February 20 Tax Regime Deadline Armenia

Every year, February 20 determines how much tax your Armenian business will pay. Here's what foreign entrepreneurs, IT companies, and diaspora Armenians need to know before the deadline.

What Is the February 20 Deadline?

Under Articles 254 and 267 of the Armenian Tax Code, businesses that want to operate under a simplified tax regime — either the turnover tax system or the microbusiness tax system — must submit an electronic declaration to the State Revenue Committee (SRC) by February 20 of each year. This declaration covers the entire calendar year, from January 1 through December 31.

The deadline is absolute. The SRC has no discretion to accept late submissions, and there is no grace period. If your declaration is not filed by February 20, you cannot use a simplified tax regime for that year.

There is one important exception: newly registered companies and individual entrepreneurs are not bound by February 20. Instead, they have 20 days from the date of state registration to submit their election. Given that Armenia can register a company in as little as one working day, the tax-planning clock starts almost immediately after incorporation.

Who Does It Affect?

The February 20 deadline is relevant to every business operating in Armenia that wants a simplified tax regime, but it is particularly critical for three groups.

Foreign entrepreneurs who have registered Armenian entities. If you incorporated an LLC or registered as an individual entrepreneur in Armenia — whether for a tech startup, a consulting practice, or an import-export operation — this deadline determines your entire year's tax treatment. Diaspora Armenians who set up businesses remotely are especially at risk of missing it because they may not be tracking Armenian compliance calendars.

IT and high-tech companies. Starting in 2025, Armenia introduced a 1% turnover tax rate for qualifying high-tech activities — one of the lowest effective tax rates in the region for IT companies. At the same time, the 2025 amendments clarified that software development is excluded from the microbusiness regime (its eligibility had always been ambiguous), and the standard turnover tax rate for most other services doubled to 10%. If you run a tech company in Armenia, the February 20 election is where you lock in the 1% rate for the year.

Small businesses approaching growth thresholds. If your annual turnover is approaching AMD 24 million (the microbusiness ceiling) or AMD 115 million (the turnover tax ceiling), your regime choice requires careful advance planning.

Armenia's Three Tax Regimes at a Glance

Armenian businesses operate under one of three tax regimes. The regime you choose — or default into — determines your tax rates, compliance burden, and available deductions.

General tax regime. This is the default. It combines 20% value-added tax (VAT) on taxable supplies with 18% corporate income tax (CIT) on profits. The general regime allows full expense deductibility for CIT and input VAT recovery. It requires the most complex compliance — VAT invoicing, quarterly filings, and detailed profit calculations — but can be the most economical choice for businesses with high deductible expenses or B2B clients who can credit input VAT.

Turnover tax regime (Chapter 55 of the Tax Code). This simplified regime replaces both VAT and CIT for LLCs and joint-stock companies. For individual entrepreneurs, it replaces VAT, and the IE pays a flat CIT of AMD 5,000 per month. Instead of tracking expenses and calculating profit, businesses pay a single tax on gross revenue at rates that vary by activity type. The trade-off is simplicity for the inability to deduct expenses or recover input VAT.

Microbusiness tax regime (Chapter 56 of the Tax Code). This is the most generous simplified regime — qualifying businesses are exempt from virtually all state taxes. Reporting requirements are minimal. However, eligibility is restricted to very small operations with turnover under AMD 24 million, and the list of excluded activities has expanded dramatically since the regime launched in 2020.

Turnover Tax: Rates, Thresholds, and 2025 Changes

Eligibility. To qualify, your previous year's turnover from all business activities must not exceed the VAT registration threshold of AMD 115 million (approximately USD 300,000). Your business must not be a restricted entity type — banks, insurance companies, investment firms, pawnshops, currency exchange operators, casinos, and audit organizations are all categorically excluded.

Rates by Activity Type

Turnover tax rates are set by Article 258 of the Tax Code and depend on business activity:

The biggest 2025 change: professional services excluded entirely. Lawyers, accountants, and consultants can no longer use the turnover tax system at all — they must operate under the general regime (20% VAT + 18% CIT). For foreign entrepreneurs who set up consulting or advisory businesses in Armenia, this is the single most consequential change and makes the February 20 election irrelevant for these activities: the general regime is now the only option.

The rate doubling also matters. The general turnover tax rate for most other activities doubled from 5% to 10% on January 1, 2025. Because turnover tax is calculated on gross revenue — not profit — a 10% rate can represent a heavier burden than it first appears. A company billing AMD 100 million pays AMD 10 million in turnover tax regardless of whether it earns AMD 80 million in profit or AMD 5 million.

The bright spot: 1% for high-tech. The introduction of the 1% turnover tax rate for government-approved high-tech activities is the major positive development of the 2025 changes. For qualifying IT companies, Armenia is now one of the lowest-tax jurisdictions available — but only if you file by February 20.

The bigger picture. The Armenian government originally planned to phase out the turnover tax entirely under its 2022–2025 Tax Revenue Management Plan. Instead of abolishing the regime outright, authorities have progressively tightened it — excluding more activity types (legal, accounting, consulting) and increasing rates. The turnover tax remains operational, and the new 1% high-tech rate shows the government is still using it as a policy tool — but the trend for non-tech businesses is toward fewer benefits each year.

