When you register a company or operate as an Individual Entrepreneur (IE) in Armenia, one of the first real questions you face is: which tax regime applies to me? For many businesses – especially once revenue grows or you operate in certain sectors – the answer is the General Tax System (GTS).

The GTS is Armenia’s standard taxation framework. It is not a simplified system. It means your business is subject to two main taxes: Value Added Tax (VAT) and Corporate Tax. Understanding how these two taxes work, how they interact, and when they become mandatory is a practical requirement for running a compliant business in Armenia.

This guide breaks down the general tax system in Armenia for 2026 – what it covers, who it applies to, the rates, how to calculate your obligations, and how it compares to the turnover tax regime. No legal jargon, no vague explanations – just clear, step-by-step information for business owners who want to get it right from the start.

1. What Is the General Tax System in Armenia?

The General Tax System is the default tax regime for businesses in Armenia that do not qualify for – or have not elected – a simplified regime such as the turnover tax or the microbusiness regime. Under the GTS, businesses are required to:

Register for and charge VAT on their taxable sales
File and pay Corporate Tax on their net profit
Maintain full accounting records in line with IFRS (mandatory for all legal entities and for Individual Entrepreneurs operating under the GTS)

Unlike the turnover tax – which replaces both VAT and Corporate Tax with a single flat tax on gross revenue – the GTS requires businesses to track income and deductible expenses separately, calculate VAT on each transaction, and file an annual corporate tax return.

The GTS applies automatically to:

Companies whose annual turnover exceeds AMD 115 million in the current or previous tax year
Businesses in activity types excluded from simplified regimes (legal, accounting, auditing, and consulting services following the 2025 tax reforms)
Companies that have voluntarily opted into the GTS – common for B2B businesses that need to issue VAT invoices to their clients
Non-resident companies that have a permanent establishment (PE) registered in Armenia
Exporters who choose the GTS to access 0% VAT on their sales and claim input VAT refunds

Key point: If your annual turnover exceeds AMD 115 million, switching to the GTS is not optional – it is a legal requirement. The transition happens from the beginning of the quarter following the quarter in which you exceeded the limit. Missing this transition is one of the most common compliance problems seen among growing businesses in Armenia.

2. VAT in Armenia: How It Works

VAT is a consumption tax charged on most goods and services sold in Armenia. Businesses registered for VAT collect it from clients, deduct the VAT they paid on their own business costs (input VAT), and pay the difference to the state. This is called the VAT credit system.

Armenia has four categories of VAT treatment. Knowing which one applies to your activity determines your obligations and whether you can claim refunds.

a) Standard rate: 20%

The 20% VAT rate applies to the majority of commercial activity in Armenia, including:

Selling goods within Armenia
Providing services or works within Armenia
Importing goods into Armenia

This is the default. If no exemption or zero rate applies to your activity, you charge 20% VAT.

b) Zero rate: 0%

A 0% rate applies to exports and certain cross-border services. Zero-rated activities are still taxable – you file VAT returns – but no VAT is charged to the client. You can still claim input VAT refunds on your costs.

Zero-rated activities include :

Export of goods from Armenia
Software development, adaptation, and modification of electronic and database products
Consulting, legal, accounting, auditing, engineering, advertising, design, marketing, and information-processing services – when provided to a non-resident client without a base in Armenia
Patents, licenses, trademarks, copyrights, and similar intellectual property services – when the recipient is a non-resident
Provision of personnel, where staff works at the client’s location outside Armenia
Rental of movable property (excluding vehicles with specific rules)
Agency services for attracting service providers for foreign clients
International freight forwarding that starts in Armenia and ends outside Armenia – or vice versa

Practical note for IT companies and service exporters: If your Armenian company provides software development, consulting, or marketing exclusively to foreign clients, your VAT rate is 0%. You do not charge VAT to clients, but you are still required to file monthly VAT declarations and can claim a refund on input VAT paid on your Armenian costs.

c) Non-taxable activities

Some activities sit entirely outside the VAT system – no VAT is charged and no input VAT can be recovered. Examples include:

Buying goods outside Armenia and selling them outside Armenia (with no Armenian nexus)
International freight that both starts and ends outside Armenia
Goods and services listed in – including certain financial, medical, and educational services

d) VAT for Non-Residents

Non-resident companies that do not have a registered permanent establishment in Armenia but provide services in Armenia are subject to VAT. In practice, the Armenian company paying for those services becomes the tax agent and is responsible for withholding and paying VAT to the Armenian state on behalf of the non-resident.

If your Armenian company pays a foreign software vendor, a foreign marketing agency, or a foreign consultant for services used in Armenia, check whether you have a VAT withholding obligation. This rule is frequently missed by founders, particularly in the early stages of running a business.

