Vahan Kerobyan: IT sector will grow by 50% this year

According to the estimates of Armenia’s Ministry of Economy, the IT sector will grow by 50% this year, Economy Minister Vahan Kerobyan told NEWS.am Tech.

"We need to understand how the IT sector grew this year. While in previous years it grew through the growth of its companies, this year there was a quantitative growth, so to speak, an explosive growth, because about 2000 new small and medium IT companies were registered in Armenia," the Minister said.

Vahan Kerobyan noted that this year, the sector will register such a growth thanks to those companies and specialists who have moved to Armenia. According to the minister, while at the beginning of the year there were 16,000 employees registered in the IT sector, now the number is about 25,000.

"According to our estimation, the growth of the sector will be about 50%, but this does not mean that companies do not have problems. IT companies said that as a result of the dramatic devaluation of the dram, their foreign exchange earnings have depreciated and they are in a loss zone. Also, last week, the government adopted a support tool, under which we provide companies with a certain runway or oxygen to help them re-adjust to the new conditions," the minister said.

After the Russian-Ukrainian war, as a result of the devaluation of the foreign currency, many IT companies in Armenia faced serious problems, because most of their products are exported. As of October, four IT companies were liquidated in Armenia, four went bankrupt, another 17 are in the process of liquidation and 342 individual entrepreneurs have been deregistered.

Although a number of companies had such problems this year, according to data for January-September of this year, 67 IT companies were on the list of 1,000 large taxpayers who paid more than $90 million in taxes. For comparison, in the first half of this year, the list of major taxpayers included only 39 IT-companies. According to the data for nine months of this year, Synopsis Armenia ranks first among the IT companies in the list of large taxpayers.

The government is implementing at least three programs to support the IT sector. At the session held on December 1, the executive branch decided to allocate 10 billion drams to support the IT sector in the form of reimbursement of income tax for June-October. This program can be used by companies, which during this period did not lay off more than 20% of their employees and whose export production makes 70% of total production.

Another IT support program provides support for newly hired employees in the amount of 50 percent of the income tax paid to the state budget. State support for beneficiaries can be calculated and provided for the month of March 2022 and the following eleven months. As of December 1, 21 organizations applied to the Ministry of Hi-Tech Industry of Armenia for state support at the rate of 50% of income tax paid by newly hired employees. As of December 1, 2022, the state support of 2.3 billion drams was transferred, and the amount of state support of 151.6 million drams is still to be paid.

Under another program, the government provides tax incentives to IT startups, namely a 0% corporate tax rate and a 10% income tax rate. On November 24, this program was extended for another year, until December 31, 2023.