Assistance package for the Armenian manufacturers to engage new workers through on-job training

Experience and Training in Exchange for an Income Tax Refund

In order to alleviate existing gaps in the labor force in the field of the manufacturing industry, an special initiative involving workers in the manufacturing industry was launched, in which forcibly displaced people from Nagorno Karabakh can also participate.

By compensating employers in the manufacturing industry for one year's income tax for workers who have completed 12 consecutive months of work, the program plans to attract around 3,000 new workers in various sectors. This move not only strengthens the labor market but also creates opportunities for sustainable growth by mitigating structural imbalances and empowering a diverse workforce.

WHY DESIGN AN INITIATIVE LIKE THIS?

In recent years, the ever-increasing demand for the labor force is accompanied by an insufficient supply of qualified specialists, as a result of which businessmen carry out qualification or training activities themselves. It is mainly carried out by the method of teaching the employee along with the work, which requires financial, technical, and territorial resources.

A number of problems arise in the process of qualification and training. As a result of the attempt to form the necessary skills through work, not all novice workers meet the requirements of the entrepreneur. Immediately after acquiring a certain skill, workers go to work for another employer and begin to engage in self-employment, which in the short term leads to the termination of employment relations. Lacking adequate experience, workers spoil raw materials and equipment, causing damage to the business. As a result, time and administrative resources are spent without solving the main problem - filling the shortage of workers.

On the other hand, there are a large number of people, including students of higher and secondary professional educational institutions or those who have just graduated, as well as people who need requalification, who want to work but do not meet the necessary requirements. Among the mentioned groups, graduates of universities and secondary professional educational institutions, as well as those in older age groups, are particularly vulnerable.

Under these conditions, there is a need to stimulate businessmen to hire and train as many workers with no work experience in the field as possible, alleviating both their own and the existing structural problems in the labor market.

The problem was mapped by the SME Council headed by the Deputy Prime Minister under the coordination and professional support of the EBRD-backed Investment Council of Armenia, supported by the UK Government's "Good Governance Fund."

WHAT IS ON OFFER?

The program offers the following:

• If employers in the manufacturing industry hire and train and pay persons displaced from Nagorno-Karabakh for 1 year, after 12 months, the income tax paid for that person during the year is returned to the business.
• If the employers of the manufacturing industry branch employ and train and pay RA citizens for 1 year, who have not worked in the manufacturing industry during the previous 3 years, then after 12 months, the amount of income tax paid for that person during the year is returned to the business. (Special condition apply.)

WHAT RESULT TO EXPECT?

The plan is to ensure the recruitment of approximately 3,000 additional new workers to various sectors of the manufacturing industry.

It will contribute to the involvement of new employees, including people with no work experience or those who need requalification, by the manufacturing industry companies operating in the territory of the Republic of Armenia, to training in working conditions and to the creation of long-term jobs.

As a result, structural imbalances in the labor market will be mitigated, high employee turnover rates will be prevented, and labor supply gaps will be filled, providing opportunities for sustainable and predictable growth for businesses.

WHO CAN APPLY:

Those commercial organizations and individual entrepreneurs registered and actually carrying out activities in the Republic of Armenia, with the exception of businessmen who are (have been) subjects of micro-entrepreneurship during the submission of the application and (or) during the preceding calendar year(s):

a. which, as of the day before the date of submission of the application, do not have tax obligations in terms of income controlled by the tax authority, and

b. for which at least 80% of the turnover presented in the calculations for each reporting period during the year preceding the date of submission of the application was formed by the Order of the Minister of Economy of the Republic of Armenia No. 874-N of September 19, 2013, "C (SI) Developer of the "Types of Economic Activity Classifier" from the types of activities included in the "industry" group.

Income Tax Refund

If employers in the manufacturing industry hire, train, and pay persons displaced from Nagorno-Karabakh for 1 year, after 12 months, the income tax paid for that person during the year is returned to the business.

If employers in the manufacturing industry hire, train, and pay RA citizens for 1 year, who have not worked in the manufacturing industry during the previous 3 years, after 12 months, the amount of income tax paid for that person during the year (existing and other) is returned to the business. (Special conditions apply).

How to Apply to the Program:

It is necessary to complete a specially defined application and have it signed by the employee. To receive support, the beneficiary submits an application from the SRC electronic reporting system, with the submission deadline being March 1, 2027. At the time of application submission, the SRC automatically checks the grounds for meeting the conditions set by this measure. If the specified conditions are not met, the application cannot be submitted, and the applicant is informed about it. If the conditions are met, the application is accepted. To transfer the support amount to the beneficiary, the SRC transfers the support amount to commercial banks to the beneficiary's bank account within three working days following the submission of the application. All details, including application and application forms, can be found here.

Timeline: valid until December 31, 2026.

Amount of Assistance: no more than 500,000 AMD per employee for 1 year.