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Tax rates in Armenia

Tax Rates

Consumption Taxes

Nature of the Tax
Avelacvats arzheqi hark (AAH) - Value-Added Tax (VAT)
Tax Rate
20%
Reduced Tax Rate
Exempt supplies include: certain educational services, books, supply of services related to the care of children, newspapers and magazines, pension insurance, insurance and reinsurance, supply of financial services by banks, persons participating in securities markets, payment and settlement organizations and lending organizations, casinos, gambling, gratuitous supply of goods by non-governmental, charitable and religious organizations, gratuitous
performance of works and rendering of services; supply of services to the organizer and operator of a free-economic zone and the supply of goods in the territory of a free-economic zone; tourism services provided to foreign tourists; etc.
Zero-rated items include exports, international transportation and related services (goods, maintenance, etc.), goods in transit, goods for the official use of diplomatic representations, transactions on the delivery of services by a telecommunication operator or postal communication operator, etc.
The turnover tax, which varies between 1.5% and 20%, replaces VAT for the goods and services provided by SMEs (turnover up to AMD 115 million).
Other Consumption Taxes
Excise tax is levied on the import of spirits, beer, wine, tobacco substitutes, crude oil, gas (except compressed natural gas), petroleum and diesel fuel.
A tax applies on motor vehicles and means of water transport, according to the number of seats and horsepower. The annual property tax on motorcycles is calculated at the rate of AMD 40 for each horsepower of the tax base. The annual rate of property tax on watercraft is calculated at AMD 150 for each horsepower of the tax base. Beginning from the fourth year after the year of production, the tax base for motor vehicles and means of water transport is reduced by 10% per year, up to a maximum reduction of 50%.

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Corporate Taxes

Company Tax
18%
Tax Rate For Foreign Companies
Non-resident companies are subject to the same tax treatment as resident firms but are only imposed on their Armenia-source income. Non-resident firms are exempt from tax on interest gains deriving from Armenian government bonds in foreign currency and on income derived from the sale and exchange of such bonds.
Resident entities, registered permanent establishments, and individual entrepreneurs are required to withhold income tax at source on payments to non-residents not having a registered PE in Armenia.
Capital Gains Taxation
Capital gains are taxed at the ordinary corporate income tax rate of 18%. Non-residents are taxable on the realised capital gains from the increase of the value of the assets located in Armenia.
Capital gains derived by a non-resident firm from the sale of securities are exempt.
Main Allowable Deductions and Tax Credits
Documented expenses incurred in the course of business activities are generally deductible.
Depreciation of tangible and intangible assets is tax-deductible (except for land). Goodwill cannot be amortised for tax purposes.
Start-up and interest expenses are generally tax-deductible. The portion of interest exceeding the double of the settlement rate fixed by the Central Bank of Armenia on December 31st of the taxation year is not deductible (the current rate is 24%). Rental payments and bad debts are also deductible. Receivables that are not collected between 91 and 180 days after their cut-off date are deductible by 25%. The rate is 50% for outstanding debts between 181 and 270 days after the cut-off date and 75% between 271 and 365 days. Debt deductibility is capped at AMD 100,000. Larger claims must be settled through the legal process.
Donations to charitable organisations are deductible up to 0.25% of gross income. Expenses for business trips outside Armenia are limited to 5% of the gross income of the tax year. Representative expenses are limited to 0.5% of the gross income of the reporting year or AMD 5 million, whichever is lower. Expenses on management services received from non-resident companies or individuals are limited to 2% of the gross income of the reporting year. Funded contributions made within the framework of the voluntary funded pension scheme are limited to 7.5% of the salary of the employee.
Commercial fines are tax-deductible, as opposed to those paid to municipal or national authorities. Non-refundable taxes are deductible.
Certain IT companies as well as income from agricultural activities and tapestry are exempt from corporation tax.
Tax losses can be carried forward up to five years. The carryback of losses is not permitted.
Other Corporate Taxes
Employers are not required to contribute to social security. Nonetheless, they are required to withhold social contributions from the monthly employment income according to progressive rates (4.5% of the monthly gross income up to AMD 500,000; above this threshold, 10% of the monthly gross income - capped at AMD 1,020,000) - minus AMD 27,500).
SMEs are subject to a turnover tax that replaces VAT and corporation tax. Rates vary between 3.5% (a reduced rate of 1.5% applies to the sale of secondary raw materials and newspapers by publishing companies) and 25% depending on the type of income and apply to any SME with an annual turnover below AMD 115 million.
Starting from 1 January 2021 the tax on immovable property and vehicle property came into force and replaced the law on property tax and land tax have lost its force. The immovable property tax is assessed and collected at the municipal level on the buildings, lands and its improvements. The value of the land is determined according to the land cadaster. Tax on land tax for agricultural land is calculated at 15% of the net income determined by the cadastral evaluation (in case of nor non-agricultural land, the rate is 0.25% to 1.0% of the cadastral value). Cadastral value should be assessed based on the value closed to the market value.
The taxes on vehicles depend on the number of seats and horsepower.
Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.

Country Comparison For Corporate Taxation

  Armenia Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 15.0 13.9 10.6 9.0
Time Taken For Administrative Formalities (Hours) 264.0 226.2 175.0 218.0
Total Share of Taxes (% of Profit) 22.6 36.5 36.6 48.8

Source: Doing Business, Latest available data.

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Individual Taxes

Tax Rate

Income Tax rate 21% from 1 January 2022
20% from 1 January 2023

(was 22% in 2021)

Income from royalties and interest 10% (when not exempt)
Income from lease of property 10% (+10% for incomes in excess of AMD 60 million)
Income from the sale of property 10% or 20% (according to the type of property and the nature of the buyer)
The sale of non-entrepreneurial property to individuals is exempt from tax
Dividends attributable to 2020 and subsequent reporting periods 5% (instead of 10%)
Allowable Deductions and Tax Credits
Individual taxpayers enjoy the following deductions:
- Paid benefits
- Pension and insurance benefits
- Insurance premiums (paid by employers on behalf of their employees - up to AMD 10,000 per month)
- Amounts of single-sum assistance in case of an employee’s (or family member’s) death
- Work, service or assets received free of charge from non-commercial organisations
- Monetary prizes received at competitions (up to AMD 50,000 per prize).
Special Expatriate Tax Regime
Residents are taxed on their worldwide income whereas non-residents are only taxed on their Armenia-sourced income.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of the tax conventions signed by Armenia (Tax Service of the Republic of Armenia)
Withholding Taxes
Dividends: 0% (resident companies)/5% (dividends attributable to 2020 or after)/10% (dividends attributable to 2019 or before), Interest: 0% (resident companies)/10% (individuals and non-resident companies), Royalties; 0% (resident companies)/10% (individuals and non-resident companies).
Bilateral Agreement
The United Kingdom and Armenia are bound by a double taxation treaty.

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Latest Update: September 2022

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