Employees who carry out approved research and development (R&D) for an Armenian company or individual entrepreneur pay 10% income tax on their salary for that work, half the standard 20%, and for the fourth quarter of 2026 the employer must file its qualification application with the Higher Education and Science Committee (HESC) by Friday 30 October 2026.
Im Überblick
- 10% income tax on the salary of qualifying R&D employees under Tax Code Art. 150(1.1), in operation from 1 January 2025 to 31 December 2031.
- The company or individual entrepreneur applies through private.hesc.am; employees do not file anything themselves.
- The Q4 2026 window opened on 1 October and, under the quarterly rule, closes on Friday 30 October 2026. The closing hour for this round has not been published in the official sources we reviewed.
- Foreign citizens with no right of residence (residence status) in Armenia are excluded.
- The rate works alongside the 1% high-tech turnover tax.
The rate is a payroll measure. Once the work is qualified, the employer, acting as tax agent, withholds 10% on the salary and equivalent payments of the named employees for that work, and the relief runs from the first day of the month the application was filed. Missing the October window therefore costs the October, November and December 2026 payroll months at the reduced rate.
What the 10% rate covers
Article 150(1.1) of the Tax Code sets three cumulative conditions. All three must be met for each employee and each piece of work:
- the employee performs an occupation on the Government’s list of professional work in the high-technology sector, set by Government Decision (GD) 353-N of 27 March 2025, in force since 28 March 2025;
- the work satisfies the Government’s R&D criteria in GD 195-N of 13 February 2025, as amended by GD 248-N of 6 March 2025 (in force 7 March 2025);
- the work has a positive conclusion from the specialist commission referred to in Art. 121(2)(4) of the Tax Code.
R&D carried out for the employer’s own needs is expressly included, so a company developing its own product can qualify without a client contract. The rate attaches to remuneration for the qualifying work of employees named in the application. It does not extend to the rest of the payroll. If the commission withdraws its positive conclusion, the income tax is recalculated under the general rules.
The provision was inserted by Article 7(2) of Law HO-499-N of 4 December 2024, signed on 17 December and published on 18 December 2024. A separate law adopted the same day, HO-500-N of 4 December 2024, sets the 1% high-tech turnover-tax rate. Armenian law numbers restart each year, so always cite the law with its adoption date: an unrelated HO-499-N from 2022 amends the Code of Administrative Offences.
The same 2024 package created two profit-tax R&D measures that are often confused with the payroll rate: the 200% Gehaltsabzug under Art. 123(2)(3) and accelerated depreciation of qualifying R&D assets under Art. 121(2)(4). Both are available only to resident profit-tax payers.
Who and what qualifies
Die Arbeit
Annex 2 of GD 195-N requires the work to meet five criteria at once: novelty, creativity, uncertainty of outcome, systematic organisation (planned and budgeted), and transferability or reproducibility of results. Routine development, maintenance or production work does not qualify merely because it is technical.
Paragraph 5 of GD 195-N excludes applied scientific research and experimental development financed from the Armenian state budget. The texts we reviewed do not settle how work funded partly by the state budget and partly from private sources is treated.
Die Angestellten
Each employee must hold an occupation on the GD 353-N list, which is built on the occupational classifiers in Economy Minister Orders 872-N and 873-N of 19 September 2013. Eligibility turns on the classifier code. The application identifies the qualifying employees by name and public service number (PSN), or by the certificate confirming that the person has no PSN. Any foreigner lawfully present in Armenia can obtain a PSN from the Migration and Citizenship Service.
Ausländische Arbeitnehmer
The exclusion covers foreign citizens who have no right of residence (residence status) in Armenia. A foreign employee who holds Armenian residence status can qualify if the occupation and R&D conditions are met. The test is residence status under migration law, so a foreign specialist working in Armenia without Armenian residence status stays at the standard rate even if tax-resident. The same provision also mentions stateless persons; whether a stateless person who holds Armenian residence status is excluded has not been authoritatively clarified.
Does it work with the 1% turnover tax?
Yes. Article 150(1.1) is addressed to the tax agent and does not require the employer to pay profit tax. Article 263(1) keeps in place the rules for other taxes that turnover tax does not replace. Turnover tax replaces profit tax and VAT for a company, and VAT for an individual entrepreneur. Income tax withheld from employees remains, and Art. 152(1) requires the employer to calculate it at the Art. 150 rates.
A company on the 1% turnover tax for tech companies therefore pays 1% on turnover from activities on the GD 142-N list (Art. 258(1), table item 8) and withholds 10% on the qualifying salaries of its approved R&D staff. The two taxes fall on different bases and are not combined into one rate.
What a turnover-tax company cannot use is the 200% salary deduction: it is a profit-tax deduction, and a company paying turnover tax has no profit-tax base to deduct from. For the trade-off between the two regimes, see our comparison of turnover tax versus the general regime.
