Armenia Tax System 2026: From 0% to 18% β Which Regime Fits Your Business?
Armenia has one of the most flexible tax environments in the region. Depending on what your business does and how it is structured, you could pay 0%, 1%, 10%, or 18% β on the same level of revenue. The difference is not luck. It is knowing which regime applies to your situation and setting things up correctly from the start.
In 2026, several important changes have come into force β including mandatory health insurance contributions and a widely misunderstood 1% IT tax that has been in effect since 2025. This guide covers every regime, who qualifies, and where the real optimization opportunities are.
You Have 20 Days to Choose
When you register a business in Armenia β whether as an LLC or an Individual Entrepreneur (IE) β you have 20 days from registration to apply for a preferential tax regime. If you miss that window, the general system (18% profit tax) applies automatically.
After that, you can change your regime once a year, between January 1 and February 20.
The most common mistake we see
People register a business, miss the 20-day window or pick the wrong regime, and overpay for an entire year before realizing it.
Regime 1 β Microbusiness (Effectively 0%)
Who it's for: Very small businesses with annual turnover not exceeding AMD 24,000,000 (~USD 62,000).
Under the microbusiness regime, you pay no income tax and no VAT. You pay only:
- βMilitary stamp duty: AMD 12,000/year (if turnover is under AMD 12M) or AMD 120,000/year (above AMD 12M)
- βMandatory health insurance: AMD 129,600/year β only if your 2025 turnover exceeded AMD 2,400,000
- βStandard payroll taxes if you have employees
The catch
Not every activity qualifies. Microbusiness is available for specific types of work β primarily manual trades, certain crafts, and small-scale retail. Professional service providers, IT consultants, lawyers, and accountants do not qualify. Before assuming you are eligible, verify your activity code with an accountant.
Regime 2 β Turnover Tax (Simplified System)
Who it's for: Businesses with annual turnover below AMD 115,000,000 (~USD 300,000) in eligible activity categories.
The turnover tax replaces both VAT and profit tax with a single tax calculated on gross revenue β not on profit. No expense deductions, but significantly simpler accounting and generally lower overall tax.
Turnover tax rates by activity
| Activity | Rate |
|---|---|
| IT and high-tech (qualifying) | 1% |
| Trade (buying and selling goods) | 1.5% |
| Production | 3.5% |
| Services (general) | 10% |
| Hospitality and catering | 6% |
Filing: Quarterly, within 20 days after each quarter ends.
Important exclusion
Legal services, accounting, auditing, consulting, advertising, and marketing are excluded from the turnover tax regime entirely. If this is your activity, the general system applies automatically.
Regime 3 β General System (Profit Tax + VAT)
Who it's for: Businesses in excluded activity categories (legal, accounting, consulting), businesses with turnover above AMD 115M, or businesses that voluntarily choose it because their expenses are high.
Under this regime you pay 18% profit tax on the difference between revenue and deductible expenses. VAT of 20% applies on top if your turnover exceeds the AMD 115M threshold or you register voluntarily.
When the general system is actually better
If your business has significant operating costs β salaries, rent, foreign contractor payments, equipment β the general system can result in a lower effective tax than turnover tax. You are taxed on profit, not revenue. A business with AMD 100M revenue and AMD 70M in expenses pays 18% on AMD 30M β not 10% on AMD 100M.
Exporters benefit significantly: Services provided to clients located outside Armenia β software development, consulting, legal, design, marketing β are subject to 0% VAT regardless of regime. This makes Armenian entities competitive vehicles for international service delivery.
The 1% IT Tax β What It Actually Is
Armenia introduced a 1% turnover tax for qualifying high-tech and IT companies from January 1, 2025, legislated to run through December 31, 2031. It is the most discussed tax incentive in Armenia right now β and also the most frequently misapplied.
To qualify, your business must:
- βGenerate at least 90% of revenue from government-defined high-tech activities
- βHave no overdue tax liabilities
- βBe registered in the High-Tech Registry β mandatory, you cannot access the regime without it
- βHave annual turnover below AMD 115,000,000
- βSubmit a quarterly application within 20 days after each quarter ends
Qualifying activities include: software development, web development, digital design, certain IT infrastructure and data processing services β activities on the government's official high-tech list.
What does not qualify: consulting, legal services, accounting, marketing, trading, reselling, import-export, or any activity not on the official list.
The mixed business problem
If your company does qualifying IT work but also resells products, does consulting, or invoices for services not on the high-tech list, the 90% rule means you must separate your invoicing by activity type. Revenue from non-qualifying activities must be reported separately at the applicable rate. We have seen businesses lose the 1% qualification for an entire year because their invoices did not distinguish between activity types.
