ey.com/globaltaxguides
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EY
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Kamar Business Center
Yerevan 0010
Armenia
Executive and immigration contact
Kamo Karapetyan
+374 (60) 507-777
+374 (99) 886-700
Email: kamo.karapetyan@am.ey.com
As of 26 September 2024, the exchange rate of the Armenian dram against the US dollar was AMD387.50 = USD1.
A. Income tax
Who is liable. Resident individuals are subject to income tax on their worldwide income. Nonresident individuals are subject to income tax on only income received from Armenian sources.
For tax purposes, an individual is considered resident if he or she satisfies either of the following conditions:
• He or she resides in Armenia for 183 or more cumulative days in the current tax year (same as a calendar year).
• His or her center of vital interests (the place of a person’s family or economic interests) is in Armenia.
For the purpose of determining the residency status, days spent abroad by an individual as a civil servant of the Republic of Armenia (RA) are considered as days spent in the RA.
Income subject to tax. The taxation of various types of income is described below.
Employment income Taxable income from employment consists of all types of compensation or benefits, whether received in cash or in any other form, subject to certain exemptions.
Self-employment and business income. Corporate income tax is levied on an individual entrepreneur’s annual income, which consists of gross income less expenses (except for nondeductible or partially nondeductible expenses) contributing to the generation of the income.
Directors’ fees Directors’ fees are included in taxable income.
Investment income. Investment income is in the form of dividends, which is the income received or to be received by a participant as an allocation of profit (including an interim allocation) from participation (stock, share or unit) in the charter or share capital of an organization or joint activity.
The above taxes are withheld at source.
Exempt income. “Exempt income” represents part of the gross income of a taxpayer, which is deducted from gross income for determination of taxable income. Income derived by individuals that is considered exempt includes, among other items, the following:
• Contributions made by taxpayers on their behalf and/or by thirdparty taxpayers (including employers) within the voluntary accumulative pension insurance system according to the terms and conditions established by RA legislation, but not more than 5% of the taxpayer’s gross income
• Contributions made by the state for the taxpayer within the obligatory accumulative pension insurance system in accordance with the terms and conditions established by RA legislation
• Compensation paid to employees within the norms specified in the legislation of the RA, with the exception of compensation paid for unused leave days in the event of quitting work
• Property and cash received from individuals as inheritance or gifts, with the exception of gifts of property received from individual real estate developers
• Assets, works and services received from noncommercial organizations free of charge
• Assets, works and services received free of charge on the basis of decisions of the state administration and local government bodies of the RA, as well as such items received from foreign states and international (intergovernmental) organizations
• Proceeds from the sale of property to non-entrepreneur individuals, with the exception of amounts received from the sale of property (buildings, its apartments, structures or other areas) to non-entrepreneur individuals by individual real estate developers
• Scholarships and stipends paid by the state, noncommercial organizations, foreign states and international (intergovernmental) organizations to students and postgraduates of higher educational institutions, students of specialized-secondary and vocational schools and attendees of religious seminaries
• Insurance compensation with the exception of insurance compensation received under the voluntary accumulative pension insurance system
• Income derived from the sale of shares, treasury bonds and other state securities
• Income received from securities that certify taxpayers’ participations in investment funds
• Amounts received as compensation for damages under the law, with the exception of compensation for lost income
• Lump-sum amounts paid on the death of an employee or his or her family members
• Prizes won at international competitions by athletes and coaches participating for the national team of the RA
• State awards (prizes)
• Monetary and in-kind winnings of the participants in advertising lotteries (lotteries organized by advertisers that fully establish the prize fund) implemented according to the procedures and terms specified by the law of the RA, in an amount not exceeding AMD50,000 for each winning
• Monetary and in-kind winnings of the participants of drawing, non-drawing, and combined lotteries and totalizators
• Winnings from casinos, games of chance and/or internet games of chance
• Value of monetary or material prizes received in competitions in an amount not exceeding AMD50,000 per prize
• Insurance payments up to AMD10,000 per month per head made by the employers for health insurance of their employees
• Income derived from the sale of agricultural production, as well as income received from other activities by individuals involved in agricultural production, to the extent that the income from such other activities does not exceed 10% of the income received from agricultural and other activities (if the 10% threshold is exceeded, the entire income from the other activities is taxed)
• State benefits paid under the legislation of the RA, with the exception of benefits for temporary work disability (including maternity)
• All types of pensions paid under the law of the RA with the exception of pensions received under the voluntary accumulative pension insurance system
• One-time compensation paid under the law of the RA to families of deceased or disabled servicemen
• Alimony paid according to the law of the RA
• Amounts received by individuals for donated blood, breast milk and other types of donorship
• Income received from the alienation of land (regardless of the purpose for the use of the land)
• Honorary payments, financial aid and support received within the framework of the social protection system
• Fines accrued in favor of an individual for each delayed day if the refund of taxes to the individual taxpayer’s unified tax account is delayed for more than 30 days after the statutory due date
Taxation of employer-provided stock options. Employer-provided stock options are taxable benefits, with some exceptions depending on the type of stock options plans.