Interconnectedness rules apply here too. Just as with the microbusiness regime, if your business is interconnected with other entities (through ownership stakes of 20% or more) and the combined turnover exceeds the AMD 115 million threshold, none of the interconnected entities can use turnover tax. Joint activity, commission, and agency agreement participants are also excluded.

For LLCs and JSCs, turnover tax replaces both VAT and CIT. For individual entrepreneurs, it replaces the VAT obligation, while the IE pays a flat CIT of AMD 5,000 per month.

Microbusiness Tax: Eligibility, Benefits, and New Exclusions

Eligibility. The microbusiness regime is available to resident commercial organizations and individual entrepreneurs whose total turnover from all activity types did not exceed AMD 24 million (approximately USD 50,000–60,000) in the previous tax year. Physical persons who are not registered as individual entrepreneurs can also qualify if they engage only in activities listed in Appendix 3 of the Tax Code — and they have the added flexibility of applying at any time during the year, not just by February 20.

Benefits. Qualifying microbusinesses are exempt from calculating and paying virtually all state taxes on their microbusiness activities, including exemption from acting as a tax agent and from advance profit tax payments. Reporting requirements are minimal: an annual turnover report by February 1 and, if applicable, monthly payroll reports.

Note on employee taxation: The preferential AMD 5,000 monthly income tax withholding per employee that was originally part of the microbusiness regime was abolished as of July 1, 2023. Microbusiness employers now withhold the standard 20% income tax on employee salaries.

Remaining obligations. Even under microbusiness status, businesses must still pay taxes on imported goods (including from EEU member states) and any applicable excise, environmental, or road taxes.

Interconnectedness rules. If your business is interconnected with other entities (through ownership stakes of 20% or more), and the combined turnover of all interconnected entities exceeds AMD 24 million, none of them can use microbusiness status. Businesses that are party to joint activity agreements, commission agreements, or agency agreements are also excluded. (These same interconnectedness rules apply to the turnover tax regime as well, with the AMD 115 million threshold.)

Expanded 2025 Exclusions — Clarifications and New Restrictions

Starting January 1, 2025, the following activities were explicitly excluded from the microbusiness regime:

• Software development
• Trading (buy-and-sell) activities by companies and individual entrepreneurs
• Construction work and architectural-construction design
• Real estate appraisal and surveying
• Expert examination services
• Hairdressing, beauty, and body care services
• Automotive technical service and repair
• Intermediary services (including real estate brokerage)
• Sauna, bath, and steam bath operations
• "Similar work or services" to those listed above

The explicit exclusion of software development is worth noting — whether IT activities were covered under microbusiness had always been ambiguous, and the 2025 amendment is better understood as a clarification than a sudden policy shift. In practice, IT companies should now elect the turnover tax regime (where the new 1% high-tech rate applies) or the general regime.

Previously existing exclusions — still in force — include consulting, legal, accounting, auditing, engineering, advertising, design, marketing, translation, medical services, scientific research, and retail trade within Yerevan city limits.

Loss of microbusiness status. Disqualification can be automatic and immediate: exceeding AMD 24 million in turnover during the year, engaging in an excluded activity, or having interconnected entities collectively exceed the threshold all trigger instant loss of status. The consequences are severe — retroactive in some cases — and the taxpayer must immediately begin calculating taxes under a different regime.

How to Apply or Switch Regimes

For Existing Businesses — The February 20 Process

1. Ensure you have active credentials for the SRC's Electronic Reporting System. Paper submissions are not accepted.
2. Verify your eligibility: calculate your previous year's total turnover across all activities and confirm your business type and activities are not excluded.
3. Submit the appropriate declaration electronically by February 20. The declaration is a self-certification — you attest that you meet all eligibility requirements.
4. The declaration covers the full calendar year (January 1–December 31). There is no mid-year opt-in for existing businesses.

For Newly Registered Businesses

1. You have 20 days from your state registration date to submit the same electronic declaration.
2. Given that Armenian company registration takes only 1–2 working days, tax regime election should be part of your post-incorporation checklist — ideally within the first week.
3. If you miss the 20-day window, you default into the general regime for the remainder of the year.

Switching between regimes: If you are currently on a simplified regime and want to switch, the February 20 deadline is your annual opportunity. Mid-year migration from turnover tax to general regime may be possible in certain circumstances, but requires advance planning around VAT registration, invoicing systems, and client contracts.

What Happens If You Miss the Deadline

There is no appeal, no extension, and no discretion. If your declaration is not filed by February 20, your business automatically operates under the general tax regime for the entire calendar year: 20% VAT on supplies plus 18% CIT on profits.

Consider this example: a software company with AMD 80 million in annual turnover and AMD 20 million in expenses qualifies for the new 1% high-tech turnover tax rate. Under turnover tax, total tax is AMD 800,000. Under the general regime, the same company would face approximately AMD 10.8 million in CIT alone (18% of AMD 60 million profit), plus VAT obligations. That's a difference of over AMD 10 million — roughly USD 25,000 — lost to a missed filing.

