Yerevan

Taxation in Yerevan, Armenia

What are the tax rates in Yerevan, Armenia? How are corporations taxed? Here’s Teleports overview of personal, corporate and other taxation topics in Yerevan, Armenia.

Corporate taxation in Yerevan

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Corporate taxation puts Yerevan in position 1 of all Teleport Cities.
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Basis

Resident companies are taxed on their worldwide income; nonresidents are taxed only on Armenia-source income.

Taxation of dividends

Dividends received from a resident company are exempt from taxation.

Residence

A company is resident in Armenia if it is established in Armenia (i.e. entered into the Armenian company register and registered with the tax authorities).

Losses

Losses may be carried forward for five years. The carryback of losses is not permitted.

Incentives

Certain information technology (IT) companies are exempt from corporate tax on IT income. Resident companies engaged exclusively in exports are taxed at a rate of 5% if the total amount of goods exported exceeds AMD 40 billon in the reporting period, or at a rate of 2% if the total amount of goods exported exceeds AMD 50 billion in the reporting period.

Rate

20%, which applies to resident companies and to Armenian permanent establishments of foreign companies.

Other

Presumptive tax and patent fee regimes are mandatory for certain types of activities.

Foreign tax credit

A credit is granted for foreign tax paid by companies on income from sources abroad up to the amount of Armenian tax payable on the foreign income. Although the credit cannot exceed the amount of tax assessable in Armenia in respect of the foreign-source income, any excess may be carried forward and set off against the company’s future corporate income tax liability.

Taxable income

Taxable income is the positive difference between the taxpayer’s gross income and allowable deductions. Examples of gross income include trading income, capital gains and income from financial activities.

Capital gains

Capital gains are taxed as ordinary income and taxed at the corporate tax rate of 20%.

Other taxation in Yerevan

Value added tax

Filing and payment

The VAT reporting period is the quarter or month. If the taxable turnover of the previous year exceeded AMD 100 million, the reporting period is the month. Tax return should be submitted before the 20th day of the month following the reporting period. The VAT amount should be paid before the 20th of the month following the reporting period.

Rates

The standard VAT rate is 20%, with a zero rate or an exemption applying to certain supplies. The turnover tax rates are as follows: 3.5% for income from manufacturing; 5% for income from a trade; and 10% for income from the sale of property and passive income.

Taxable transactions

VAT is levied on the supply of goods and services, and on imports. Armenia also levies a turnover tax on individual entrepreneurs and commercial entities with previous year revenue from the sale of goods and the provision of services not exceeding AMD 115 million (subject to certain exceptions).

Registration

An entity generally must register for VAT purposes if its annual taxable turnover exceeds AMD 115 million.

Withholding tax

Royalties

Royalties paid to a nonresident are subject to a 10% withholding tax unless the rate is reduced under a tax treaty.

Basis

A resident individual is taxed on worldwide income; a nonresident is taxed only on Armenia-source income.

Residence

An individual is resident in Armenia if he/she is present in the country for a period exceeding in the aggregate 183 days in the tax year, starting or ending in any 12-month period or if his/her center of vital interests is in Armenia.

Filing status

Each person must file a separate tax return; joint returns are not permitted.

Thin capitalization

There are no specific thin cap rules, but limits on the deduction of interest expense exist. Interest expense on loans from entities other than banks and credit organizations may be deducted in an amount not exceeding nine times the value of tax net

Filing requirements

The annual tax return and annual accounting reports must be submitted by 15 April of the year following the reporting year.

Consolidated returns

Consolidated returns are not permitted. Each company must file a separate return.

Other

Insurance compensation and reinsurance payments made to a nonresident are subject to a 5% withholding tax.

Rates

Income up to AMD 120,000 is taxed at a rate of 24.4%; income exceeding that amount but up to AMD 2 million is subject to a tax of AMD 29,280, plus 26% on the amount exceeding AMD 120,000; and income exceeding AMD 2 million is subject to a tax of AMD 518,080, plus 36% on the amount exceeding AMD 2 million.

Deductions and allowances

Individual entrepreneurs’ incomes are reduced applying the same deductions or allowances as for corporate tax. Such incomes are taxed at a rate of 24.4% on annual income up to AMD 1,440,000 and at a rate of 26% on any excess.

Interest

Interest paid to a nonresident is subject to a 10% withholding tax unless the rate is reduced under a tax treaty.

Real property tax

Property tax is calculated at a rate of 0.3% of the tax base, with the tax base being the assessed cadastral value. The tax is due annually.

Taxable income

Taxable income include employment income (wages and salaries), business income received by individual entrepreneur, capital gains, interest and royalties, income from insurance, income from leasing and donations and assistance.

Capital gains

Capital gains are taxed as ordinary income and taxed at the standard personal income tax rate.

Penalties

Penalties apply for filing a late return or failure to file and/or late payment.