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Artsakh women initiate businesses and go through “hell’s twists and turns”
Coffee lovers will love Ada’s apartment. The smell of coffee has captivated it. Ada’s “Tesan-Tena” business is there. She started her business in Stepanakert in 2020 after the war. Initially, she sold aromatic coffees and teas online. A few months later, she opened her small shop.
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Ada is not engaged in the usual sale of ground coffee or tea; the uniqueness of her business lies in beautiful packaging and lovely presentation. She makes and sells coffee and tea bouquets, boxes, and other packaging with her own hands. Throughout her career, Ada has not attended any business courses and has no textbook knowledge in this field; she acts according to her feelings, as she sees fit. She is an economist by profession, and before being forcibly displaced from Artsakh, she worked as a chief specialist in the treasury of the Artsakh Ministry of Finance.
After the 44-day war, the state in Artsakh established tax privileges for the business sector. As a business opened in the post-war period, “Tesan-Tenan” was exempt from all types of taxes. Before the blockade of Artsakh by Azerbaijan, the business worked smoothly, providing a stable income. Each subsequent month of the blockade brought with it new difficulties for business. And after the 10-month blockade, as a result of the armed attack of Azerbaijan, 120 thousand Armenians were forcibly displaced from Artsakh, moving to Armenia. Here, they were forced to accept new rules of the game.
“After the displacement, my clients asked to continue their business in Armenia. You know about the rents for the premises, they are expensive, very expensive, but we decided to open, resume business, open a store,” says Ada Sargsyan.
Hopes and expectations were not justified, rents and taxes were high, and income did not cover expenses. After 8 months of struggle, Ada closed the store, but she has no intention of closing the business. Before opening a store in Armenia, they had calculated all the costs, she says, but they didn’t choose the right place for the store; they had to move to the center of Yerevan, where they didn’t have the financial means. The store closed, but the regular customers continued to come. She says she has put a lot of effort and energy into this business, and she will continue, despite all the difficulties. “This business is a blessing for me.”
He did not use any privileges in Armenia to continue his favorite business; on the contrary, instead of 5%, he already pays 10% turnover tax, like everyone else. “The privilege is not exemption from taxes; the privilege will be for the state to help attract finance, for example, implement grant programs.”
No privileges, but there is an increase in taxes
In post-war Artsakh, businesses multiplied thanks to the state’s policies. Some businesses were exempt from taxes. This is what Sofia Hovsepyan, coordinator of the Artsakh Social Development Foundation, says. “People understood that they had to start something, do something, that they could not rely on the state, receive benefits, and live on it.”
However, in Armenia, not only are there no privileges, but the tax burden is also being tightened, applying to everyone without regard for the needs and capabilities of different businesses. For example, as of January 1, 2025, the turnover tax has been doubled.
“The law was passed to be equal for everyone, and in reality, this law will also crush local businesses, since no privileges or advantages are given to people to develop their business. This will force people to act secretly or simply close down and leave the country,” says Sofia Hovsepyan.
In her opinion, many Artsakh residents do not leave Armenia in the hope that they will still manage to do something here and will stay in their homeland, but if they cannot earn enough money and have a decent job, they will leave the country. “That would be a huge loss for the Republic of Armenia, and a closed door for the vision of returning to Artsakh.”
“It took a long time to prove that I can bake good bread, too.”
After being forcibly displaced from Artsakh, Karine worked for some time at the Public Radio in her profession as a sound director and editor. Then she went to Russia for a short time to work there. After returning, she was ashamed to go to the radio again for work, she could not stay idle, so she got a job in one of the supermarkets in Artashat.
And one day she saw an announcement on social networks about a grant business program for Artsakh residents. The Armenian Foundation for Sustainable Development was the implementer. She sent the application, wrote a business plan, and became one of the 15 winners.
Some of the necessary equipment for the bakery was purchased through grants, while the rest was funded by her own resources. Karine opened the “Ari Ojakh” bakery in Masis because in Artashat, where they live, the rental fees for commercial premises are higher. This means she spends time and money on the road.
