Amid economic stability, technological advancement, and improvements in financial services, businesses in Armenia face a critical decision: should they purchase new equipment or lease it (acquire it through leasing)? This choice significantly impacts not only the company’s short-term financial position but also its long-term profitability, tax burden, and growth opportunities.
In this article, we will explore in detail:
- The differences between acquiring equipment through leasing and purchasing
- The advantages and disadvantages of each option
- The strategic considerations in the context of Armenia’s financial and economic environment in 2025
- The tax implications of both choices
- The best options for different industries
What Is Equipment Leasing and How Does It Work in Armenia?
Leasing is a financial transaction through which a company gains the right to use equipment for a specific period without paying its full value upfront. In Armenia, leasing services are provided by both banks and specialized leasing companies.
There are two types of leasing:
- Financial leasing (with a purchase option): At the end of the lease term, the client has the option to purchase the equipment at a predetermined value.
- Operational leasing: The equipment remains the property of the leasing company, and the client pays only for its use.
As of 2025, financial leasing is more widespread in Armenia, particularly in the manufacturing and agricultural sectors.
Purchasing as a Form of Ownership
Purchasing involves acquiring the equipment in full, making it the property of the company. This option requires a large upfront investment but ensures complete control, resale rights, and independence.
Purchasing can be done through:
- Own funds (self-financing)
- Bank loans
Advantages and Disadvantages of Leasing
Advantages
| Advantage | Details |
| Financial flexibility | Does not require a large upfront investment; you pay monthly instead |
| Reduced profit tax | Lease payments are recorded as expenses, thus reducing profit tax |
| Equipment renewal / upgrade | Allows regular replacement of old equipment with new models |
| Faster procedures | Some leasing companies can approve the transaction within 1–2 days |
| No collateral or guarantor required | The equipment itself serves as collateral |
Disadvantages
| Disadvantage | Details |
| Higher total cost | Over time, leased equipment may cost more than a one-time purchase |
| Restrictions on equipment | In the case of operational leasing, the equipment remains company property |
| Early termination penalties | Contract termination may involve penalties |
Advantages and Disadvantages of Purchasing
Advantages
| Advantage | Details |
| Full ownership rights | You can freely use, resell, or pledge the equipment |
| Lower long-term cost | No leasing interest rates; you pay once and that’s it |
| Independence | No third-party terms or usage restrictions on the equipment |
| Depreciation control | You can account for depreciation and adjust your bookkeeping accordingly |
Disadvantages
| Disadvantage | Details |
| High upfront costs | May strain the company’s cash flow |
| Loan burden (if financed) | If purchased with a loan, you must wait for approval and pay interest |
| Depreciation risk | Technology can become outdated quickly, reducing the value of your investment |
Tax and Accounting Implications
| Factor | Leasing | Purchase |
| Tax Expense | Lease payments are recognized as expenses | Equipment is subject to depreciation accounting |
| VAT (Value Added Tax) | May be included in monthly payments | VAT must be paid in full at the time of purchase |
| Accounting | Simple accounting based on the contract | Requires full asset registration and accounting |
Which Option to Choose in 2025 – Depending on Your Business
- Startups and New Businesses
- Leasing is recommended as it helps preserve cash flow and reduces financial risks.
- Manufacturing and Agricultural Companies
- If the equipment is intended for long-term use, purchasing may be more cost-effective.
- However, if upgrades are expected within 2–3 years, leasing offers greater flexibility.
- IT and Tech Companies
- If the equipment (servers, workstations, network devices) becomes obsolete quickly, operational leasing allows for regular upgrades.
- Large Enterprises
- Large organizations often opt for financial leasing to take advantage of tax benefits.
Leasing Companies in Armenia (2025)
As of 2025, the following organizations offer competitive leasing terms:
- ACBA Leasing
- Inecobank Leasing
- AraratBank Leasing
- Unibank Leasing
- Armenian Leasing Company (Armleasing)
- VTB Armenia
- Armenbrok Leasing
Tip: Always compare different leasing offers—pay attention to interest rates, terms, early termination conditions, and additional fees.
Which Option Is Better in 2025?
There is no single right answer for all businesses. Your choice should be based on the following factors:
- The size of your business and cash flow
- The cost of the equipment and its depreciation rate
- Tax planning considerations
- Your investment strategy
If you are a startup, leasing is often the best option to preserve cash and reduce risk. However, if you have stable cash flow and plan to use the equipment long-term, purchasing may result in a lower total cost and the benefits of full ownership.
How LSA Can Help
Choosing between leasing and purchasing equipment is a complex legal and financial process that requires a clear strategy, contract analysis, and consideration of tax implications. This is where LSA, a legal and financial consulting company, can become your trusted partner.
How LSA can assist you:
- Analyze your business specifics and create comparative calculations between leasing and purchasing options
- Identify the tax benefits you can take advantage of in the context of the transaction
- Review and assess leasing or purchase contracts to help you avoid risky clauses and hidden fees
- Represent you before banks and leasing companies to help negotiate better terms
- Provide legal support in case of contractual or tax-related issues
LSA has years of experience, particularly in business law, financial consulting, and tax planning—helping Armenian companies make smart, forward-thinking, and legally sound decisions.
Contact LSA’s experts today to discuss your equipment investment plan, receive professional guidance, and choose the best option for your business in 2025.
