ArmInfo. In Armenia, during implementation of leasing agreements, organizations previously used different approaches, but from now on, thanks to changes in the Civil and Tax Codes, a common methodology will be in effect, which will allow transferring the regulation of the sector from the contractual to the legislative field. Arsen Bazikyan, Co-Founder & CEO at Armenian Leasing Company, stated this at a press conference on August 6.
Regarding the changes in terms of improving leasing instruments, he explained that we are talking about accelerated depreciation and a number of other advantages, stressing that the basis of all legislative amendments, by and large, is an approach that primarily contributes to the development of the economy.
In turn, Izabela Hovhannisyan, Legal Consultant of the Business Support Office, said that due to the changes in the Civil Code of the Republic of Armenia, such concepts as "secondary leasing" and "return leasing" were introduced. She explained: "In a secondary lease, the leased asset that remains in the ownership of the lessor in the event of termination or cancellation of the lease agreement is leased to another lessee. This was previously a problem for financial institutions. Leaseback leasing (reverse leasing) concerns cases when an enterprise has acquired property, but at the same time wants to save financial resources for purchasing raw materials or solving other organizational issues. The bank acquires this property, then provides it to the economic entity through a leasing transaction, which makes it possible for the latter to preserve property and funds that can be directed to other necessary purposes. The introduction of this type will allow diversifying the leasing portfolio>.
In this regard, Arsen Bazikyan noted that the amendments to the Civil Code will make it possible to form a secondary leasing market, and open up an opportunity, in cooperation with international leasing companies, to serve clients wishing to purchase property on lease abroad. He also drew attention to the fact that these changes in the Civil Code of the Republic of Armenia will contribute to the development of the rental market.
Speaking about the changes in the Tax Code, Bazikyan said that leasing transactions are henceforth exempted from VAT, moreover, leasing transactions for supplies are also exempted from VAT. "These very important changes will serve as an incentive for the development of local suppliers, allowing transactions to be made without VAT and artificial added value," he stressed.
In her turn, Deputy Minister of Economy of Armenia Naira Margaryan said that today the total loan portfolio of banks is about 4 trillion drams, of which 200-300 billion drams are credited for the purchase of real estate. At the same time, the leasing portfolio is over 30 billion AMD. "This indicates that the demand for leasing is 10 times higher than the volume of transactions," she said. Stressing that Armenia has a high potential for the development of leasing, N. Margaryan noted that out of 17 existing banks and 32 credit companies, only 8 provide leasing services, of which only 3 are large players. In particular, she reported that the latter account for 79%, 15% and 3%, respectively, while 2% were distributed among the other 5 players.
The deputy minister said that the work on the bill had been going on for a long time, in the development of which both representatives of the public and private sectors took part. "It is very important that both sides took a constructive approach, as a result of which we received mutually beneficial and balanced solutions," she concluded.
According to the Ranking of banks and credit companies of Armenia, as of June 30, 20, prepared by ArmInfo IC, the total volume of the leasing portfolio amounted to about 37 billion drams, with a y-o-y growth of 52%. Moreover, there are 7 banks from banks in leasing operations, among which ACBA-Credit Agricole Bank (through the leasing company ACBA-Leasing) is the leader in terms of volume - over 23 billion drams (y-o-y growth of 24%), and Ameriabank is in second position - over 10 billion drams (2.4 times y-o-y growth). And there are 4 leasing companies in Armenia, among which ACBA Leasing is the undisputed leader, Agroleasing occupies the second position with a significant breakaway in terms of volume, and a new player Armleasing occupies the third position.