Armenia Personal Income Tax

Resident individuals are subject to income tax on their worldwide income. Nonresident individuals are subject to income tax on only income received from Armenian sources.

For tax purposes, an individual is considered resident if he or she satisfies either of the following conditions:

  • He or she resides in Armenia for 183 or more cumulative days in any continuous 12-month period ending in the current tax year (same as a calendar year).
  • His or her center of vital interests (the place of a person’s fam­ily or economic interests) is in Armenia.

For the purpose of determining the residency status, days spent abroad by an individual as a civil servant of the Republic of Armenia (RA) are considered as days spent in the RA.

Income subject to tax. The taxation of various types of income is described below.

Employment income. Taxable income from employment consists of all types of compensation or benefits, whether received in cash or in any other form, subject to certain exemptions.

Self-employment and business income. Tax is levied on an indi­vidual entrepreneur’s annual income, which consists of gross income less expenses (except for nondeductible or partially non­deductible expenses) contributing to the generation of the income.

Directors’ fees. Directors’ fees are included in taxable income.

Investment income. A 10% withholding tax is imposed on inter­est income and other compensation received by individuals from loans. Interest derived from treasury bonds and other state securi­ties is not taxable.

Exempt income. “Exempt income” represents part of the gross income of a taxpayer, which is deducted from gross income for determination of taxable income. Income derived by individuals that is considered exempt includes, among other items, the following:

  • Dividends
  • Contributions made by taxpayers on their behalf and/or by third-party taxpayers (including employers) within the voluntary accu­mulative pension insurance system according to the terms and conditions established by RA legislation, but not more than 5% of the taxpayer’s gross income
  • Contributions made by the state for the taxpayer within the obligatory accumulative pension insurance system in accordance with the terms and conditions established by RA legislation
  • Compensation paid within the norms specified in the legisla­tion of the RA, with the exception of compensation paid for unused leave days in the event of quitting work
  • Property and cash received from individuals as inheritance or gifts
  • Amount of monetary and in-kind assistance provided to indi­viduals within the scope of charter activities of non-commercial organizations established in accordance with the procedures specified by the law of the RA and registered with the tax authorities
  • Amount of financial assistance provided on the basis of deci­sions of the state administration and local government bodies of the RA, as well as financial assistance provided by foreign states and international (intergovernmental) organizations
  • Proceeds from the sale of property to non-entrepreneur indi­viduals, with the exception of amounts received from the sale of property within the scope of entrepreneurial activity
  • Scholarships and stipends paid by the state to students and postgraduates of higher educational institutions, students of specialized-secondary and vocational schools and attendees of religious seminaries
  • Insurance compensation with the exception of insurance com­pensation received under the voluntary accumulative pension insurance system
  • Income derived from the sale of shares, treasury bonds and other state securities
  • Amounts received as compensation for damages under the law, with the exception of compensation for lost income
  • Lump-sum amounts paid on the death of an employee or his or her family members
  • Prizes won at international competitions and contests by ath­letes and coaches participating for the national team of the RA, and state awards (prizes)
  • Monetary and in-kind winnings of the participants in lotteries implemented according to the procedures and terms specified by the law of the RA
  • Insurance payments up to AMD10,000 per month per head made by the employers for health insurance of their employees
  • Income derived from the sale of agricultural production, as well as income received from other activities by individuals involved in agricultural production, to the extent that the income from such other activities does not exceed 10% of the income received from agricultural and other activities (if the 10% threshold is ex ceeded, the entire income from the other activities is taxed)
  • State benefits paid under the legislation of the RA, with the exception of benefits for temporary work disability
  • All types of pensions paid under the law of the RA with the exception of pensions received under the voluntary accumula­tive pension insurance system
  • One-time compensation paid under the law of the RA to fami­lies of deceased or disabled servicemen
  • Alimony paid according to the law of the RA
  • Amounts received by individuals for donated blood, breast milk and other types of donorship
  • Income received from securities that certify taxpayers’ partici­pations in investment funds
  • Income from the sale of handmade carpets for taxpayers engaged in the production of such carpets

Taxation of employer-provided stock options. Employer-provided stock options are taxable benefits.

Capital gains and losses. Capital gains are subject to regular income tax when they are realized. Unrealized capital gains are not subject to tax.