The SRC issues a reminder each January, but technical difficulties with the electronic system on February 20 are not accepted as an excuse. File early.

Common Mistakes Foreign Entrepreneurs Make

Not knowing the deadline exists. This is the most common problem. Foreign founders and diaspora Armenians who registered companies remotely often focus on immigration or banking setup and overlook the February 20 tax election. By the time they engage a tax advisor, the deadline has passed.

Assuming the company accountant handled it. If you use a local accounting firm, confirm in writing that they will submit the declaration on your behalf — and follow up before the deadline to verify it was filed.

Filing for the wrong regime. Some businesses apply for microbusiness status without realizing their activities are excluded (especially after the 2025 changes). A false declaration carries legal liability under Armenian law, and discovering the error mid-year can mean retroactive tax assessments.

Ignoring threshold creep. A business that comfortably sat under AMD 24 million last year may exceed it this year. If you claim microbusiness status and then exceed the threshold, you lose status immediately — with potential retroactive consequences.

Not setting up the electronic system in advance. The SRC requires electronic submission through its reporting portal. If you don't have login credentials or encounter technical issues on February 19, you have a problem. Set up your account well before the deadline.

Confusing the two thresholds. The AMD 115 million ceiling for turnover tax and the AMD 24 million ceiling for microbusiness are very different. Make sure you're applying for the regime you actually qualify for.

How Vardanyan & Partners Can Help

We work with foreign entrepreneurs, IT companies, and diaspora Armenians who need to make the right tax regime decision — and make it on time.

Pre-deadline tax regime analysis. We model your specific financial situation under each available regime and recommend the optimal election based on your revenue, cost structure, client mix, and growth projections.

Electronic filing. We handle the declaration submission through the SRC's Electronic Reporting System on your behalf, ensuring it is filed correctly and before the deadline.

New business formation and tax election. For clients incorporating new Armenian entities, we integrate tax regime election into the registration process so you don't miss the 20-day post-registration window.

2025 rule change impact assessment. If your business was previously on a simplified regime and may be affected by the expanded exclusions, we evaluate your options and help you transition smoothly.

Ongoing compliance. Beyond February 20, we provide year-round tax compliance support, including turnover monitoring, threshold management, and mid-year regime migration planning.

Frequently Asked Questions

What is the February 20 deadline in Armenia?

February 20 is the annual deadline for existing Armenian businesses to submit a declaration electing to operate under a simplified tax regime — either the turnover tax system or the microbusiness tax system — for the current calendar year. It is established by Articles 254 and 267 of the Armenian Tax Code.

What happens if I miss the February 20 deadline?

Your business automatically defaults to the general tax regime for the entire year: 20% VAT on taxable supplies plus 18% corporate income tax on profits. There is no extension, grace period, or retroactive election.

Does the February 20 deadline apply to newly registered companies?

No. Newly registered companies and individual entrepreneurs have 20 days from the date of state registration to submit their tax regime election. If they miss this 20-day window, they default to the general regime until the next annual election.

What is the difference between turnover tax and microbusiness tax?

Turnover tax is a simplified tax on gross revenue (at rates from 1% to 20% depending on activity type) for businesses with annual turnover under AMD 115 million. Microbusiness tax provides near-total tax exemption for very small businesses with turnover under AMD 24 million, but has a much longer list of excluded activities.

Can IT companies still use simplified tax regimes in Armenia?

The 2025 amendments clarified that software development is excluded from the microbusiness regime. However, the same amendments introduced a new 1% turnover tax rate for government-approved high-tech activities — making the turnover tax regime the optimal choice for most qualifying IT companies, provided their turnover does not exceed AMD 115 million.

How do I submit the tax regime declaration?

Declarations must be submitted exclusively through the SRC's Electronic Reporting System. Paper submissions are not accepted. Ensure you have active credentials and test access to the system before the deadline.

Can I switch tax regimes during the year?

Generally, the February 20 election locks in your regime for the full calendar year. Mid-year switches are possible in limited circumstances — such as voluntarily terminating microbusiness status to become a VAT or turnover tax payer — but these are typically one-way transitions.

What are the turnover thresholds for each regime?

The turnover tax ceiling is AMD 115 million (approximately USD 300,000) based on the previous year's total turnover from all activities. The microbusiness ceiling is AMD 24 million (approximately USD 50,000–60,000). Exceeding these thresholds disqualifies you from the respective regime.

Do I need to re-file every year even if nothing changed?

Yes. The simplified tax regime election is annual. Even if your business circumstances are identical to last year, you must submit a new declaration by February 20 to maintain your simplified regime status.

What is the 1% high-tech turnover tax rate?

Introduced in 2025, the 1% turnover tax rate applies to activities on the government's approved high-tech list. To benefit, a company's activities must fall within this list and its turnover must stay under AMD 115 million. The rate makes Armenia one of the lowest-tax jurisdictions for qualifying IT and software development companies — but only if you file by the February 20 deadline (or within 20 days of registration for new companies).