Strategies of the Development of Entrepreneurship and SME

Index of SME Development in Armenia, 2003-2006Table 19.YearShare ofPrivateSector inTotalEconomy[%]Share of SMESector inGDP[%]Share of Number ofEmployees in all SMEsCompared to TotalNumber of Employeesin the Economy as aWhole[%]GDP[USD/capita]Index ofSMEDevelopment[USD/SME]2003 83 36.5 31.0 873.4 82.02004 84 38.6 32.9 1,104.1 117.82005 84 39.8 34.0 1,513.0 171.92006 84 40.3 35.1 1,996.0 237.25.2.2. Legislation and steps of doing Business in Armenia 31In order to launch an entrepreneurial activity in the Republic of Armenia it is necessaryto register as a commercial legal entity (LE) or sole proprietor (SP).It is comparatively easy to register as a sole proprietor in regard with requireddocuments, cost and duration. In general for SP registration it is required to pay AMD 3000 asa registration fee and fill in an application form and submit it to the State Registry. Theregistration certificate for SP is given during 2 days.In Armenia there are various types to register as commercial legal entities, such asproduction cooperatives, companies (Limited liability companies (LLC), Supplementary liabilitiescompanies (SLC), Joint stock companies (JSC)) and commercial partnerships (full partnership(FP) and limited partnership (LP)). For registering as a commercial legal entity it is required: topay AMD 5,000 to any bank as a state duty in order to register the name of the company; topay AMD 12,000 to the appropriate account in order to register the company at the StateRegistry. Registering the company name takes 2 days. After obtaining necessary documents, aregistration application should be submitted to the State Registry and during 5 working daysthe company’s registration certificate is given.Regardless the fact whether a company or a sole proprietor was registered, their namesshould be officially recorded at the State Tax Service in 30 days after registration in order toobtain a taxpayer’s ID number (TIN), thereafter, to be recorded at the Social Security Fundrequires submitting the copy of registration certificate and the TIN. After accomplishing theabove-mentioned steps, the LE seal should be obtained which is not obligatory for SPs.By estimation of the World Bank for launching a business for commercial legal entities itis required 9 steps and 18 days. The steps include registering the name of the company at theState Patent Department (2 days), Procuring a written statement of deposited charter capitalat a bank (1day), obtaining a Registration Application from the State Registry Office and fillingit out (1 day), paying the registration fee at any bank (1 day), registering with the StateRegistry (7 days), registering with tax authorities and obtaining a TIN (2 days), obtaining aright at the National Police Department to order a seal for all official company transactions (1day); order a seal (2 days), registering with statistical office (1 day). The fee to be paid at theNational Police Department for ordering a seal compose AMD 6000 and the seal cost variesbetween AMD 10,000 and 20,000.31 www.doingbusiness.org; “SME sector in Armenia:2005-2006, Reference Book, pages 4-34, SME DNC of Armenia90