Individual entrepreneurs may offset their capital losses against capital gains. If the capital loss cannot be offset in the year in which it is incurred, it can be carried forward to offset gross income in the following five years.

Deductions

Business deductions. Taxpayers may deduct all necessary and documented expenses incurred directly and exclusively for the purpose of generating taxable income (for example, material expenses, depreciation allowances, lease payments, salaries and wages and interest paid), except for nondeductible or partially nondeductible expenses.

Nondeductible or partially nondeductible expenses include, but are not limited to, the following:

  • Environmental pollution charges exceeding 0.5% of the gross income of the tax year
  • Advertising, staff training, marketing and business trip expenses incurred abroad that exceed the norms established by the gov­ernment of the RA
  • Representative expenses exceeding 0.5% of gross income (but not more than AMD5 million) for the tax year
  • Fines, penalties and other proprietary sanctions transferred to the state and municipal budgets
  • Assets provided free of charge and remitted (forgiven) debts
  • Expenses related to generation of income that is exempt from income tax
  • Interest paid on loans and borrowings above the established limit of 24% per year
  • Repair and maintenance expenses with respect to fixed assets in excess of 10% of the acquisition cost of the corresponding fixed asset

Depreciation allowances for fixed and intangible assets used in economic activities are deductible for tax purposes in accordance with the terms and conditions provided by the Law of the RA on “Profit Tax.” Details regarding the depreciation of fixed and intangible assets are provided below.

Fixed and intangible assets acquired before 1 January 2014. The annual value of depreciation allowances for fixed assets acquired before 1 January 2014 is calculated by dividing the acquisition cost or revalued cost (if the revaluation is carried out according to the procedure established by the law of the RA) of fixed assets by the depreciation period determined for the appropriate group of fixed assets or for intangible assets. The following minimum periods are established for depreciation purposes.

Minimum depreciation

Group Assets Minimum depreciation period (years)
1 Buildings and constructions
of hotels, boarding houses, rest homes, sanitariums and
educational institutions
10
2 Other buildings, constructions
and transmission devices
20
3 Robot equipment and assembly
lines
3
4 Calculating devices and computers 1
5 Other fixed assets, including
growing cattle, perennial plants and investments intended for
improving the land
5

The minimum depreciation period for fixed assets with a value up to AMD50,000 is one year.

Intangible assets are depreciated over their useful economic lives. If it is impossible to determine the useful life of an intangible asset, the minimum depreciation period of such asset is set at 10 years, but it may not be longer than the period of the taxpay­er’s activity.

Land is not subject to depreciation.

For the purposes of determination of taxable income, a taxpayer may choose a different depreciation period for fixed assets at his or her discretion, but it may not be less than one of the above-mentioned periods for the appropriate group.

Fixed and intangible assets acquired on or after 1 January 2014. The annual amount of depreciation allowances of fixed assets acquired on or after 1 January 2014 is calculated by multiplying the net book (residual) value (as at the last day of reporting period) of each group of fixed assets by the annual depreciation rate for the appropriate group of fixed assets. The following are the annual maximum depreciation rates for each group of fixed assets.

Maximum annual depreciation

Group Assets Maximum annual depreciation (years)
1 Buildings and constructions
of hotels, boarding houses, rest homes, sanitariums and
educational institutions
15
2 Other buildings, constructions
and transmission devices
7.5
3 Robot equipment and assembly
lines
50
4 Calculating devices and computers 100
5 Other fixed assets, including
growing cattle, perennial plants and investments intended for
improving the land
30

For purposes of the determination of taxable income, taxpayers may choose an annual depreciation rate for fixed assets other than the rates mentioned in the above table, but the chosen rates may not exceed one of the above-mentioned rates for the appro­priate group.

The maximum annual depreciation rate for buildings, construc­tions and transmission devices located in a disaster area is 100%.

The maximum annual depreciation rate for a group of fixed assets with a book (residual) value of less than AMD50,000 (as of the last day of reporting period) is 100%.

Intangible assets are amortized over their useful economic lives. If it is impossible to determine the useful life of a group of intan­gible asset, the maximum annual amortization rate is set at 20%, but it may not be less than the rate calculated on the basis of the period of the taxpayer’s activity.

