Armenia Personal Income Tax Guide 2026

Overview — State Revenue Committee (SRC)

The State Revenue Committee (SRC) of Armenia administers all tax collection including personal income tax, corporate tax, VAT, and social contributions. Tax residents are taxed on worldwide income; non-residents are taxed only on Armenia-source income. Residency is determined by physical presence of 183 days or more in any 12-month period, or by having a permanent home in Armenia. Employees have tax withheld at source under the withholding tax system. Self-employed individuals and business owners file annual returns directly with the SRC. The currency is the Armenian Dram (AMD).

Flat 20% IIT Rate

Armenia applies a flat personal income tax rate of 20% on all taxable income. Unlike many countries, there is no progressive bracket system — all income is taxed at the same flat rate regardless of amount. Key aspects:

• Flat rate — 20% on all employment, business, and investment income
• No personal allowance — no tax-free threshold or basic personal relief
• No deductions — generally no deductions for personal expenses (except specific items like mortgage interest on principal residence)
• Withholding at source — employers withhold IIT from salaries and remit to SRC

The flat rate system simplifies tax compliance considerably. A taxpayer earning AMD 1,000,000/month pays AMD 200,000 in IIT — a 20% effective rate. There are no bands to calculate. For employees, the only deduction from gross salary before IIT is the mandatory pension contribution (5% for employees born after 1974).

Microbusiness Regime — 0% Tax

Armenia offers a favourable microbusiness regime for very small businesses. Individuals registered as microbusinesses are exempt from IIT on their business income if:

• Turnover limit — annual turnover does not exceed AMD 24 million
• No employees — the microbusiness cannot employ any staff
• No VAT registration — microbusinesses are not VAT-registered
• Excluded activities — certain activities are excluded (e.g., notary, advocacy, audit, gambling, trade in precious metals)

Microbusinesses pay 0% IIT on revenue up to AMD 24 million. There is no expense deduction — revenue is simply not taxed. If turnover exceeds AMD 24 million in a year, the business loses microbusiness status and must register for regular taxation from the following year.

Employment Income & Withholding

Employers must register for IIT withholding with the SRC and deduct 20% tax monthly from employee gross salaries. The employer calculates monthly IIT on gross salary, deducts the mandatory pension contribution (5% for employees born after 1 January 1974), and remits the net tax to the SRC by the 20th of the following month. Employers file monthly IIT returns via the SRC's online portal. Employees receive annual tax deduction summaries for their records. Failure to remit IIT attracts penalties of up to AMD 50,000 plus 0.04% interest per day on overdue amounts.

Self-Employed Individuals

Self-employed individuals and sole proprietors are taxed at the same flat 20% rate as employees. However, they must file self-assessment returns. Estimated tax may be payable in quarterly instalments. The annual return must be filed by 20 April of the following year. Self-employed individuals can deduct allowable business expenses (rent, utilities, raw materials, salaries) to arrive at taxable profit. Proper books of account must be maintained. Self-employed individuals not registered as microbusinesses must also register for VAT if annual turnover exceeds AMD 115 million.

FAQs

Do I need to file an annual return if I pay IIT through my employer?

Generally, employees whose only income is from employment and who have no other taxable income do not need to file an annual return. The employer's monthly withholding is the final tax. However, if you have additional income (rental, business, investment), you must file.

Is there any tax-free allowance?

No, Armenia does not have a personal allowance or tax-free threshold. All income is taxed at 20% from the first dram. However, certain social benefits and state pensions are exempt from IIT.

Can I deduct mortgage interest?

Yes, mortgage interest paid on the acquisition of a principal residence is deductible for IIT purposes, subject to certain limits. The deduction is available for mortgages taken after 1 January 2018.

What happens if my employer does not remit IIT?

The employer is liable for the unpaid tax plus penalties. The SRC may pursue the employer for collection. Employees can verify their tax compliance through the SRC's online portal and request a tax compliance certificate.

Disclaimer

This guide provides general information about Armenian personal income tax for the 2026 tax year. Tax laws, rates, and regulations may change. Always consult with a qualified Armenian tax advisor or the State Revenue Committee for advice specific to your situation. InvestmentKit does not provide tax advice.