Source: Armenian Tax Code – VAT, Chapter 8

3. Corporate Tax in Armenia: Rates and How It Works

Corporate Tax is levied on the net profit of a business – that is, revenue minus deductible expenses. This is fundamentally different from the turnover tax, which is applied to gross revenue regardless of costs.

Corporate Tax Rates (2026)

18% – for legal entities (LLCs, JSCs, and other registered companies)
23% – for Individual Entrepreneurs (IEs) operating under the general tax system

Resident companies are taxed on their worldwide income. Non-resident companies with a permanent establishment in Armenia are taxed only on their Armenian-source income.

How Corporate Tax Is Calculated

Taxable profit = Total Revenue – Deductible Expenses

Deductible expenses include:

Salaries and social security contributions
Rent and utility costs
Depreciation of fixed assets
Materials and cost of goods sold
Business-related travel expenses
Interest on business loans
Marketing and advertising costs (within the limits set by the Tax Code)

Important: Expense documentation. Every deductible expense must be supported by a proper primary document – an invoice, contract, or receipt. Submitting expenses without documentation is one of the most common audit triggers in Armenia. If the Tax Authority rejects your expense documentation, those costs are added back to your taxable base and you pay tax on them.

Advance Payments

Corporate tax reporting is annual – the return is due on April 20 for the previous calendar year. However, taxpayers must make advance payments on the 15th of every month throughout the year. The final annual return reconciles the total tax due against the advance payments already made.

Free Economic Zones (FEZ)

Companies operating inside Armenia’s Free Economic Zones are exempt from Corporate Tax within the zone. This is a meaningful incentive for manufacturing, logistics, and certain high-tech activities. FEZ status requires a formal registration process.

Source: PwC – Armenia Corporate Taxes on Income

4. Tax Rates at a Glance

Quick reference for the key rates under the General Tax System in Armenia:

Tax	Rate	Who Pays
VAT – standard	20%	All VAT-registered businesses selling goods/services in Armenia
VAT – export / zero rate	0%	Exporters of goods; exporters of qualifying services (IT, consulting, legal, etc.)
Corporate Tax – legal entities	18%	LLCs, JSCs, and other legal entities resident in Armenia
Corporate Tax – Individual Entrepreneurs	23%	IEs registered in Armenia operating under the GTS
Withholding – freight (non-residents)	5%	Non-resident companies earning freight income from Armenia
Withholding – passive income (non-res.)	10%	Non-residents earning dividends, interest, royalties from Armenia
Withholding – other income (non-res.)	20%	Non-residents earning other Armenian-source income

Sources: PwC Armenia Tax Summary

5. Practical Example: VAT + Corporate Tax Calculation

Let’s walk through a real scenario so you can see how VAT and Corporate Tax work together under the GTS.

Scenario: An Armenian LLC provides IT consulting to local Armenian companies (VAT-taxable at 20%) and to foreign clients (VAT at 0%). Here is the annual picture:

Item	Amount (AMD)
Revenue from Armenian clients (20% VAT)	60,000,000
VAT charged to Armenian clients (20%)	12,000,000
Revenue from foreign clients (0% VAT – export)	50,000,000
Total gross revenue (excluding VAT)	110,000,000
Input VAT paid on own business expenses	3,000,000
VAT payable to state (12,000,000 – 3,000,000)	9,000,000
Deductible business expenses (salaries, rent, etc.)	40,000,000
Taxable profit (110,000,000 – 40,000,000)	70,000,000
Corporate Tax at 18%	12,600,000

In this example, the company pays AMD 9,000,000 in VAT (after deducting input VAT it paid on its own costs) and AMD 12,600,000 in Corporate Tax. These are two separate obligations, reported on different schedules.

Note: if this company had been under the turnover tax regime, it would have paid approximately AMD 11,000,000 in turnover tax on AMD 110,000,000 of gross revenue at the 10% service rate – with no ability to deduct AMD 40,000,000 of business expenses. In this case, the GTS produces a lower total tax bill.

6. Who Must Use the General Tax System?

The GTS is mandatory if any of the following conditions apply:

Your annual turnover exceeds AMD 115 million in the current or previous tax year. Once you cross this threshold, the GTS becomes mandatory from the beginning of the next quarter.
Your business activity is excluded from simplified regimes. Following the March 2025 tax reforms, legal services, accounting and auditing firms, real estate agencies, and consulting firms are no longer eligible for turnover tax or the microbusiness regime. These businesses must operate under the GTS.
You are a non-resident with a permanent establishment in Armenia. Any branch, office, or registered representative structure in Armenia falls under the GTS.
You have voluntarily opted into the GTS. Some companies choose to register for VAT and operate under the GTS even if they qualify for a simpler regime – because their clients require VAT invoices for their own input VAT deductions.