Rates. The personal income tax rates are provided below. Tax agents calculate income tax using the following rates.

Taxable income (AMD) Tax rate % Tax due (AMD) Cumulative tax due (AMD)
First 120,000 24.4 29,280 29,280
Next 1,880,000 26 488,800 518,080
Above 2,000,000 36  –  –

A 13% rate applies to salaries and other income equivalent to salaries that are paid to RA resident employees who perform their job exclusively outside of the RA within the framework of proj­ects approved by the RA government.

A 10% rate applies to salaries and other income equivalent to salaries that are paid to employees by employers certified accord­ing to procedures established by the RA law on State Support of Information Technologies.

Tax on income not taxed by tax agents (that is not subject to tax at source) is calculated at the following rates.

Taxable income (AMD) Tax rate % Tax due (AMD) Cumulative tax due (AMD)
First 1,440,000 24.4 351,360 351,360
Above 1,440,000 26  –  –

A 10% rate applies to the following types of income derived by individuals (except for individual entrepreneurs) in Armenia:

  • Royalties and income derived from property leases
  • Interest income
  • Income from the sale of property to tax agents and the sale of immovable property to non-tax agents if the amount of square meters of such property exceeds the limits established by law

Income paid from Armenian sources to foreign citizens and state­less persons is taxed by tax agents at the source of payment at the following rates.

Type of income Rate (%)
Insurance payments and income received from freight 5
Royalties, interest, lease payments and realized capital gains from the sale of property* 10

* If the amount of annual lease payments exceeds AMD58,350, an additional 10% rate is applied to the excess amount.

Other income paid from Armenian sources to foreign citizens and stateless persons is taxed by tax agents at source at the rates set forth in the table following the second paragraph of this section.

Credits. The income tax liability of Armenian tax residents is reduced by the amount of tax paid by them abroad under foreign law, with the exception of the amount of foreign tax paid on income that is exempt from tax under the law of the RA. How­ever, the foreign tax credit may not exceed the amount of tax that would be due in the RA on this income.

Relief for losses. Individual entrepreneurs may carry forward operating losses for up to five years. No carryback is allowed.

Other taxes

Inheritance and gift taxes. Armenia does not impose inheritance and gift taxes.

Wealth tax. Armenia does not impose wealth tax or net worth tax.

Property tax. For individuals and individual entrepreneurs, build­ings and constructions, and vehicles are subject to property tax.

For purposes of the property tax, buildings and constructions include the following:

  • Residential construction units
  • Multi-flat dwelling buildings
  • Nonresidential areas of residential buildings
  • Separate constructions for the parking of vehicles that are built on plots
  • Constructions for public use
  • Constructions for production use
  • Incomplete (semi-built) construction units

The tax base of buildings and constructions is considered to be the cadastral value assessed under procedures defined by the Law of the RA on Property Tax. The property tax rates for buildings and constructions range from 0% to 1%.

For purposes of the property tax, vehicles include the following:

  • Motor vehicles
  • Watercrafts
  • Snowmobiles
  • Quattro cycles
  • Motorcycles

The tax base for vehicles is motor power (horsepower or kilo­watt). The property tax for motor vehicles is calculated at the following annual rates.

Type Tax amount
Motor cars with up to 10 passenger seats
From 1 to 120 horsepower AMD200 per horsepower
From 121 to 250 horsepower AMD300 per horsepower and additional AMD1,000 for each horsepower above 150
251 and more horsepower AMD500 per horsepower and additional AMD1,000 for each horsepower above 150 Motor cars with
Motor cars with 10 or more passenger seats and trucks
From 1 to 200 horsepower AMD100 per horsepower
201 and more horsepower AMD200 per horsepower
Watercrafts, snowmobiles and quattro cycles AMD150 for each horsepower
Motorcycles AMD40 for each horsepower
Trucks of more than 20 years 0

Property tax on motor vehicles used for up to three years is cal­culated at 100%. The amount of property tax on motor vehicles used for more than three years is reduced for each year following the third year by 10% but not by more than a total of 50% of the tax amount. The time in use is calculated from the date on which the motor vehicle is produced.

