Armenia's Simple Flat Tax System – Armenia

All salaries and wages taxed at flat 20%. Employer withholds tax monthly. Simple calculation: gross salary × 20%. No brackets, no complications. Same rate regardless of income level. Applies to bonuses, overtime, all compensation.

Dividends taxed at only 5% - one of lowest globally. Final withholding tax - no additional taxation. Applies to dividends from Armenian and foreign companies. Tax refundable if reinvested in same entity. Very efficient structure.

Interest from deposits, loans taxed at 10%. Lower than employment rate. Encourages saving and lending. First AMD 3,000 of savings income exempt (very minimal). Withheld at source by payers.

Rental income taxed at 10%. If rental exceeds AMD 60 million annually, must pay additional 10% beyond withholding. Lower rate than employment encourages real estate investment. Must be reported if threshold exceeded.

Property sold to tax agent: 10-20% depending on property type. Property sold to individual: generally exempt. Securities/asset sales: generally not taxed if sold to individuals. Crypto gains through tax agent: 20%. Creates planning opportunities.

Certified R&D salaries in high-tech sector eligible for reduced 10% income tax (instead of 20%) under 2025-2031 incentive program. Employers get reimbursements for hiring young talent and professional migrants. Major boost for tech industry.

Standard CIT rate 18% on net profits. Capital gains included at same rate. Must file annually, VAT monthly. Full accounting required. Best for larger businesses, foreign companies, those needing VAT refunds.

Simplified regime: tax on gross revenue at 1.5-10% depending on business type. Replaces both CIT and VAT. Less paperwork. Can reduce by up to 9% with expense deductions. For businesses under ~AMD 115 million (~$290k) revenue. Very popular.

For businesses under AMD 24 million revenue. Exempt from CIT, VAT, most taxes. Pay only AMD 5,000 per employee monthly. Extremely simple. Ideal for small sole proprietors, freelancers. Digital nomads often use this. Minimal reporting.

Tech companies get super-deductions on R&D expenses, reduced 2% turnover tax rate (proposed), government covers 50-100% income tax for new tech hires, training cost reimbursement. 2025-2031 program. Makes Armenia very competitive for tech.

Standard VAT 20% on goods and services. Registration threshold AMD 115 million annual turnover. Must register if exceed threshold. Input VAT recoverable for VAT-registered businesses. Similar to EU VAT system principles.

Exports of goods completely zero-rated (0% VAT). Advertising, consulting, marketing, design, engineering, legal, accounting, auditing, data processing services to non-residents also 0% if recipient located outside Armenia. Encourages international business.

Financial services, educational services, certain other activities exempt from VAT (not zero-rated). Cannot recover input VAT on exempt supplies. Important distinction from zero-rating.

Businesses choosing turnover tax regime exempt from VAT. Cannot charge VAT, cannot recover VAT. Trade-off for simplicity. Good for B2C businesses. Bad for B2B if customers need VAT recovery.