2025 Reform Alert: Following the March 2025 amendments to the Armenian Tax Code, certain professional service providers – including legal, accounting, auditing, and consulting businesses – were formally excluded from the turnover tax regime. If your company operates in these sectors and was previously under turnover tax, you are required to switch to the GTS. Check your activity type against the updated eligibility list to confirm your status. Source: KPMG – Armenia Amendments to Special Tax Regimes (2025)

Sources: KPMG Armenia – Tax Regime Amendments 2025 | Orbitax – Armenia Excludes Certain Activities from Simplified Regimes | VATupdate – Armenia Amends Tax Code 2025

7. General Tax System vs. Turnover Tax: Side-by-Side

This is one of the most common questions from founders setting up in Armenia. The right answer depends on your cost structure, your client base, and your revenue level.

Factor	General Tax System	Turnover Tax
VAT	Yes – 20% standard, 0% on exports	No VAT
Tax base	Net profit (revenue minus deductible expenses)	Gross revenue
Rate – legal entity	18% on profit	7%-12% depending on activity type
Rate – IE	23% on profit	7%-12% depending on activity type
Expense deductions	Yes – full deductions allowed	Limited / not applicable
VAT refunds	Yes – claimable on exports	Not available
Annual turnover limit	None	AMD 115 million per year
Bookkeeping	Full IFRS accounting required	Simplified (records required from 2025)
Best for	Exporters, high-cost businesses, B2B companies	Small traders, cafes, low-overhead services under the threshold

When the GTS works in your favour:

Your business has significant deductible expenses – salaries, rent, equipment, materials. Under the GTS, these reduce your taxable profit, which can result in a lower effective tax burden than paying turnover tax on your gross revenue.
You export goods or services – you charge 0% VAT and can claim refunds on input VAT paid in Armenia.
Your clients are other businesses that need VAT invoices for their own input VAT deductions.
Your turnover has exceeded or is close to AMD 115 million annually.

When the turnover tax may still fit:

Your business is a small retail shop, cafe, or low-overhead service provider with minimal deductible costs.
Your annual turnover is well below AMD 115 million and your activity type is eligible.
Simpler reporting is the primary driver for your choice.

Sources: EY Armenia Tax Alerts – March 2025

8. Reporting and Deadlines Under the GTS

Operating under the GTS comes with specific reporting obligations. Missing deadlines results in penalties and interest from the State Revenue Committee (SRC).

Obligation	Deadline	Frequency
Corporate Tax annual return	April 20 (for the prior year)	Annual
Corporate Tax advance payments	15th of each month	Monthly
VAT declaration	20th of the month following the reporting period	Monthly
Payroll / income tax (staff)	20th of the month following payroll	Monthly

Key notes on reporting:

VAT declarations must be filed even in months where VAT payable is zero.
If you are a VAT-registered exporter with 0% rated sales, you can apply for a VAT refund – but this requires documentation and a formal application with the SRC.
All returns must be filed electronically through the SRC portal at e-services.taxservice.am.
Corporate Tax advance payments are made monthly. The annual return reconciles the total tax due against advances already paid.

Source: State Revenue Committee of Armenia

9. Common Mistakes Founders Make Under the GTS

These are the compliance mistakes we see most often when working with businesses in Armenia:

Warning: Most common GTS compliance mistakes

Missing the turnover threshold transition – many companies discover they should have switched to the GTS only during an audit, resulting in back-taxes, penalties, and interest.

Not registering for VAT on time – VAT registration is required once you hit the threshold. Operating without it while above the limit is a serious compliance issue.

Claiming undocumented expenses – every deductible expense must have a supporting primary document. A bank transfer alone is not enough without an invoice or contract.

Applying the wrong VAT rate – charging 20% on services that should be zero-rated (or vice versa) creates both financial and legal exposure. Know which category your activity falls into.

Ignoring non-resident VAT obligations – if your Armenian company pays a foreign vendor for services consumed in Armenia, you may have a VAT withholding obligation as a tax agent.

Missing advance Corporate Tax payments – not making monthly advance payments results in penalties even if your annual return is filed on time and the full-year tax is correct.

Final Thoughts

The General Tax System in Armenia is not overly complex by international standards, but it does require discipline: proper accounting records, accurate VAT tracking, on-time filings, and a clear understanding of which activities fall under which rate.

For growing businesses, exporters, IT companies, and professional service providers operating in excluded sectors, the GTS is either mandatory or the strategically correct choice. Getting the setup right from the beginning – correct VAT classification, proper expense documentation, and a reliable accounting system – saves significant time and money down the road.

If you are not sure whether the GTS applies to your business, or you are in the middle of transitioning from the turnover tax regime, getting professional advice at the outset avoids costly corrections later.

Need help with tax accounting in Armenia?

Profin Consulting helps companies in Armenia set up compliant accounting systems, navigate VAT registration, transition between tax regimes, and stay on top of reporting deadlines.

Whether you are a foreign founder, a growing startup, or an established SME, we provide practical, Armenia-specific guidance.

Visit us at: profin.am

General Tax System in Armenia (2026)