TL;DR
- From 1 January 2025, eligible Armenian tech startups can pay a 1% turnover tax on qualifying IT revenue, instead of profit tax, through 31 December 2031.
- To qualify, ≥90% of sales must come from government-defined high-tech activities, the firm must have no overdue tax liabilities, and it must be listed in the new High-Tech Registry.
- The 1% regime applies while annual turnover remains below AMD 115 million; exceeding the cap disqualifies you.
- Applications/quarterly support requests are filed on a government portal within 20 days after quarter-end; procedures and a self-service platform were approved on 17 April 2025.
- Complementary incentives under the general tax regime include reduced 10% income tax for R&D staff (with commission approval) and a 200% salary deduction for IT specialists.
Last updated December 2025
Armenia has locked in a startup-friendly tax regime for the tech sector: a 1% turnover tax that simplifies compliance and stretches runway for early-stage teams. With the country’s IT turnover already surging — 837 billion AMD in 2023 and continued double-digit growth into 2025 — the regime is designed to channel that momentum into jobs and innovation.
Legislative framework
Armenia’s 1% turnover tax for the high-tech sector is enacted through amendments to the Tax Code and a dedicated law providing state support to IT/high-tech companies (Law HO-498-N). The reforms introduce a preferential 1% turnover rate for qualifying tech revenue and a formal registration mechanism (High-Tech Registry) to gate eligibility.
Implementation procedures — including a self-service application platform and quarterly submission windows — were approved by the Government on 17 April 2025 to operationalize the support program and approvals workflow.
| At a glance | Key point |
|---|---|
| Legal basis | Tax Code amendments (HO-499-N) + State support law for high-tech/IT (HO-498-N) |
| Administration | High-Tech Registry + quarterly applications via government portal |
Related reading: If you are setting up a new entity to access the regime, see our guide to business registration in Armenia. For broad fiscal considerations, review Armenia’s taxes and compliance overview.
Timeline and sunset for the 1% turnover regime
The 1% turnover tax applies to qualifying revenue earned from 1 January 2025 and is legislated to remain in force through 31 December 2031, providing a clear multi-year planning horizon for startups and investors.
Applications are submitted on a quarterly cycle, with a fixed window after each quarter for filing through the government portal (see “application steps and government approval timelines” below). The government approved the implementation procedures and platform on 17 April 2025.
What the 1% turnover tax covers: rate
Eligible high-tech companies are taxed at a 1% rate on qualifying turnover, instead of paying profit-based corporate income tax on those activities.
Note on complementary incentives: Additional employment incentives (10% income tax for R&D staff, 200% salary deduction for IT specialists) apply only under the general tax regime, not the turnover tax regime. Most small IT companies use the 1% turnover tax and don’t access these deductions.
Taxable base and scope
For companies approved under the regime, the taxable base is the gross turnover from government-defined high-tech/IT activities — i.e., gross revenue without expense deductions — subject to meeting the 90% activity mix test described below.
Important: Only revenue from qualifying high-tech activities can be taxed at 1%. Non-qualifying activities fall under the standard regime and can jeopardize eligibility if they exceed the activity mix threshold.
Eligibility rules: qualifying activities
To access the 1% turnover tax, a company must satisfy all of the following:
- Have at least 90% of total sales derived from government-defined high-tech/IT activities (e.g., software development, data/AI, engineering, and R&D).
- Have no overdue tax liabilities at the time of application and throughout participation.
- Be registered and recognized in the state High-Tech Registry (see below).
- Not be an excluded business type (banks, insurance, legal services, accounting, management consultancy, etc. are prohibited from using turnover tax).
- Not be a related party to entities that would disqualify you under Armenian Tax Code Article 30.
These criteria are designed to ensure that the preferential rate targets true core tech activity and to prevent abuse by non-tech businesses.
Quick eligibility checklist
- ☐ High-tech activity share ≥90%?
- ☐ Annual turnover under AMD 115 million?
- ☐ No overdue tax liabilities?
- ☐ Registered in the High-Tech Registry?
- ☐ Not an excluded business type?
