Taxes are an integral part of our life and one of the main sources of state budget formation. In this article, we will analyse the structure of the modern taxation system in Armenia.

To begin with, let’s decide that we will consider taxes to be levied
on individuals, in this regard, it will not be excessive to determine their list. According to Article 24 of the Tax Code of the Republic of Armenia, individuals are:

• Citizens of the Republic of Armenia;
• Foreign citizens;
• Stateless persons;
• Individual entrepreneurs;
• Notaries.

What taxes do individuals have to pay?

Income tax

From among individuals, income tax must be paid by resident and non-resident individuals, as well as individual entrepreneurs and notaries (only in terms of personal income). The income tax rate starting from January 1, 2023, is 20%, but there are exceptions. For example, in respect of all income received from the alienation of property, income tax is calculated at the rate of 10%.

The object of taxation in this case is:

• For resident individuals – gross income received from sources in the Republic of Armenia and/or from sources outside the Republic of Armenia, except for entrepreneurial income of individual entrepreneurs and notaries registered in the Republic of Armenia;
• For non-resident individuals – gross income received from the sources of the Republic of Armenia, except for income related to the permanent establishment of non-resident individuals operating in the Republic of Armenia through a permanent establishment and/or receiving income from the sources of the Republic of Armenia through a permanent establishment, as well as income received from foreign economic activity.

Value Added Tax

VAT (value added tax) is a state tax that is paid to the state budget in the manner, amount and terms established by the Code for the implementation of transactions and/or operations that are considered to be the object of taxation determined by Article 60 of the Tax Code:

• delivery of goods, if the place of delivery of goods is considered to be Armenia;
• performance of work and (or) provision of services, including  the provision of goods for rent or use, provision of a loan, alienation of an intangible asset, granting the right to use an intangible asset;
• import of goods to Armenia under the customs procedure “Release for domestic consumption”;
• import to Armenia from the EAEU member states of goods that have the status of EAEU goods.

Individual entrepreneurs and notaries are required to pay VAT from among individuals. The value added tax rate is 20%, but the law establishes certain benefits for which some transactions and operations are exempt from VAT or taxed at a zero rate.

Excise tax

Individual entrepreneurs are required to pay excise tax from among individuals. The excise tax rate varies depending on the object of taxation, they can be viewed in Article 88 of the RA Tax Code.

In accordance with Article 87 of the Tax Code, the excise tax is levied on: ethyl alcohol (except for cognac alcohol); Spirits; beer; wine; tobacco products (including tobacco or reconstituted tobacco, or products containing nicotine or their substitutes intended for inhalation without combustion); lubricating oil; petrol; diesel fuel; crude oil; Petroleum products; petroleum gases; other gaseous hydrocarbons (except for natural gas, which is not considered compressed), as well as compressed natural gas.

Income tax

Individual entrepreneurs, notaries, as well as non-resident individuals operating in the Republic of Armenia through a permanent establishment and/or receiving income from the sources of the Republic of Armenia through a permanent establishment are obliged to pay income tax from among individuals. The income tax rate is 20%, except in some cases.

The object of income tax is:

• For individual entrepreneurs and notaries – gross income received or to be received from sources of the Republic of Armenia and/or sources located outside the Republic of Armenia, except for personal income of individual entrepreneurs and notaries registered in the Republic of Armenia;
• For non-resident individuals carrying out activities in the Republic of Armenia through a permanent establishment and/or receiving income from the sources of the Republic of Armenia through a permanent establishment – gross income received from the sources of the Republic of Armenia, except for personal income of non-resident individuals operating in the Republic of Armenia through a permanent establishment and/or receiving income from sources of the Republic of Armenia through a permanent establishment.

Turnover tax

Turnover tax is a state tax that replaces VAT and/or income tax. For individual entrepreneurs and notaries, this tax can replace VAT, if the sales turnover for part of all their activities for the previous tax year did not exceed 115 million drams. The turnover tax rate may vary depending on the type of income from 1.5 to 25%.

In addition to the presented taxes, there is an environmental tax and a road tax in Armenia.

An environmental tax is a tax paid to the state budget in order to generate funds necessary for the implementation of environmental protection measures.

Road tax is a tax paid to the state budget for the purpose of generating funds necessary for the development of the road network of the Republic of Armenia, construction, repair and maintenance of public roads of state importance of the Republic of Armenia.

Any tax issue can be solved with us. We also offer professional accounting services for small and large businesses throughout Armenia. Contact experienced specialists in the office of Vardan Khechyan.

☎+374 33 311 00  

✉vardan@khechyan.com  

🏢 0002 Yerevan, 6 Yekmalyan St., floor 2 

🔗 https://www.armenianlaw.com/ 

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