Quick route map
| Situation | First check | Likely route |
|---|---|---|
| Eligible activity up to AMD 24m | Article 267 exclusions and related parties | Micro-business may apply |
| Trade, manufacturing, or ordinary services up to AMD 115m | Activity code and supported expenses | Turnover tax may apply |
| IT | Code included in Decision No. 142-N | 1% turnover tax for listed high-tech activity |
| Legal, accounting, or management consulting | Actual service and code | Special regimes are restricted |
| Turnover above AMD 115m | Exact crossing point and VAT | General system |
Five-step decision process
- 1. Map transactions
Record what is sold, who receives it, where the result is used, and whether there are imports, employees, agency arrangements, related parties, or owner payments.
- 2. Identify the activity code
Match actual work to the Armenian classifier. Take extra care with IT, consulting, accounting, marketing, staffing, and intermediation.
- 3. Test exclusions
Read Articles 254 and 267 separately. Low turnover does not override activity, contract, or related-party restrictions.
- 4. Model a full year
Compare base, growth, and downside scenarios including supported costs, VAT, payroll, owner payments, and administration.
- 5. File the notice on time
An existing business files by 20 February; a newly registered business by the twentieth day following registration. A special regime is not automatic.
Micro-business is not “zero tax for every small sole proprietor”
A resident LLC or sole proprietor may qualify if total turnover from all activities in the previous year did not exceed AMD 24 million and no Article 267 exclusion applies. Relief from the main state taxes on eligible activity does not remove import taxes, specified sector taxes, or obligations on payments to individuals.
Excluded activities include trade and many services: consulting, legal, accounting, engineering, advertising, design, marketing, translation, medical and intermediary services, software development, information processing, construction, and other listed work. Related-party, joint-activity, commission, and certain agency arrangements also matter.
If turnover exceeds AMD 24 million or a prohibited activity starts during the year, micro-business status ends from that event. The next regime and notices must be resolved immediately rather than at quarter-end.
Turnover tax: rates and evidence
The tax is reduced by a prescribed percentage of eligible costs, not by the costs themselves, and then the minimum is tested. Costs must be supported by the documents required by Article 55 and related to the activity. Direct, administrative, and selling costs can qualify.
The reduction excludes, among other items, acquisition or creation of fixed and intangible assets, depreciation, costs on those assets, travel, and representation. A sole proprietor on turnover tax also pays AMD 5,000 profit tax for each month of activity.
Since 1 July 2025, exclusions expressly cover the relevant codes for legal and accounting activities, head-office activity, management consulting, and specified staffing services.
| Income | Headline rate | Expense reduction | Minimum on turnover |
|---|---|---|---|
| Trade | 10% | 9.5% of eligible costs | 1% |
| Manufacturing | 7% | 5% of eligible costs | 3% |
| Public catering | 12% | 9% of eligible costs | 3.5% |
| Other activity | 10% | 6% of eligible costs | 4.5% |
| High-tech listed by No. 142-N | 1% | No stated cost reduction | — |
| Rent, interest, royalties | 10% | No stated cost reduction | — |
General system and foreign customers
The LLC profit-tax rate is 18% of the tax base; the general-system rate for a sole proprietor is 23%. The main VAT rate is 20%. The general system can be mandatory or commercially sensible where supported costs and input VAT are substantial, B2B customers need VAT documents, or turnover is likely to exceed AMD 115 million.
A foreign customer does not automatically produce 0% VAT. First determine the place of supply under Article 39. Software development, consulting, engineering, advertising, design, marketing, and similar services often turn on the recipient and actual use. Where the place is outside Armenia, Article 65 applies zero-rating, supported by the contract, deliverables, customer data, and performance records.
When AMD 115 million is crossed, turnover-tax status ends at that point. VAT arising solely from the threshold applies to the excess, and the cessation notice is due by the twentieth day after the event.
Three calculations
Turnover AMD 12m; eligible costs AMD 3m. Headline tax is AMD 1.2m; the reduction is 6% of costs, or AMD 180k; result AMD 1.02m. The 4.5% minimum is AMD 540k and does not change it.
Turnover AMD 40m; documented eligible costs AMD 32m. Headline tax AMD 4m less AMD 3.04m gives AMD 960k, above the AMD 400k minimum. Missing purchase evidence would make the tax materially higher.
Turnover excluding VAT AMD 150m and eligible costs AMD 110m produce AMD 40m profit and AMD 7.2m profit tax. Output VAT AMD 30m less eligible input VAT AMD 12m gives AMD 18m VAT. These are separate liabilities.
Deadlines and common mistakes
- turnover tax: quarterly return and payment by the twentieth day of the following month
- VAT and payroll return: monthly by the twentieth day of the following month
- micro-business turnover report: by 1 February of the following year
- annual profit tax: by 20 April of the following year
- do not select a regime from the threshold alone or ignore related parties
- do not claim unsupported costs or include fixed assets, travel, and representation in the turnover-tax reduction
- do not treat every foreign customer as automatic zero-rated VAT
- do not forget payroll obligations and the usual 5% personal income tax on dividends
Official sources
Links and current versions checked: 23.09.2026