Land tax. Landowners and permanent users of state-owned land are considered payers of land tax. The land tax rate for the agri­cultural lands (including land lots allotted for housing in settle­ments, and garden plots) is 15% of the net income determined by cadastral evaluation. The land tax rate for non-agricultural lands ranges from 0.5 to 1% of the value determined by cadastral evaluation.

Tax filing and payment procedures The tax year in Armenia is the calendar year.

Individuals must submit tax returns regarding their annual tax­able income to the tax authorities by 15 April of the year follow­ing the tax year, except in the following cases:

  • The taxpayer received exempt income only.
  • The taxpayer received only income subject to taxation at source by a tax agent, regardless of the amount of such income during the tax year.

The amount of income tax calculated must be paid to the state budget by 1 May of the year following the tax year.

In the event of termination of the activity (source of income) before the end of the tax year, the individual must submit the tax return within one month after the termination of the activity.

Individual entrepreneurs engaged in economic activities in Armenia must make advance payments of the income tax during the tax year, each equal to 18.75% of the amount of income tax for the preceding tax year. The advance payments must be made quarterly by the 15th day of the last month of each quarter.

Before the calculation of the amount of income tax for the pre­ceding year, a taxpayer must make the first advance payment of income tax by 15 March in an amount not less than the last advance payment of the preceding tax year.

At the end of the reporting year, a taxpayer calculates the amount of income tax based on the accrued taxable income, setting off the amounts of advance payments made for such reporting year.

Double tax relief and tax treaties

Armenia has entered into tax treaties with the following countries.

Austria Hungary Romania
Belarus India Russian
Belgium Iran Federation
Bulgaria Ireland Slovenia
Canada Italy Spain
China Kazakhstan Switzerland
Croatia Kuwait Syria
Cyprus Latvia Thailand
Czech Republic Lebanon Turkmenistan
Estonia Lithuania Ukraine
Finland Luxembourg United Arab
France Moldova Emirates
Georgia Netherlands United
Germany Poland Kingdom
Greece Qatar

If a foreign citizen who is nonresident for tax purposes in Armenia receives income from Armenian sources and meets the conditions of a double tax treaty, a tax agent can apply the treaty exemption on the basis of a tax residency certificate issued by the competent tax authority of the foreign country.

Visas

One of the legal bases for a foreign citizen’s stay in Armenia is the entry visa. In general, entry visas are issued by the Passport and Visa Department of the Police of the RA at the border-crossing control points or on the territory of Armenia or by the Ministry of Foreign Affairs of the RA at the diplomatic missions and consular posts of the RA. The Ministry of Foreign Affairs of the RA also provides electronic entry visas to foreign citizens. Citizens of certain countries (principally the countries of the former USSR) are not required to have a visa to enter Armenia and stay in the country for up to 180 days during a calendar year.

Armenian entry visas are provided for a period of stay up to 120 days, with the possible extension for a maximum of 60 days, and are issued for single or multiple entries. The following types of Armenian visas are available:

  • Visitor visa
  • Official visa
  • Diplomatic visa
  • Transit visa

Currently, at the border-crossing control points of the RA, visa services of the Passport and Visa Department of the Police of the RA issue the following visas only:

  • Single-entry, 3-day transit visas
  • Single-entry, 21-day visitor visas
  • 120-day visitor visas

Electronic visas are valid for entry at all border-crossing points of the RA.

Citizens of the following jurisdictions may apply for Armenian entry visas only to Armenian diplomatic representations or con­sular posts abroad and only on the basis of an invitation letter.

Afghanistan                     Gabon                               Rwanda

Algeria                            Gambia                             St. Helena

Angola                            Ghana                               Island

Bangladesh                      Guinea                              São Tomé

Benin                               Guinea Bissau                   and Príncipe

Botswana                        Kenya                                Saudi Arabia

Burkina Faso                   Lesotho                             Seychelles

Burundi                           Liberia                               Sierra Leone

Cameroon                        Libya                                 Somalia

Cape Verde                     Madagascar                       Senegal

Central African                Malawi                              South Sudan

Republic                          Mali                                  Sri Lanka

Chad                                Mauritania                         Sudan

Comoros                         Mauritius                          Swaziland

Congo (Democratic         Morocco                           Syria

Republic of)                    Mozambique                     Tanzania

Congo (Republic of) Namibia                                   Togo

Côte d’Ivoire                   Nepal                                Tunisia

Djibouti                           Niger                                 Uganda

Egypt                               Nigeria                              Vietnam

Equatorial Guinea            Pakistan                            Zambia

Eritrea                              Palestinian Authority        Zimbabwe

Ethiopia

Citizens of China, India and Iraq may apply for Armenian entry visas at only Armenian diplomatic representations or consular posts abroad. However, they do not need an invitation letter.