- ☐ No disqualifying related party relationships?
Revenue thresholds (AMD 115M) and exclusion conditions
The 1% turnover regime is limited to companies with annual turnover below AMD 115 million (approximately $300,000). If a company exceeds this cap, it exits the preferential regime.
Important: If you exceed the threshold in 2025, you cannot return to turnover tax in 2026. You can only return in 2027, provided your 2026 turnover was below AMD 115 million. There is a mandatory gap year.
Key disqualifiers include:
- Falling below the 90% high-tech activity threshold in a reporting period
- Having overdue tax liabilities at application or during participation
- Exceeding the AMD 115M turnover ceiling
- Being a related party to entities with combined turnover exceeding AMD 115M
- Engaging in prohibited activities (legal, accounting, consulting services)
High-Tech Registry
The law establishes a High-Tech Registry to identify and track eligible entities. Registration in the Registry is mandatory to access tax privileges and related employment incentives.
On 17 April 2025, the Government approved procedures and a self-service digital platform to manage applications, quarterly submissions, and approvals under the support program, including mechanisms to validate projects (such as R&D) and monitor continued eligibility.
If you are forming a new company to enroll, our team can assist with end-to-end Armenia business registration and ongoing tax compliance.
Application steps and government approval timelines
Applications and quarterly support requests are handled online through the government portal, with submissions due shortly after each quarter closes. Below is a practical, step-by-step guide based on the approved procedures.
- Confirm your eligibility: verify the ≥90% high-tech activity mix, absence of overdue tax liabilities, and expected turnover below AMD 115M.
- Prepare documentation: business activity description, revenue composition evidencing the 90% test, and other data required by the portal’s forms.
- Register in the High-Tech Registry: create an account on the self-service platform and submit your initial registration dossier.
- File quarterly applications: submit support requests within 20 days after each quarter’s end through the portal.
- Await government decision: approvals/recognition are issued via the platform under the approved procedures; maintain compliance documentation for monitoring.
| Item | Timeline / Threshold |
|---|---|
| Program start | 1 January 2025 |
| Program sunset | 31 December 2031 |
| Turnover cap | AMD 115,000,000 annual |
| Quarterly filing window | Within 20 days after quarter end |
| Activity mix | ≥90% qualifying high-tech sales |
Considering moving founders or key staff to Armenia to benefit from the program? Explore visa and residency options alongside our investment support.
Conclusion
Armenia’s 1 percent turnover tax for tech startups offers a clear, low-friction path to operate and scale in a cost-effective jurisdiction, with predictable benefits through 2031. If your activity mix meets the 90% rule and your turnover stays under AMD 115M, the regime can materially extend runway and simplify compliance.
Have questions about eligibility, registration, or structuring your Armenian operations? Contact our tech and tax team for tailored advice.
For comprehensive support with business registration, tax compliance, and corporate structuring in Armenia, visit our Business Registration Services page.
FAQ
When did Armenia’s 1% turnover tax for tech take effect, and how long does it last?
It applies to qualifying revenue starting 1 January 2025 and is legislated to remain in force through 31 December 2031.
What is the turnover cap for the 1% regime?
Annual turnover must be below AMD 115 million. Exceeding the cap disqualifies you from the preferential regime, and you must skip one full year before you can return.
What are the core eligibility rules for tech startups?
You must derive ≥90% of sales from government-defined high-tech activities, have no overdue tax liabilities, not be an excluded business type, and be listed in the High-Tech Registry.
Do individual entrepreneurs (sole proprietors) qualify, or only companies?
Both commercial organizations and individual entrepreneurs can be recognized as eligible for state support, subject to meeting the statutory conditions and Registry requirements.
How and when do I apply each quarter?
Applications/support requests are filed through the government’s self-service portal within 20 days after each quarter ends, under procedures approved on 17 April 2025.
What happens if I exceed the AMD 115M threshold?
You exit the turnover tax regime and must switch to the general system (18% CIT + 20% VAT). You cannot return to turnover tax the following year — you must wait one full year, then reapply if that year’s revenue was under the threshold.