“There are 4 such factories next to my workshop in Masis, they have more experience, they have been working for a long time. It took me quite a long time to get a customer. It took me a long time to prove that I also produce good bread and that people can buy it from me,” says Karine. The jewels of the business are the zhengyalov bread and baklava; people order it again after trying it once.
Her husband and 2 sisters help her. She says she doesn’t see her daughters’ faces, she is at the workshop from morning to night, she leaves at 5 in the morning and gets home at 8-9 in the evening.
Having state benefits, she says, will of course play a big role in the development of the business. “If the state helps with money for 6 months, I will manage to buy at least a refrigerator for cookies and cakes, it is very necessary, but I can’t afford it.”
Karine has big plans for this business; they plan to increase volumes and income.
Instead of giving the fish, it is better to give the hook
The Armenian business market is a new environment for the people of Artsakh, which they must first get acquainted with, then adapt to and be ready for changes. It is mandatory to be constantly informed and flexible, says business expert Hripsime Kocharyan.
“One-time support is important as a first aid, but then it would be better to implement educational programs and educate entrepreneurs, and organize some events. Instead of giving the fish, the state would do well to give the hook, and let the beneficiary catch the fish,” says Hripsime Kocharyan in an interview with us.
The state has no support programs for Artsakh entrepreneurs and does not have data on how many of the forcibly displaced Artsakh residents have started businesses
Is it known how many Artsakh residents have established businesses in Armenia after being forcibly displaced? We tried to find out from the Ministry of Justice. In response to our inquiry from the Ministry’s State Register of Legal Entities Agency, they informed us that from September 19, 2023, to March 24, 2025, 292 legal entities and 70 individual entrepreneurs were registered. However, these are general data, and there is no information on how many of these were registered by displaced Artsakh residents.
We asked the Ministry of Economy about the support programs implemented for those forcibly displaced from Artsakh. The response states that there are no separate programs. “…The Ministry of Economy of the Republic of Armenia does not implement separate support programs for citizens forcibly displaced from Nagorno-Karabakh; however, they can benefit from state support programs developed by the Ministry. We also inform you that the Ministry does not conduct separate registration of citizens forcibly displaced from Nagorno-Karabakh.” It is also noted that in some programs, there are certain privileges for Artsakh residents. However, the response mentioned only one program, the “Measures for Involving Workers in the Developing Industry” support program implemented in cooperation with the State Revenue Committee. According to the State Revenue Committee, as of January 22, 2025, 78 beneficiaries had applied to the program, 33 of whom were displaced from Artsakh.
“The state has the potential and should support”
Yes, there are many problems for Artsakh businessmen in the Armenian business market: high rents for the premises, recognition, attracting finance, enduring the tax burden, etc. Economist Hrant Mikaelyan says that the state should help these people temporarily taken under its protection to solve these problems.
In his opinion, the right direction would be for the state to provide low-rent areas to Artsakh residents to develop their business. “For example, a business center could be created, with office or perhaps commercial space, where the businesses of Artsakh residents would be located. This would also allow them to work together and solve the problem of adaptation,” the economist believes, considering this option of state support to be quite promising.
The economist also notes that the Republic of Armenia has the potential to ease its tax burden. “For example, we need to provide preferential loans so that they can start a business. Here, perhaps, the tax should not be 0%, but it should be, let’s say, half of the general rate.”
In addition to all these issues, there is another important issue: to ensure conditions for non-emigration from Armenia. “It is very important for Armenia to keep the people of Artsakh on the territory of Armenia and we should conduct policy with that assumption in mind. For example, if people stay or if the whole family stays, then more preferential interest rates on the loan should be provided.”
Author: Aspram Avanesyan
The material was prepared within the framework of the “Support to Women Entrepreneurs” program by the “Point 33” NGO with the support of the Embassy of the Kingdom of the Netherlands in Armenia. The author is solely responsible for the content of the material, and the views expressed in it may not coincide with the views of the Embassy.
