of project equipment?

Generally, permission to import equipment to Armenia is not needed. However, restrictions apply on importing certain equipment to Armenia. Particularly, restrictions apply on importing live animals and animal products, plants, food, weapons and ammunition, alcohol, chemical products, pharmaceuticals and drugs, trade with endangered animals and plants, and counterfeited products that are imported unless authorised governmental body gives particular licence. The reasons for these restrictions are trade policies, environmental considerations, consideration for the health and safety of humans and protection against the spreading of animal and plant diseases. For further information see www.petekamutner.am/Content.aspx?itn=csCIGoodsImportExportProcedures.

Nationalisation laws

What laws exist regarding the nationalisation or expropriation of project companies and assets? Are any forms of investment specially protected (from nationalisation or expropriation)?

Pursuant to the Armenian Constitution, everyone shall have the right to possess, use and dispose of legally acquired property at his or her discretion; no one may be deprived of ownership except through judicial procedure, in the cases prescribed by law; and the right of ownership may be restricted only by law, for the purpose of protecting public interests or the basic rights and freedoms of others. According to Armenian law, foreign investments in Armenia are not subject to nationalisation. Foreign investment cannot be confiscated by state authorities. Confiscation as an exceptional measure is allowed only under conditions of state of emergency prescribed by Armenian legislation, by court order and with full compensation.