VAT Rate in Armenia to be Doubled

The VAT rate in Armenia will be doubled, and the tax burden compared to VAT and profit tax will be reduced. The National Assembly of Armenia approved, in the second reading, the draft amendments to the Tax Code and related laws.

According to the changes, the tax will be set at 10% for trade entities, 7% for production, and 12% for public catering. Certain types of micro-entrepreneurship will be removed from this VAT system, making it more targeted. These include notarial, legal, and lottery organizing services.

As for micro-entrepreneurship, activities in the regions involving trade, hairdressers, body care, saunas, and steam rooms, as well as vehicle technical service and repair services, will be removed from this list, alongside brokerage activities involving real estate rental and sales, software development, etc.

“During the period between the discussions of the first and second readings, certain amendments were made, one of which proposes to start revising the VAT burden for public catering activities organized in the regions one year later, shifting from January 1, 2025, to January 1, 2026. This is justified by the logic that this type of activity in the regions has more pronounced seasonality and the possibility of substantiating acquisitions with documents is even more limited, as they mainly come from households,” said Deputy Finance Minister Arman Poghosyan.

According to him, another change relates to the high-tech industry, particularly the information technology sector, for which a 5% rate will continue to apply.

Currently, the VAT threshold is up to 120 million AMD annually, while for microbusinesses, it is up to 24 million AMD annually. Earlier, Armenian Finance Minister Vahe Hovhannisyan stated that as of 2022, there are about 56,000 VAT payers who contributed only 2.3% of the total taxes in Armenia in 2023, which is quite a low figure.