To be shut down or to raise prices: Small and medium businesses face a dilemma
Close the business or raise the price of goods and services? The new tax cuts, effective from January 1, 2025, have put business owners in a difficult situation.
Hripsime Kocharyan has been producing eco-bags for 5 years. The “Ecobag with me” brand, founded in 2020, collaborates with women with young children and children with health issues. First, they teach them sewing and patterning for free, and then they hire them. Currently, they have 12 employees. They all work from home so that they can easily combine work and childcare.
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“I know, a number of companies will close due to the new tax burden; they didn’t even stand a month. We will not close, because we have an adopted ideology: it doesn’t matter if we don’t generate profit, we must try to provide our mothers with work, this entrepreneurship was created for them, naturally, we strive to generate profit, to have more orders,” says Hripsime Kocharyan.
After its establishment, the production operated as a micro-enterprise, and since 2023, it has been subject to turnover tax. Starting this year, the turnover tax percentage has doubled, which also implies an increase in the price of goods.
“We have not made a difference at the moment, but probably from February-March, whether we like it or not, we will have to increase the cost of each product by 5-10 percent. In the case of 100 pieces, the price of one bag is now 1,970 drams; it will become 2,270 drams.”
According to the entrepreneur, along with the expected inflation, they will face another problem: “If the price goes up, then buyers will look for an alternative option, we will also have a sales problem – a reduction in quantity. As a result of tax increases, we will also have a reduction in the number of employees and working hours.”
According to Hripsime Kocharyan, the tax increases have made women entrepreneurs particularly vulnerable, as they typically have more limited financial resources to invest in their businesses and receive more modest salaries from them.
She also points out that this tax hike was implemented without prior consultation with representatives of small and medium-sized enterprises (SMEs): “They make the decision first and only then consider the opinions of SMEs. It’s not that SMEs don’t want to pay taxes, but those taxes need to be realistic.”
As a result, not only are small and medium businesses facing serious challenges, but price increases are also expected — the rise in taxes will directly affect the wallets of end consumers.
New tax changes
According to the amendments made to the Tax Code, the turnover tax rate has doubled since the beginning of this year.
Accordingly, in the case of trade, the tax has been set at 10% instead of the previous 5%, in the case of production – 7% instead of the previous 3.5%, in the case of the public catering sector – 12% instead of the previous 6% (Tax Code, Article 258).
With the same changes, a number of sectors operating under turnover tax have also begun to operate in the general taxation field. From January 1, providers of advocacy services have been transferred to the value-added tax (VAT) field, and from July 1, 2025, companies providing accounting, legal services and financial consulting operating in the turnover tax field are scheduled to be transferred to the VAT field.
At the same time, a number of types of activities can no longer continue to operate as micro-enterprises and be exempt from taxes, they have also moved to the turnover tax field. This particularly concerns commercial activities in the regions, hairdressing, body care, saunas, steam baths, car maintenance and repair services, intermediary activities – real estate rental and sale, etc.
Business Taxation Regimes in Armenia
In Armenia, businesses operate under general and special taxation systems or regimes. Those operating under the general taxation system are taxed by VAT and/or profit tax. VAT is calculated at a rate of 20 percent, and profit tax at a rate of 18 percent as a general rule (with some exceptions, the rate may be different). That is, in cases where a business pays both VAT and profit tax, the monthly tax payments are 38 percent.
There are two special taxation systems: micro-entrepreneurship and turnover tax regime. In the case of turnover tax, taxes are calculated at a rate of up to 12 percent, depending on the type of activity. In the case of micro-entrepreneurship, individuals are exempt from all types of tax obligations.
All businesses, at the same time, depending on the nature of the activity and other factors, may pay different taxes and fees, for example, environmental tax, road tax, excise tax, etc.
All businesses with employees pay income tax and stamp duty.
Small and medium-sized businesses are targeted
The president of the Small and Medium-sized Enterprises Association, Hakob Avagyan, also says that the consequences of raising taxes and reducing privileges (in particular, removing certain types of activities from the micro-enterprise taxation regime) will be the closure of some businesses and the inflation of goods.
