ARMENIA LAW AND PRACTICE Contributed by: Aram Orbelyan, Narine Beglaryan, Artur Hovhannisyan, Lilit Karapetyan, Sarkis Knyazyan and Shushanik Stepanyan, Concern Dialog
tax, which is 5% of income received from trade activities or rendering services; the entity can become a turnover taxpayer only if its turnover last year did not exceed AMD115 million. The following entities cannot be considered turnover tax payers: banks, credit organisations, insurance companies, insurance agents, insurance brokers, invest - ment companies, specialised participants of the securities market, pawnshops, enti - ties engaged in foreign currency exchange operations, investment funds, fund managers, payment and settlement organisations, enti - ties engaged in organising casinos, games of chance, totalisators and internet totalisa - tors, entities engaged in organising lotteries, notaries, audit organisations, and providers of legal services. Additionally, starting from 1 July 2025, this also applies to those engaged in legal and accounting activities, head office activities, management consulting services, temporary employment services, and other labour supply activities. • Micro-Enterprise: Resident entities and indi - vidual entrepreneurs whose sales turnover for all types of activities without VAT during the previous calendar year did not exceed AMD24 million can be considered micro- enterprises, which do not pay any taxes. • Dividends: Dividends received by natural per - sons are taxable at 5%. Dividends received by entities are added to the taxpayer’s tax base. • Interest Paid: Interest paid to shareholders is taxed at 10%. • IP Royalties: Royalties paid to shareholders are taxed at 10%. 5.3 Available Tax Credits/Incentives All taxpayers involved in agricultural production are exempt from income tax until the end of the year 2026.
Taxpayers who are dealing with handmade car - pet production are also exempt from paying income tax. 5.4 Tax Consolidation There is no tax consolidation prescribed in Armenian tax legislation. 5.5 Thin Capitalisation Rules and Other Limitations There are no thin capitalisation rules in Armenia. At the same time, there are some limitations on the deductibility of interest expenses. The fol - lowing are not deductible from gross income: • interest on loans and credit exceeds twice the settlement rate set by the Central Bank of Armenia (currently, the deductible interest rate is capped at 24%); and • annual interest on loans received from non- bank and non-credit entities that, according to fiscal year results, is above: (a) the two-fold positive amount of the equity of the taxpayer (excluding banks and credit organisations) on the last day of the fiscal year; and (b) the nine-fold positive amount of the equity of a taxpayer that is a bank or credit organisation on the last day of the fiscal year. 5.6 Transfer Pricing Under the Tax Code, transfer pricing rules are applicable for a taxpayer if the amount of all supervised transactions of the taxpayer exceeds AMD200 million for the current year. According to the Tax Code, there are several transfer pricing methods allowed: • the comparable uncontrolled price method – where the price of the object of a controlled
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