The cost to your Armenian customers
Article 113(1)(10), inserted by Article 4 of HO-499-N, bars an Armenian profit-tax payer from deducting what it spends on goods, services and works bought from a turnover-tax payer in respect of activities on the GD 142-N high-tech list. The restriction applies to the customer’s profit tax and turns on the supplier’s turnover-tax status and the listed activity. Whether the supplier also uses the 10% R&D rate makes no difference. For a 1% company selling software development to Armenian profit-tax payers, the full price becomes a non-deductible cost for the customer.
Combining it with the PIT reimbursement
The 10% rate can sit alongside the separate high-tech employee PIT reimbursement run by the Ministry of High-Tech Industry under HO-498-N. Since HO-221-N of 7 May 2026 (in force 30 May 2026, applying to reporting periods from 1 January 2026) and GD 1092-N of 23 July 2026 (in force 28 July 2026), support for an employee taxed at the 10% R&D rate is calculated on a base of 20% of salary. GD 1092-N replaced the old support procedure and left the HESC qualification process in place.
How the company applies
The applicant is the company or individual entrepreneur carrying out the work. The application asks the HESC specialist commission to classify the work as R&D; the reduced payroll rate follows from that classification.
- Test the work and the staff. Check the project against the five GD 195-N criteria and each employee’s occupation code against the GD 353-N list. Confirm that no part of the work is financed from the state budget.
- Prepare the programme. Annex 4, paragraph 4 of GD 195-N requires an application with a programme covering the classified work, its objectives, stages, timing, funding, the jobs involved, and the names and PSNs of the professional employees.
- Complete the portal form. The Ministry’s published checklist asks for the applicant’s name in Armenian and English, legal form, registered address and taxpayer identification number (TIN); the director’s name, email and telephone; a description of the activity and the programme title; the classification of the work under Economy Minister Order 874-N of 19 September 2013; expected start and completion dates; and which relief is sought: Art. 121(2)(4), Art. 123(2)(3) and/or Art. 150(1.1). The portal’s “Files” section adds further required documents, whose full current list we could not confirm.
- File within the window. Applications are accepted through private.hesc.am from the first working day to the last working day of the first month of each quarter. HESC announced that the Q4 2026 round opened on Thursday 1 October 2026; under that rule the last working day is Friday 30 October 2026. The April 2025 round closed at 18:00 Yerevan time, but no closing hour for October 2026 appears in the official notices we reviewed, so file before the final day.
- Keep the programme accurate. A revised application resets the date used to fix when relief starts (see below).
If the October window is missed, the next one opens on the first working day of January 2027, and relief for a January application cannot start before 1 January 2027.
When the relief starts
Paragraph 7 of GD 195-N applies the relief from the first day of the month in which the application is filed, but no earlier than the first day of the month in which the work begins. The month of approval plays no part.
- A company that files on 20 October 2026 for work already under way applies 10% to qualifying salary from 1 October 2026.
- A company that files in October for work planned to start on 10 December 2026 applies the rate from 1 December 2026.
- If the company later submits a revised application, the revised submission date is used instead (Annex 4, paragraph 6, as amended by GD 248-N), which can push the start date later.
Paragraph 8 allowed relief back to 1 January 2025 only for applications filed between 1 and 30 April 2025. It gives no backdating to applications filed in 2026.
How it differs from the other tech incentives
| Incentive | Was es reduziert | Steuerregelung | Wo Sie sich bewerben |
|---|---|---|---|
| 10% R&D rate, Art. 150(1.1) | Income tax withheld on qualifying R&D salaries (10% instead of 20%) | Any, including 1% turnover tax | HESC commission via private.hesc.am, quarterly |
| 200% salary deduction, Art. 123(2)(3) | Company profit tax | Resident profit-tax payers only | Relief selected in the same HESC application |
| PIT reimbursement, HO-498-N | Cash support equal to part of employees’ income tax | General regime and turnover tax, subject to a 90% high-tech turnover test | Ministry of High-Tech Industry platform |
| 1% turnover tax, Art. 258(1) item 8 | Tax on turnover from GD 142-N activities | Turnover-tax regime | Election with the State Revenue Committee |
Häufig gestellte Fragen
Can an employee apply for the 10% rate personally?
Can foreign employees benefit from the 10% rate?
Can a company on the 1% turnover tax use the 10% R&D rate?
What happens if we miss the 30 October 2026 deadline?
From when does the 10% rate apply after approval?
Was beinhaltet die Anwendung?
Is state-funded research covered?
Does using the 1% regime affect our customers?
Verwandte Dienstleistungen: tax services in Armenia, Firmenregistrierung, eingetragener Arbeitgeber und Einhaltung der Beschäftigungsvorschriften.
Letzte Aktualisierung: 10. Oktober 2026
