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Armenia now has two taxation systems: general and special. General taxation system in Armenia - the taxpayer adds 20% VAT on income and pays a profit tax on annual gross profit. The profit tax rate is 18% for legal entities and 23% for individual entrepreneurs (IE). Taxpayers can opt into the general taxation system at any time by submitting an application to become a VAT payer in Armenia. VAT in Armenia applies to taxpayers whose income exceeds 115 million AMD in the current or previous tax year. Tax year in Armenia starts on 1st of January and ends on 31st of December. Special taxation systems in Armenia include the turnover tax system and the micro-entrepreneurship system. These systems can be chosen within 20 days after company registration or before February 20 of each tax year by submitting an application to the taxservice of RA. Special taxation systems have restrictions on yearly turnover and types of activities.

In Armenia, entrepreneurship can be conducted as an individual, an individual entrepreneur (IE), and/or a legal entity. Individuals in Armenia can operate under the micro-entrepreneurship taxation system if their activities fall under the types permitted by law of RA. IEs and legal entities in Armenia can engage in any type of activity and choose any taxation system. There are two taxation systems in Armenia: general and special.

When entrepreneurs want to register a business in Armenia, they often face the question: should they register as an IE or open a legal entity in Armenia? Below are the main differences: 1. An individual entrepreneur is personally liable with their private assets, while a legal entity is liable with the company’s assets. 2. A legal entity, in addition to tax accounting, is required to maintain financial reporting in Armenia in accordance with IFRS and IAS. 3. Registering and deregistering an IE in Armenia is easier than registering LLC or dissolving a legal entity. 4. Accounting services for legal entities are more expensive than for individual entrepreneurs in Armenia.