Doing business in Armenia with clients and suppliers abroad brings both opportunities and tax obligations. Armenia applies a territorial flat-tax system for companies: resident firms pay 18% corporate income tax (CIT) on profits, and non-residents pay tax on Armenia‐source income. Below is a breakdown of the key taxes and rules:
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Get Legal Consultation →Corporate Income Tax (CIT)
All Armenian companies and any non-resident with a permanent establishment (PE) in Armenia pay 18% on net profit. Deductions are allowed for documented business expenses. For example, an Armenian firm that earns $100,000 profit in a year would owe $18,000 in CIT.
VAT (Value-Added Tax)
The standard VAT rate is 20%. Exports of goods and services (sales to foreign customers) are generally taxed at 0% (zero-rate). For example, an Armenian software developer billing a U.S. client can apply 0% VAT on that invoice.
Reverse Charge for Imports: Services imported from abroad are subject to VAT by reverse charge: if an Armenian VAT-registered business pays a non-resident for services, the Armenian company must account for 20% VAT on that import by itself. The foreign supplier invoices net of VAT, and the Armenian buyer self-accounts the VAT to the tax authority.
Withholding Tax (WHT)
Payments to foreign entities are often subject to Armenian withholding tax. The general rates are:
- 5% on insurance/reinsurance and freight payments
- 10% on interest, royalties, rental income and most capital gains
- 5% on dividends paid to non-residents
- 20% on other Armenian-source payments to non-residents (e.g. fees for services) if not covered by a specific category
Key Tax Rates and Registration
Corporate Income Tax
Non-residents without PE are generally not subject to CIT in Armenia, but their Armenian-source payments (interest, royalties, etc.) trigger the WHT rates above.
VAT Registration and Filing
VAT returns (combined VAT+excise) are due monthly by the 20th of the following month.
Micro/Turnover Tax Regimes
Very small businesses can opt for special regimes:
- Micro-entrepreneurship: Eligible taxpayers with turnover under ~AMD 24 million pay a flat AMD 5,000/month instead of regular taxes
- Turnover Tax: SMEs with last year's revenue under ~AMD 115 million can elect turnover tax, which replaces both VAT and CIT
Navigating Armenian Tax Regimes for Your Business
Choosing the right tax regime can significantly impact your business operations. Our legal experts help you understand and select the optimal tax structure.
Explore Tax Strategy Options →VAT and Cross-Border Services
Exports of Services
Armenian companies providing services to foreign clients generally charge 0% VAT. For example, if an Armenian consultant bills a European client for online marketing, that income is zero-rated. The consultant still includes the revenue in profit (and pays 18% CIT on net profit), but no VAT is due on the invoice.
Imports of Services
Conversely, if you hire a foreign service provider, you must typically self-account VAT. Armenia applies the EU-model reverse-charge: any VAT-registered Armenian firm receiving business-related services from abroad (with no local PE) must pay 20% VAT to the tax office.
Digital Services
Since 2022, Armenia requires foreign companies supplying electronic services (software, streaming, advertising, etc.) to Armenian customers to register and collect 20% VAT. Foreign e-companies selling to Armenian businesses file VAT returns monthly; those selling to consumers file quarterly.
Withholding Taxes on Foreign Payments
Armenian businesses paying abroad must consider withholding:
- Dividends: 5% WHT when paid to non-residents (Treaty rates may be lower)
- Interest & Royalties: 10% WHT on most cross-border interest or royalty payments
- Services and Other Income: 20% WHT on payments to foreign contractors (unless treaty relief applies)
- Insurance/Freight: 5% WHT on insurance, reinsurance and freight payments
Turnover Tax and Small-Business Options
For small or new businesses, Armenia offers simpler tax regimes:
Turnover Tax
By election, qualifying firms replace their VAT and profit tax obligations with a single turnover tax. The tax is calculated on gross revenue: essentially 60% treated as VAT and 40% as profit. In practice this yields an effective rate of roughly 10% on sales.
