Tax System in Armenia: Complete Guide 2025

The tax system in Armenia is designed to be efficient and business-friendly. The Republic of Armenia has a favorable and transparent tax system characterized by relatively low tax rates. Most taxes are paid directly into the state budget. Armenia’s tax legislation is based on international best practices, ensuring a tax environment conducive to stable economic growth.

The Armenian tax system consists of a combination of direct and indirect taxes, which are mandatory for both individuals and legal entities. The country’s tax legislation is designed to ensure stable revenue collection for the state while encouraging entrepreneurial activity.

Taxes in Armenia are classified into state and local taxes. State taxes apply throughout the country and are levied on individuals and businesses. Local taxes are established by municipal authorities and include property tax, land tax, and certain special duties.

Types of State Taxes

• Value Added Tax (VAT)
• Excise Tax
• Corporate Income Tax
• Personal Income Tax
• Environmental Tax
• Road Tax
• Turnover Tax

Types of Local Taxes

• Real Estate Property Tax
• Vehicle Property Tax

The general principles of Armenia’s tax system are enshrined in the Tax Code, which was updated in 2018 to become more structured, transparent, and simplified. The introduction of the new Tax Code has also contributed to the digitalization of tax administration, allowing taxpayers to submit reports and make payments electronically.

Armenia’s taxes can be categorized as follows:

• Indirect Taxes – Levied on the circulation of goods and services, ultimately paid by the end consumer. These taxes include VAT and excise tax.
• Direct Taxes – Levied directly on the income and assets of individuals and businesses.

These include personal income tax, Corporate Income Tax, property tax, inheritance tax, donation tax, land tax, and resource tax.

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Detailed Overview of Major Taxes – Tax System in Armenia

Value Added Tax (VAT)

VAT is a state tax payable to the state budget for taxable transactions and operations as defined by the Tax Code.

Taxable Transactions and Operations under VAT

• Supply of Goods within the territory of Armenia.
• Provision of Services and Work Execution, except for certain international transportation services that begin and end outside Armenia.
• Importation of Goods into Armenia under the customs procedure “Release for Domestic Consumption.” Once cleared through customs, goods can circulate freely within the country. VAT and customs duties are applied where applicable.
• Importation of Goods from EAEU Countries (Eurasian Economic Union) under the EAEU regulations.

Exemptions from VAT

• Supply of goods when the place of delivery is outside Armenia,for example, the export of goods to another country.
• International transport services (freight, mail, passenger transportation) that both start and end outside Armenia. In this case, Armenia is considered as an intermediate country for transporting any goods from one country to another.

VAT Rates in Armenia

The standard VAT rate is 20%, except for certain cases specified in the Tax Code.

1. If VAT is included in the total price, it is calculated at an effective 16.67% rate in the following cases:
   • The business has not registered as a VAT payer despite being required to do so.
   • The VAT payer has not separately specified VAT in the invoice.
   • The VAT payer has not issued an invoice.
   • A VAT payer has only provided a cash register receipt without detailing VAT.
2. Certain transactions are subject to a 0% VAT rate, including:
   • Export of goods (except for scrap metal).
   • Exports to EAEU countries with proper documentation.
   • Services related to the export process (packaging, loading, unloading).
   • International transportation of goods, mail, and passengers.
   • Diplomatic supplies and services, provided they qualify for zero VAT in the recipient country.
   • Provision of international interconnection services for telecommunications or postal services.

VAT Refund Mechanism

Businesses engaged in taxable activities in Armenia may qualify for a VAT refund under certain conditions.

• The refundable VAT amount is determined as the difference between VAT payable on taxable transactions and VAT deductible under Article 71 of the Tax Code.
• Refunds can be used to offset other VAT liabilities or credited to the taxpayer’s unified tax account.
• Refunds deemed “high-risk” require additional verification.

Corporate Income Tax

Corporate Income Tax is levied on taxable income as defined by law. The following entities are subject to profit tax:

• Resident companies, except government bodies, municipalities, the Central Bank of Armenia, diplomatic missions, and some exempt entities.
• Registered individual entrepreneurs and notaries in Armenia.
• Contractual investment funds, excluding pension and guarantee funds.
• Non-resident entities and individuals earning income from Armenian sources.

Tax Base for Corporate Income Tax

• For residents – Tax is levied on gross income minus allowable deductions.
• For investment funds – Tax is calculated based on net asset value as determined by the Central Bank of Armenia.
• For non-residents – Tax is levied on gross income from Armenian sources, with or without a permanent establishment.

Corporate Income Tax Rates

• Standard rate for resident companies and non-residents with a permanent establishment: 18%
• Investment and securitization funds: 0.01%
• Individual entrepreneurs under the turnover tax system: Fixed monthly fee of 5,000 AMD
• Entrepreneurs under the general taxation system: 23%

Rates for Non-Resident Entities without a Permanent Establishment

• Insurance and reinsurance payouts, freight charges: 5%
• Passive income (royalties, interest, rental income): 10%
• Dividends: 5%
• Capital gains from securities: 0%
• Capital gains from the sale of shares in other companies: 18%
• Other non-specified income: 20%

Special Provisions

• If a non-resident’s income is not linked to a permanent establishment in Armenia, special tax rates for non-residents apply.
• If an Armenian company operates within a tax-free zone, different tax exemptions may apply.

This guide provides a structured overview of Armenia’s tax system, focusing on state and local taxation, VAT mechanisms, Corporate Income Taxation, and key exemptions. Understanding these principles helps businesses and individuals navigate the country’s taxation landscape effectively.