Visa application forms are usually processed at the diplomatic missions and consular posts of the RA within three working days. In some cases, additional checking may be required and process­ing time can be extended.

Work permits

Under the Law of the RA on Foreigners, employers may enter into labor contracts with foreign employees and employ them based on work permits issued by the competent authority. The issuance of work permits to foreign employees is based on the procedures and terms established by the government of the RA. However, such procedures have not yet been established by the authorized body of the government of the RA. As a result, foreign citizens are not currently required to obtain work permits to work in Armenia.

The Law of the RA on Foreigners provides that certain categories of foreign citizens are not required to obtain work permits for work in Armenia. These include, among others, the following:

  • Foreign nationals having permanent and special residence sta­tus in Armenia
  • Close family members (parents, brothers, sisters, spouses, chil­dren, grandparents and grandchildren) of Armenian citizens or foreign citizens having permanent residence status (legally resid­ing) in Armenia, during their temporary residence status period
  • Close family members of employees of authorized diplomatic missions, consular posts, international organizations and their representations in Armenia
  • Founders, directors or authorized representatives of commercial organizations with foreign capital participation
  • Employees of foreign commercial organizations coming to Armenia for the purpose of working in representative offices located in Armenia
  • Professionals or other persons arriving in Armenia under author­ity of international agreements
  • Lecturers from foreign educational institutions coming to Armenia for the purpose of lectureship in Armenian educa­tional institutions
  • Certified representatives of foreign organizations practicing journalistic activities
  • Foreign citizens and stateless persons who have the status of refugees and have received political asylum with a term not exceeding the period of residence
  • Students working within the framework of job exchange for vacation time by virtue of international agreements

Residence permits

The types of residence status provided by the Law of the RA on Foreigners are described below.

The Passport and Visa Department of the Police of the RA grants temporary residence status to the following foreign citizens:

  • Individuals studying in Armenia
  • Individuals having a work permit in Armenia
  • An individual who is spouse, parent or child of a foreigner hav­ing temporary residence status in Armenia
  • An individual who is spouse or a close family member (parent, brother, sister, child, grandmother, grandfather or grandchild) of a citizen of Armenia or a foreigner having permanent or special residence status in Armenia
  • Individuals engaged in entrepreneurial activities in Armenia
  • Individuals of Armenian ancestry

Temporary residence status is granted for up to a one-year term with possible extension periods of one year per extension.

Permanent residence status is granted by the Passport and Visa Department of the Police of the RA to a foreign citizen who satis­fies all of the following conditions:

  • The individual proves the presence of a spouse or a close fam­ily member (parent, brother, sister, child, grandmother, grand­parent or grandchild) in Armenia who is a citizen of Armenia or has permanent residence status in Armenia.
  • The individual is provided with housing and means for living in Armenia.
  • The individual has been legally residing in Armenia for at least three years before submitting an application for permanent resi­dence status.

Permanent residence status can also be granted to a foreigner of Armenian ancestry as well as to a foreigner engaged in entrepre­neurial activities in Armenia.

Permanent residence status is granted for a five-year term with possible extensions of five years per extension.

The President of Armenia may grant special residence status to foreign citizens of Armenian ancestry and to foreign citizens who are engaged in economic or cultural activities in Armenia. The special residency status is granted for a 10-year term. It can be granted several times.

The documents establishing types of residence status in Armenia described above are temporary or permanent residence certifi­cates and special passports.

Driver’s permits

A foreign national with an international driver’s license may legally drive in Armenia using this license. Citizens of Common­wealth of Independent States (CIS) countries may drive legally in Armenia with their home-country driver’s licenses for up to one year. A foreigner may obtain an Armenian driver’s license after passing written and practical examinations.