Microbusiness in Armenia is a special regime that has been in effect for four years and resembles the self-employed status in Russia. This status offers significant advantages, including nearly full exemption from tax obligations. It applies to individual entrepreneurs (IE) and limited liability companies (LLC).
To qualify for the “Microbusiness” status in Armenia, the following conditions must be met:
- Establish an IE or LLC. The IE or LLC must not provide services in the fields of consulting, law, accounting, auditing, engineering, advertising, marketing, design, translation, medicine, dentistry, data processing, or information technology. Additionally, they should not be involved in trade in Yerevan or in shopping centers outside the city.
- Total revenue from the sale of goods or services for the previous tax year must not exceed 24,000,000 AMD.
The “Microbusiness” status allows businesses to avoid paying corporate income tax and VAT, effectively freeing them from significant tax liabilities. If the IE or LLC has employees, the personal income tax is a fixed amount of 5,000 AMD per month per employee.
To apply for the microbusiness status in Armenia, you must fill out and submit the “Application for Admission to the Microbusiness Tax Regime” through: https://fileonline.taxservice.am. This should be done within 20 days of registration.
Similar to the “turnover tax” regime (analogous to the simplified tax system in Russia), if more than 20 days have passed since the registration of the IE/LLC, it will not be possible to apply the microbusiness status or switch to the turnover tax regime during the current year.
Reporting Requirements for Microbusinesses in Armenia
- Annual turnover report: Must be submitted once a year by February 1 of the following year, covering all business activities.
- Monthly payroll reporting: If the company has employees, a personal income tax report for each employee must be submitted monthly by the 20th of the following month.
- Mandatory contribution: Residents are required to make an annual contribution of 18,000 AMD to the Army Insurance Fund for themselves.
If the annual turnover exceeds 24 million AMD, the company must switch to the Simplified Tax System (STS) or the Turnover Tax regime at a rate of 5%. The turnover cap under this regime is 115 million AMD per year. The application for switching to the Turnover Tax regime must be submitted within 20 calendar days from the registration of the individual entrepreneur or organization.
If the turnover exceeds the limit under the Turnover Tax regime, the IE or LLC will be moved to the General Taxation System (GTS), where income is taxed on a profits-minus-expenses basis at a rate of 18%. The reporting period for GTS is the calendar year, and the tax declaration must be submitted by April 20 of the following year, similar to the Turnover Tax regime.