On June 12, the Armenian Parliament passed the second reading of the bill "On Amendments to the Tax Code" and its accompanying laws. According to these amendments, the turnover tax rate in Armenia will be doubled. This change aims to reduce the tax burden disparity between the turnover tax, VAT, and profit tax.
As a result of these changes, the tax rate for trade entities will be set at 10%, for manufacturing at 7%, and for public catering at 12%.
Certain types of micro-enterprises will be excluded from the turnover tax system to make it more targeted. This includes notarial and legal services, as well as lottery organization services.
The following types of commercial activities will be excluded from the list of micro-enterprises: regional commercial activities, hairdressing services, body care services, saunas, car maintenance and repair services, real estate rental and sales brokerage, software development, and others.
According to the Deputy Minister of Finance of Armenia, several amendments were made between the first and second readings of the bill. Notably, it is proposed to begin reviewing the turnover tax burden for catering enterprises in the regions a year later—from January 1, 2026, instead of January 1, 2025.
"This is due to the pronounced seasonality of this type of activity in the regions and the limited possibilities for documenting income, as most of these services are provided by households," the Deputy Minister of Finance noted.
He also stated that another change affects the high-tech industry sector, particularly information technology, for which the 5% tax rate will be maintained.
It should be noted that the current turnover tax threshold is up to 120 million drams (over $300,000) per year, and for micro-businesses, it is up to 24 million drams per year.
Earlier, Finance Minister Vahe Hovhannisyan noted that in 2022, about 56,000 regional taxpayers contributed only 2.3% of the country's total tax revenue in 2023, which is a relatively low figure.