- 7% on manufacturing sales
- 10% on most service revenue
- 12% on catering sales
- 1.5% on media services
Only businesses under about AMD 115 million annual revenue can elect this system.
Micro-entrepreneurship
Very small businesses (turnover under ~AMD 24 million) can qualify as micro-entrepreneurs. They pay a flat AMD 5,000 per month as final profit tax (no VAT or corporate tax). This makes compliance extremely simple for sole proprietors or tiny firms.
Recent 2024–2025 Tax Law Changes
High-Tech Incentives
- 200% deduction of eligible tech staff salaries from CIT
- 10% PIT rate (instead of 20%) for qualified R&D employees
- Immediate expensing of research capital
- 1% turnover tax rate for approved IT activities
In late 2024 Armenia passed significant tax breaks for the IT/R&D sector. Starting 2025, Armenian tech companies can deduct 200% of eligible tech staff salaries from profit when computing CIT, effectively reducing taxable profit. These incentives aim to make Armenia more attractive to software and R&D firms.
Income Declaration Reforms
Armenia has implemented a universal income-declaration system (2023–2025). Though aimed at individuals, it reflects the government's focus on transparency. For businesses, deadlines were shifted in 2025 (e.g. individual returns due by Nov 1, 2025 instead of May 1).
Tax Code Adjustments
Other recent changes largely reinforced existing rates (CIT stays 18%, VAT 20%) but tightened definitions and introduced e‑invoicing systems. It's wise to periodically review the State Tax Service or legal updates.
Stay Updated on Armenian Tax Law Changes
Tax regulations evolve frequently. Our legal team monitors all changes and helps ensure your business remains compliant with current Armenian tax law.
Get Professional Legal Updates →Example Scenarios
Scenario 1: Invoicing a Foreign Client
An Armenian marketing agency provides services to a U.S. firm and issues a $5,000 invoice. This is an export of services, so VAT = 0% on the invoice. The Armenian agency still records $5,000 as revenue and will pay 18% CIT on net profit. No WHT is withheld by Armenia on the export payment.
Scenario 2: Hiring a Foreign Contractor
An Armenian retailer hires a foreign graphic designer for AMD 200,000 worth of work. The retailer must account for 20% VAT on that purchase via reverse charge (paying AMD 40,000 VAT to the tax office). If the payment qualifies as royalty or licensing, the retailer would also withhold 10% WHT on the payment (paying AMD 20,000 to the government), unless a treaty says otherwise.
Scenario 3: Working with Suppliers
When buying goods from abroad, Armenia applies Eurasian Economic Union (EEU) customs rules, but be aware that import VAT (20%) is collected at the border. Services from abroad trigger the VAT rules above.
Compliance Tips
Registration Requirements
- Register on Time: Sign up with the Armenian Tax Service (State Revenue Committee) to get a Tax ID when starting operations
- VAT Registration: Mandatory once thresholds are reached
Record Keeping
- Maintain Detailed Documentation: Keep comprehensive invoices and contracts
- Document Foreign Transactions: Maintain records of service location and customer location to prove VAT treatment
Treaty Benefits
- Use Double Tax Treaties: Armenia has treaties with many countries
- Apply Treaty Rates: For dividends, interest or royalties abroad, submit proper forms to the tax office
Filing and Payment
- Electronic Returns: All Armenian tax returns (CIT, VAT, WHT) are filed online
- Monthly VAT Returns: Due by 20th of next month
- Annual CIT Returns: Typically due around April
- Currency: Pay taxes in Armenian drams (AMD)
Professional Guidance
- Consult Authorities: For complex transactions, especially cross-border, consult the State Tax Service
- Legal Professional Support: Work with qualified legal professionals for comprehensive compliance
- Stay Current: Official updates are posted by Armenian tax authorities and Parliament
Ensure Full Compliance with Armenian Tax Laws
Don't navigate complex international tax requirements alone. Our experienced legal team provides comprehensive guidance for businesses operating in Armenia with international clients and suppliers.
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