Capital gains and losses. Capital gains are subject to regular income tax when they are realized. Unrealized capital gains are not subject to tax. Capital gains arising from certain types of activities, such as the sale of shares and other specified types of property as mentioned in Exempt income are exempt from income tax.
Individual entrepreneurs may offset their capital losses against capital gains. If the capital loss cannot be offset in the year in which it is incurred, it can be carried forward to offset gross income in the following five years.
Deductions
Business deductions Individual entrepreneurs may deduct all business-related and documented expenses (for example, material expenses, depreciation allowances, lease payments, salaries and wages, and interest paid) except for nondeductible or partially deductible expenses.
Nondeductible or partially deductible expenses include, but are not limited to, the following:
• Business-trip expenses that exceed the norms established by the Tax Code of the RA.
• Representative expenses exceeding 0.5% of gross income (but not more than AMD5 million) for the tax year. The limit of 0.5% is not taken into account in the tax year of registration as an individual entrepreneur.
• Fines, penalties and other proprietary sanctions transferred to the state and municipal budgets.
• Assets, works and services provided free of charge and debts forgiven.
• Expenses related to the generation of income that is exempt from income tax.
• Interest paid on loans and borrowings above the established limit of 24% per year.
• Management service expenses that exceed the norms established by the Tax Code of the RA.
• Amounts of financial aid, food provided to individuals, costs for organization of social and cultural events, and similar expenses exceeding 0.25% of the taxable income before deducting expenses.
Depreciation (amortization) allowances for fixed and intangible assets owned by individual entrepreneurs are deducted for tax purposes in accordance with the terms and conditions provided by the Tax Code of the RA. Details regarding the depreciation (amortization) of fixed and intangible assets are provided below.
The annual value of depreciation (amortization) allowances for fixed and intangible assets is calculated by dividing the acquisition cost or revalued cost (if the revaluation is carried out according to the procedure established by the respective law of the RA) of fixed and intangible assets by the depreciation period determined for the appropriate group of fixed assets or for intangible assets. The following minimum periods are established for depreciation purposes.
Minimum depreciation
Group Assets period (years)
1 Buildings and constructions of hotels, boarding houses, rest homes, sanitariums and educational institutions 10 2 Other buildings, constructions and transmission devices 20 3 Production equipment 5 4 Robot equipment and assembly lines 3
5 Calculating devices and computers 1
6 Other fixed assets, including growing cattle, perennial plants and investments intended for improving the land 8
Fixed and intangible assets with a value up to AMD50,000 (inclusive) are depreciated in the tax year of their acquisition.
health, education and housing that have the documentary support as defined by the Armenian tax legislation.
Relief for losses. Individual entrepreneurs may carry forward operating losses for up to five years. No carryback is allowed.
B. Other taxes
Inheritance and gift taxes. Armenia does not impose inheritance and gift taxes.
Wealth tax. Armenia does not impose wealth tax or net worth tax.
Real estate tax. For individuals and individual entrepreneurs, land, buildings and constructions are subject to real estate tax.
