Accounting Outsourcing and
Tax compliance in Armenia

Armenia – Accounting Outsourcing and Tax Compliance

Global Expansion Plus provides accounting outsourcing and tax compliance in Armenia. We provide services with support of our local accountants and tax specialists. We will perform bookkeeping, accounting and filling tax return on your behalf bearing all associated compliance risks.

Armenian Republic provides a well-equipped tax system that sees to it almost all its citizens and non-residents contribute to the economy. Taxation offers that kind of possibility with the multiple tax rates, applicable.

Armenia in facts

  • Location: Caucasian State
  • Territory: 29,743 square kilometers
  • Capital: Yerevan
  • Official language: Armenian
  • Currency: Dram (֏) (AMD)
  • Population: 2,95 million

Corporate income tax (CIT) in Armenia

Corporates, whether residents or non-residents, have to contribute to the economy in the form of taxes. The normal rate is 20%. Nonetheless, 20% of CIT does not apply to all companies. A reduced rate of 0.01% is set aside for securitization foundations and investment funds.
Small and medium enterprises (SMEs) get the needed break from CIT and VAT by being subject to turnover tax (ToT). The ToT subject to SMEs is based on the annual revenue and varies from one enterprise to the other. The better part of this is that the SMEs will not be subject to VAT or CIT.
The payment of licenses for sole traders is also a form of taxation. It covers the CIT and VAT forms of tax, where they will not be subject to the same. As a sole trader in Armenia, a fixed rate for license payment will apply depending on the type of business and the location.

Value-added Tax (VAT) in Armenia

All sales made locally in Armenia will be subject to VAT. A rate of 20% will apply to local sales of goods and services plus imports. However, exports will attract a zero-rated VAT. Non-residents, whose place of business is outside the country, the services offered to them will be zero-rated. Such services include management, consulting, and marketing services, among others. Supplies that involve the provision of education and financial services will be exempt from VAT.
To qualify as a VAT agent, you need to register. There is a threshold for a business or an individual for the registration as a VAT agent. SMEs qualify only for ToT, which replaces the VAT obligation. The qualification for VAT registration is based on the previous year’s revenue. For example, the VAT threshold, in terms of revenue, for 2018 and before, is AMD 115 million in annual revenue. It implies that businesses whose annual income in 2017 exceed AMD 115 million, qualify for VAT registration. Starting in 2019, the amount reduced to AMD 58.3 million, which is the applicable threshold for one to either qualify for VAT or ToT.

Personal Income tax (PIT) in Armenia

Personal incomes will be subject to PIT. However, not all incomes will be subject to this. The normal rate is 10% for all incomes received, domestically, by either residents or non-residents. In most cases, the payer is the one with the obligation to withhold a proportion of the gross amount payable. The withheld amount is usually final unless otherwise stated.
Monies from interest and royalties are subject to a 10% tax rate, withheld at the source. The party paying the amounts is obligated to do so, especially if it is registered as a tax agent. For incomes due to a lease of property, a 10% WHT will be final if and only if the annual income is not more than AMD 58.5 million. If otherwise, then an additional 10% PIT will apply.
For the proceeds due to the sale of a property, the range of the PIT varies from 10% to 20%. It will depend on whom the property is sold to, or the type of property in question. For the sale of property that will not be used in revenue generation activities, it is exempt from taxation.
Non-resident individuals receiving dividends from Armenian companies will be subject to a 10% tax, while the same for residents attract a 5% tax rate.
WHT payable is subject to refund by the state if the dividends paid by a resident company are used as capital investment for the same entity. The taxable income is arrived at, as the gross income less allowable expenses.

Withholding Tax (WHT) in Armenia

The rates for WHT for incomes by non-residents apply as follows:
  • Transportation, re-insurance, and insurance – 5%;
  • Royalties, capital gains, property leases, interests and dividends – 10%;
  • Capital gains due to proceeds from securities – 0%;
  • Other incomes generated locally – 20%;
WHT reporting is done quarterly where a tax agent is required to submit and remit by the 20th day of the subsequent quarter.

Payroll-Related Taxation in Armenia

All employers in Armenia are tax agents. As such, they have an obligation to withhold a proportion of their employees’ salaries at source and remit to the state.
Social contributions are a must for both local and foreign Armenian citizens. Employers are subject to withhold 2.5% on the monthly income of their employees, like social security contributions. The amount goes to the pension fund and is set at a maximum limit of AMD 12,500. Although social contributions are a must, employees could have suspended the same, through an application, until 1st July 2018.

Import/ Export related taxation in Armenia

Custom duty

All countries, members of the Eurasian Economic Union (EEU), possess free movement of goods, people, and services among its member countries. As such, the imposition of customs duty on imports and exports from and to the member countries is not applicable. Armenia is a member of EEU plus countries like Belarus, Kazakhstan, Russian, and Kyrgyzstan. In that case, any trade between Armenia and the above countries is tariff-free.

Excise taxes

Excise tax is imposed on locally manufactured goods and some of the imported products. The focus is mostly on the harmful products which see to affect human health or the environment in general negatively. As such, colossal excise tax rates are subject to such products. They include, but not limited to:
  • Petroleum products, including crude oil;
  • Alcohol and alcoholic beverages;
  • Tobacco products such as cigarettes;
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