Commercial organizations (mainly as LLCs)
Legal Framework for Social Entrepreneurship (Organizational and Legal Form: Commercial Organization / Limited Liability Company)
Commercial organizations, primarily structured as limited liability companies (LLCs), have profit generation as their main objective. Profits from entrepreneurial activities are distributed among the members in proportion to their shares in the authorized capital of the company.
In the context of social entrepreneurship, these organizations may provide employment for specific groups — including persons with disabilities — or carry out activities aimed at addressing particular social problems within society. They may qualify as micro-business entities if their total sales turnover across all types of activities did not exceed 24 million Armenian drams in the previous tax year.
The legal basis for this organizational form is provided by the Civil Code of the Republic of Armenia and the Armenian Law on Limited Liability Companies.
State Support Measures
Within the framework of the State Employment Program, the following financial support measures are available: a one-time compensation covering 75% of the cost of acquiring fixed assets necessary for starting a small business (up to 500,000 AMD); reimbursement of 25% of the salary of a newly hired employee (not exceeding 50% of the minimum monthly salary) for a period of one year; reimbursement of 50% of rental costs (up to 25,000 AMD per month) for one year; and coverage of income tax arising directly from entrepreneurial activity, as well as targeted social payments where applicable, up to the amount of the minimum monthly salary for one year. The maximum total cost of the program amounts to 1,350,000 AMD.
Tax Relief
For profit taxpayers employing persons with disabilities, 150% of the total salary paid to each such employee — whether employed under a standard employment contract or a civil contract — may be deducted from gross income when determining the profit tax base, irrespective of the standard salary deduction already applicable. Micro-enterprise entities are exempt from calculating and paying all state taxes related to their micro-enterprise status, with the exception of taxes on goods imported into Armenia, a flat income tax of 5,000 AMD per month per hired employee, excise tax, environmental tax, and road tax.
Educational and Informational Support
Entrepreneurs benefit from a comprehensive support infrastructure. Within the State Employment Program, consulting, business training, and business plan development assistance are provided for start-up and early-stage entrepreneurial activities. During the first year of operation, a consulting company provides ongoing accompaniment, offering advice on tax obligations, business management, and marketing.
Through the “Successful Start” State Program, entrepreneurs acquire skills in business planning, marketing, management, production, and financial planning, and develop individual business plans. The most viable plans may be submitted for lending through partner banks of the SME Development National Center (SME DNC) of Armenia.
The SME DNC of Armenia additionally provides information and consulting assistance covering legal advice for business registration, tax regime selection, customs clearance and permits; support in submitting electronic reports and declarations to state authorities; awareness-raising on legislative changes through group meetings; and the preparation and dissemination of informational materials related to entrepreneurship legislation.
Further information is available through the official business registration portal (armenia.eregulations.org), the SME DNC website (smednc.am), and the guidelines for start-ups published on the SME DNC’s official website.