For purposes of the real estate tax, buildings and constructions include the following:
• Residential construction units
• Multi-flat dwelling buildings
• Nonresidential areas of residential buildings
• Separate constructions for the parking of vehicles that are built on plots
• Constructions for public use
• Constructions for production use
• Incomplete (semi-built) construction units
• Newly constructed and/or modified real estate that is registered and evaluated by the cadastral body but that has not yet had state registration of rights, as well as buildings and structures built without a construction permit on a land parcel by taxpayers having the right of ownership over the given land parcel, including constructions built without authorization in multiapartment buildings or adjacent to the buildings
The real estate tax rate for agricultural lands is 15% of the net income determined by cadastral evaluation. The real estate tax rate for non-agricultural lands ranges from 0.25% to 1% of the cadastral value assessed under procedures defined by the Tax Code of the RA.
The tax base for buildings and constructions is considered to be the cadastral value assessed under procedures defined by the Tax Code of the RA. The real estate tax rate for a residential apartment building, an apartment in a residential apartment building or a nonresidential area of an apartment building ranges from 0.05%, which is applied to the tax base to AMD1,326,000, plus 1.5% applied to the part of the tax base exceeding AMD200 million. The following is the table of progressive rates. Tax base
Up to AMD10 million inclusive 0.05%
More than AMD10 million up to AMD25 million inclusive
More than AMD25 million up to AMD47 million inclusive
AMD5,000 plus 0.1% applied to the part exceeding AMD10 million of the tax base
AMD 20,000 plus 0.2% applied to the part exceeding AMD25 million of the tax base
• Citizens of the RA who are residents of the RA and who received taxable income within the framework of civil law contracts during 2024
• As of 31 December 2024, citizens of the RA holding positions of state service, community service and/or public service, as defined by the Law of the RA on Public Service
• Citizens of the RA who are residents of the RA and who as of 31 December 2024 are (were) participants (shareholders, equity-holders or members) of a commercial organization resident in the RA that declared a gross income of AMD1 billion or more during 2023
• Citizens of the RA who are residents of the RA and who are considered beneficial owners within the framework of the RA Law on Combating Money Laundering and Terrorism Financing
• Citizens of the RA who are residents of the RA and who received a borrowing of AMD20 million or more during 2024
• Individuals mentioned in the preceding paragraph
For the 2025 tax year and subsequent years, citizens of the RA who are residents of the RA must file income tax returns.
Individual entrepreneurs must submit corporate income tax returns to the tax authorities by 20 April (inclusive) of the year following the tax year.
Individual entrepreneurs engaged in economic activities in Armenia must make advance payments of corporate income tax during the tax year. The amount payable must be the lower of the following:
• 20% of the amount of corporate income tax for the preceding tax year
• 2% of revenue received from the supply of goods, performance of works, and/or the provision of services during the preceding quarter
The advance payments must be made quarterly by the 20th day of the last month of each quarter.
At the end of the reporting year, an individual entrepreneur calculates the amount of corporate income tax at a rate of 23% based on the accrued taxable income, setting off the amounts of advance payments made for such reporting year.
D. Double tax relief and tax treaties
Armenia has entered into tax treaties with the following jurisdictions.
Austria Iran Serbia
Belarus Ireland Singapore
Belgium Israel Slovak
Bulgaria Italy Republic
Canada Kazakhstan Slovenia
China Mainland Kuwait Spain
Croatia Kyrgyzstan Sweden
Cyprus Latvia Switzerland
Czech Republic Lebanon Syria
Denmark Lithuania Tajikistan
Estonia
Luxembourg
Finland Malta
France
Moldova
Thailand
Turkmenistan
Ukraine
Georgia Netherlands United
Germany Poland Arab
Greece
Hungary
Qatar Emirates
Romania
United
India Russian Kingdom
Indonesia Federation
If a foreign citizen who is nonresident for tax purposes in Armenia receives income from Armenian sources and meets the conditions of a double tax treaty, a tax agent can apply the treaty exemption on the basis of a tax residency certificate issued by the competent tax authority of the foreign country.
E. Visas
One of the legal bases for a foreign citizen’s stay in Armenia is the entry visa. In general, entry visas are issued by the Passport and Visa Department of the Police of the RA at the bordercrossing control points or on the territory of Armenia or by the Ministry of Foreign Affairs of the RA at the diplomatic missions and consular posts of the RA. The Ministry of Foreign Affairs of the RA also provides electronic entry visas to foreign citizens. Citizens of certain countries (principally the countries of the former USSR) are not required to have a visa to enter Armenia and stay in the country for up to 180 days during a calendar year.