“We talk to regional small and medium-sized entrepreneurs, and they say, no, they have imposed such a burden that is unbearable, we, on the contrary, will go into hiding. In other words, the same tax forecast: 13 billion with one project, 18 billion with another project, additional income will be provided with one project, but that will not be provided either. Because people say, we cannot pay, because it is an unbearable burden.”
According to him, the relevant structures should also have made forecasts regarding the risks of the changes being made. “In other words, the Ministry of Economy should have made that prediction, then written an opinion for those laws. We have had experience working with the previous three governments, and this is the first time I see that they write, ‘I am not against’, to draft laws containing norms that will worsen the situation for small and medium-sized businesses. Therefore, we have what we have.”
As for the government’s observation that micro-entrepreneurship privileges lead to the fact that small businesses do not grow or at some point the increase in turnover is inhibited, Hakob Avagyan notes that small businesses are created and closed all over the world. Some succeed, expand, some close, and some simply decide that this level of development and expansion is enough for them, they consider themselves a “boutique business”.
“That is, it is not a crime when a small business says, I want to stay within this threshold, or when it decides to increase the volume of business.”
Avagyan also spoke about the change to exclude regional stores from the field of micro-entrepreneurship. In particular, according to him, more than 50 percent of SMEs are traders, and small stores operating in border villages and communities actually play a much more important role than just being a store.
“Let’s not forget that the phenomenon of lending goods still exists: one person is given bread on credit, another is given child care on credit… The only hairdresser and dental clinic operating in the region are of equal importance. In other words, to say in such a hasty manner and without deep research that we are eliminating micro-entrepreneurship is wrong, because tax policy leads to balanced economic development, poverty reduction, job creation, etc.”
Either bankruptcy, or emigration, or transition to the shadow economy: economist
“Tax collection has become the main indicator of efficiency for this government. The more taxes it collects, the more the corresponding bonuses increase. Starting from 2018, tax revenues have increased by an average of 15.6 percent every year until 2023, compared to 2014-2018. The growth has been about 5 percent each year. This leads to the fact that SRC employees are not becoming assistants to the economy, but on the contrary, they are interested in collecting taxes from everywhere and placing an additional burden on business entities,” says economist Aghasi Tavadyan, head of the Tvyal.com organization.
According to him, for the first 9 months of 2024, about 8 percent less tax was received by the state budget than was planned by the government. “This is unprecedented, nothing like this has been recorded in the last 20 years. This speaks of the wrong fiscal policy and that this policy is no longer working. In reality, the economy cannot pay additional taxes. Business operators will either exit the market, declaring themselves bankrupt, or go abroad, where the tax policy is more favorable, or they will go into the shadows.”
Government Response
We attempted to obtain a response from the government, specifically the Ministry of Economy and the State Revenue Committee, as to whether the above-mentioned risks have been assessed and whether measures to mitigate them have been planned.
We received the following response from the Ministry of Economy: “In order to alleviate possible risks and concerns of businessmen, the government has developed and is implementing numerous targeted support measures in the form of state support tools of the Ministry of Economy. One of them was adopted just last week, through which we will provide support to companies engaged in export activities, they will be able to use our programs, they will receive certain subsidies. We have other “state support” programs for private business companies, it can be our program for attracting highly qualified specialists, the leasing program, through which they can borrow equipment at 0 interest rates, etc. The list of these programs is large, they can support businesses to avoid closure and be able to increase their turnover. In other words, in essence, privileges are not being reduced, but expanded, a vivid proof of this was the adoption of another support program by the government last week.”
By the time of publication of the article, we had not received a response from the State Revenue Committee.
Author: Arpine Simonyan
The material was prepared within the framework of the “Support to Women Entrepreneurs” program by the “Ket 33” NGO with the support of the Embassy of the Kingdom of the Netherlands in Armenia. The author is solely responsible for the content of the material, and the views expressed therein may not coincide with the views of the Ambassador.