Additional IT incentives under the general system:
- βIncome tax on qualifying IT employee salaries: 10% (instead of standard 20%)
- β200% salary deduction for IT specialists β AMD 3M in actual salaries reduces your taxable profit by AMD 6M
New in 2026 β Mandatory Health Insurance
From January 1, 2026, Armenia launched a Universal Health Insurance system. This introduces new costs for both businesses and entrepreneurs.
For Individual Entrepreneurs
- βMandatory if your 2025 turnover exceeded AMD 2,400,000
- βFixed annual contribution: AMD 129,600 (~USD 340)
- βPayment deadline: April 20 of the following year, paid in one lump sum
- βNo state subsidy β IEs pay the full amount
For employees
| Salary bracket | Monthly contribution |
|---|---|
| Under AMD 200,000/month | Not applicable (2026) |
| AMD 200,001β500,000/month | ~AMD 300/month (subsidized) |
| AMD 500,001β1,000,000/month | AMD 3,300/month |
| Above AMD 1,000,000/month | AMD 10,800/month |
The system expands in 2027 to include employees earning under AMD 200,000 and civil contract workers.
Paying Foreign Contractors β The Tax Most People Miss
When you pay a foreign individual or company for services β a freelancer, a developer, a consultant abroad β and there is no double taxation treaty (DTT) between Armenia and their country, you must withhold and pay a 20% non-resident tax on the payment. Deadline: 20th of the month following the payment.
Armenia has DTTs with 51 countries including Russia, China, Germany, France, India, and most EU member states. If a treaty exists and the contractor provides a valid tax residency certificate for the current year, the non-resident tax is eliminated or reduced.
One of the most overlooked compliance gaps
Without the certificate, you pay 20% on top of whatever you pay your contractor. Collect tax residency certificates before paying foreign contractors. One document eliminates a 20% tax obligation on every payment.
Salary Taxes β What Every Employer Pays
These apply regardless of your business tax regime:
- βPersonal income tax: flat 20% on employee salaries
- βPension contributions: 4.5% of gross salary up to AMD 500,000/month; 10% minus AMD 25,000 above that β withheld from employee salary; applies to persons born after January 1, 1974
- βMandatory health insurance: AMD 10,800/month per qualifying employee
- βMilitary stamp duty: AMD 12,000β120,000/year depending on turnover
How to Legally Pay Less
Pick the right regime for your activity from day one
The difference between 1% and 10% on AMD 50M in revenue is AMD 4.5M. Per year. This is not a rounding error.
Separate your revenue streams
Mixed activity businesses β IT plus reselling, services plus trading β must invoice by activity category. Mixing revenue into a single invoice often results in the higher rate applying to everything.
Use the general system if your expenses are substantial
If your costs are above 50β60% of revenue, profit-based taxation at 18% frequently results in a lower effective tax than 10% on gross turnover. Run the numbers before assuming the simplified system is cheaper.
Get the IT deductions right
The 200% salary deduction for IT specialists under the general system is one of the most generous provisions in Armenian tax law. A team of five developers at AMD 500,000/month generates AMD 30M in actual salary costs β and AMD 60M in deductions from taxable profit.
Manage your foreign contractor payments
Collect tax residency certificates before paying foreign contractors. One document eliminates a 20% tax obligation on every payment.
Key Deadlines
| Obligation | Deadline |
|---|---|
| Choose or change tax regime | January 1 β February 20 each year |
| Quarterly turnover tax payment | Within 20 days after each quarter |
| Annual income declaration (2025 income) | March 2 β November 1, 2026 (extended) |
| Annual profit tax return | April 20 of following year |
| Health insurance payment (IEs) | April 20 of following year |
| Non-resident tax | 20th of following month |
| VAT return | Monthly, by 20th of following month |
Which Regime Fits Your Business?
| Business Type | Regime |
|---|---|
| Very small trade or craft, under AMD 24M | Microbusiness |
| IT company, 90%+ qualifying revenue, under AMD 115M | 1% IT turnover tax |
| General services, under AMD 115M | Turnover tax (10%) |
| Trade, under AMD 115M | Turnover tax (1.5%) |
| Legal, accounting, consulting | General system (18% profit tax) |
| High-expense business | General system |
| Turnover above AMD 115M | General system (mandatory) |
This table is a starting point. The right answer depends on your specific activity codes, revenue mix, expense level, and growth plans.
Last updated: April 5, 2026
This article is for informational purposes only and does not constitute tax or legal advice. Rates and rules are subject to change. Contact Documan for advice specific to your situation.