FactorTV invited me to an interview to discuss the recent initiative of the Ministry of Economy of Armenia to grant exporting IT companies the tax benefit of paying 5% income tax (versus 20% paid by other companies.
Here are the key takeaways from the discussion:
1) The legal initiative of the ministry lacks proper details on the problem they solve and the expected impact.
2) In the long term reducing income tax will result in the growth of the salaries in the IT sector which will effectively eliminate the benefits of this initiative.
3) Tax benefit is not the only way the Government can support the ecosystem. Educational systems reforms, bringing international acceleration programs, and investing in infrastructure are critical in securing the long-term success of the IT sector in Armenia.
4) Government must provide transparent reporting on the use of the previous support package when about 10 bn drams were provided to IT companies to soften the impact of AMD valuation. The public should be able to assess how effectively public funding was used by the Government.
5) Public-private dialogue is critical in finding effective solutions to provide continued support to the growing IT sector of Armenia. Dialogue is not just meeting and telling compliments to each other. Dialogue is about the bravery to present core issues and take ownership in solving the issues.
You can see the full interview here (in Armenian):
https://youtu.be/dvPrEb8nh1EBig thanks to Garik Harutyunyan for an interesting and open talk.
P.S. This is the first time I present 3N speaking publicly about the initiative impacting the IT sector and startups. It was quite a fascinating experience :)
https://t.me/threenstartups#interview #taxbenefits #support #publicprivatedialogue