Armenian entry visas are provided for a period of stay up to 120 days, with the possible extension for a maximum of 60 days, and are issued for single or multiple entries. The following types of Armenian visas are available:
• Visitor visa
• Official visa
• Diplomatic visa
• Transit visa
Currently, at the border-crossing control points of the RA, visa services of the Passport and Visa Department of the Police of the RA issue the following visas only:
• Single-entry, 3-day transit visas
• Single-entry, 21-day visitor visas
• 120-day visitor visas
Electronic visas are valid for entry at all border-crossing points of the RA.
Citizens of the following jurisdictions may apply for Armenian entry visas only to Armenian diplomatic representations or consular posts abroad and only on the basis of an invitation letter.
Afghanistan Eritrea
Angola
Bangladesh
Benin
Botswana
Burkina Faso
Burundi
Eswatini
Ethiopia
Gabon
Gambia
Ghana
Nigeria
Pakistan
Palestinian
Authority
Rwanda
São Tomé
Guinea and Príncipe
Cameroon Guinea Bissau
Senegal
Cape Verde Kenya Seychelles
Central African Lesotho
Republic
Sierra Leone
Liberia Somalia
Chad Libya
South Sudan
Comoros Madagascar Sri Lanka
Congo Malawi Sudan
(Democratic Mali
Republic of)
Syria
Mauritania Tanzania
Congo Mauritius
(Republic of)
Côte d’Ivoire
Djibouti
Equatorial Guinea
Togo
Mozambique Uganda
Namibia
Yemen
Nepal Zambia
Niger
Zimbabwe
Citizens of the above jurisdictions who have an Armenian ancestry may obtain an entry visa at the border-crossing control points of Armenia.
Visa application forms are usually processed at the diplomatic missions and consular posts of the RA within three working days. In some cases, additional checking may be required and processing time can be extended.
F. Work permits
Under the Law of the RA on Foreigners, employers may enter into labor contracts with foreign employees and employ them based on work permits issued by the competent authority. The issuance of work permits to foreign employees is based on the procedures and terms established by Decrees N 493-N and N 2087-N of the government of the RA.
The Law of the RA on Foreigners provides that certain categories of foreign citizens are not required to obtain work permits for work in Armenia. These include, among others, the following:
• Foreign nationals having permanent and special residence status in Armenia
• Foreigners who have a residence permit on the basis of studying in Armenia with a term not exceeding the period of their residence in Armenia
• Foreigners who have a residence permit on the basis of being a spouse, parent or child of a foreigner exempted from receiving a work permit based on the international agreements signed with Armenia with a term not exceeding the period of their residence in Armenia
• Foreigners who have a residence permit on the basis of being a spouse or close relative (parent, child, brother, sister, grandparent or grandchild) of a citizen of Armenia or a foreigner who has an Armenian permanent or special residence status with a term not exceeding the period of their residence in Armenia
• Foreigners who have a residence permit on the basis of being of Armenian nationality with a term not exceeding the period of their residence in Armenia
• Founders and directors of the executive body of commercial organizations with at least 50% foreign capital participation arriving for the purpose of working in those organizations
The documents establishing types of residence status in Armenia described above are temporary or permanent residence certificates and special passports.
Citizens of countries of the Eurasian Economic Union who arrive in Armenia to work can apply for the Certificate of Legality of Stay in Armenia if they signed an employment contract with an Armenian employer. The application for the certificate is submitted to the Migration Service via https://workpermit.am/am/home, and the certificate is issued for a period of up to one year with a possibility of being renewed annually, provided that the employment is still active.
H. Driver’s permits
The citizens of those countries that have acceded to the Vienna Convention on Road Traffic dated 8 November 1968 (the Convention) can drive in the territory of Armenia with their national driver’s licenses. The holders of such licenses who drive a car in the territory of Armenia are required to have a valid notarized translation of their licenses. Driving a vehicle in Armenia is permitted also with the international driver’s license issued by the competent authority of the Member State of the Convention, provided that it complies with the requirements of the Convention and its amendments. A foreigner may obtain an Armenian driver’s license after passing written and practical examinations.