Armenia tax guide for foreign-owned companies

The taxes that actually apply to an Armenian LLC — rates, thresholds, filing duties and the incentives worth knowing about.

If you own — or are about to open — an Armenian company from abroad, the tax system is simpler than you probably expect: flat rates, no capital controls, free profit repatriation, and a genuinely usable simplified regime for small businesses. This guide covers every tax your company and you as its owner will actually meet in 2026, in plain language.

The three regimes at a glance

You choose (or are assigned) a regime at registration, and the choice is the single most important tax decision you will make — it changes your effective rate far more than any deduction. Switching later is possible but usually only at year-end.

1. Micro-business: the 0% regime

Armenia exempts micro-businesses from turnover and profit tax entirely. The conditions: annual sales up to AMD 24,000,000, and the activity must be on the approved list — broadly small trade, production, and consumer services. Notable exclusions: consulting, most professional services, and companies based in Yerevan performing certain activities. Employees of a micro-business pay a reduced flat income tax. If you qualify, this is the cheapest legal way to operate in Armenia — but verify the activity list before you count on it.

2. Turnover tax: the simplified regime most small companies use

Instead of VAT plus 18% profit tax, small companies can pay a flat percentage of revenue:

• Trade: 10% (raised from 5% in the 2025 reform — budget for the new rate, not the old blog posts)
• Production: 7%
• Public catering: 12%
• Eligible high-technology activities: 1% through December 31, 2031
• Other activities: between 1% and 12% depending on category

Do not compare a headline turnover-tax rate with profit tax without checking the applicable expense deductions, minimum tax and activity-specific rules. The effective result depends on documented costs and eligibility. Ask your accountant to calculate both regimes using the same sales and expense assumptions.

3. General regime: profit tax + VAT

Corporate income tax is a flat 18% on net profit. Resident companies are taxed on worldwide income; standard business expenses, salaries, depreciation and interest are deductible with normal documentation. Losses can be carried forward.

VAT is 20% on domestic sales of goods and services. Registration becomes mandatory once annual turnover passes AMD 115,000,000 (≈ $291,000); exports are zero-rated, and input VAT on purchases is creditable. If you sell services to clients outside Armenia, much of your revenue may effectively sit outside Armenian VAT — the place-of-supply analysis is worth doing properly.

4. Getting money out: dividends

Dividends paid by an Armenian company are subject to a flat 5% withholding tax — for foreign individual owners this is usually the final Armenian tax. Most of Armenia’s several dozen double-tax treaties either cap this rate or give you a credit at home, so your total burden is rarely 5% + full home-country tax on the same income. There are no restrictions on repatriating profits, and no exchange controls.

5. If you hire people

• Personal income tax: flat 20%, withheld by the employer.
• Social payments and other payroll charges: confirm the current bands, deductions, caps and employee eligibility with the accountant. A single percentage is not enough to calculate the payment.
• Certified high-tech employers keep targeted payroll incentives (reduced PIT on R&D staff, extra deductions for IT specialists) as part of the sector package running to end-2031.

Payroll is filed monthly. A remote foreign owner with no Armenian employees files “zero” payroll — but still files.

6. The compliance calendar

Filing periods depend on the tax and taxpayer status. Turnover tax uses quarterly reporting; do not treat it as a monthly return. VAT, payroll and annual profit-tax obligations must be checked separately against your circumstances. Penalties for missed filings are small at first but compound — and they surface at the worst moments: bank onboarding, due diligence, or when you finally distribute dividends. Even a dormant company should keep filings current. This is why our accounting & tax filing service (from $129/month) exists: everything filed, on time, in Armenian, while you get reports in English.

7. Common founder mistakes

• Comparing tax regimes using headline rates while ignoring permitted deductions, minimum payments and eligibility.
• Missing the VAT registration point and back-paying with penalties.
• Assuming the micro-business regime applies to consulting — it usually does not.
• Paying themselves “salary” from abroad without payroll registration instead of taking dividends at 5%.
• Leaving a dormant company unfiled for a year, then losing weeks cleaning penalties before a bank will onboard them.

FAQ

Do I personally become an Armenian tax resident by owning a company?

No. Company ownership alone does not create personal tax residency. You generally become an Armenian tax resident after 183+ days of presence in a tax year — relevant if you also take residency in Armenia.

Is there a tax on retained profits?

No. The 5% dividend withholding applies only when you actually distribute. Profits can sit in the company indefinitely at just the 18% (or turnover-tax) level.

How does Armenia compare with Georgia?

Different philosophies — Georgia taxes distributed profit only, Armenia taxes profit but at low flat rates with a cheaper simplified regime. We compare them line by line in Armenia vs Georgia for your business.

This is a general orientation, not a tax calculation. The turnover-tax comparison, filing-frequency wording and currency label were corrected on 25 October 2026. Check the current Tax Code (including the turnover-tax provisions) and ask an accountant to confirm the applicable version, elections, deductions and deadlines. For a regime recommendation based on your actual margins, book a consultation.