Are you looking for a stable, dynamically developing, and business-friendly environment in which to establish or expand your technology business?
Armenia regards the high-tech sector as a strategic area of its economy and offers companies operating in this sector a range of tax incentives and state support mechanisms.
Importantly, the main state support mechanisms are available not only to companies operating under the turnover tax regime but also to eligible companies operating under the general taxation system and paying VAT.
- 1% Turnover Tax
A 1% turnover tax rate is available to companies engaged in high-tech activities specified by the Government that meet the eligibility requirements for operating under the turnover tax regime.
If a company’s annual sales turnover does not exceed AMD 115,000,000 and the other statutory conditions are met, the 1% rate may be applied to income generated from the relevant high-tech activities.
This incentive applies to entities operating under the turnover tax regime and does not apply to companies operating under the general taxation system and paying VAT.
Legal basis: Tax Code of the Republic of Armenia, Articles 253, 254, and 258.
- 10% Personal Income Tax for R&D Specialists
A special tax incentive is available to eligible specialists engaged in scientific research and experimental development — R&D (Research and Development).
Subject to compliance with the statutory requirements and a favourable opinion from the expert commission, the salaries of personnel engaged in qualifying R&D activities may be taxed at a personal income tax rate of 10% instead of the standard 20% rate.
Employees of eligible companies operating under the general taxation system and paying VAT may also benefit from this incentive, provided that the statutory R&D criteria are met.
Legal basis: Tax Code of the Republic of Armenia, Article 150, Part 1.1.
- 60% State Support for Hiring New Employees
A company carrying out qualifying activities in the high-tech sector may receive state support for hiring a new employee in an amount equal to 60% of the personal income tax calculated on that employee’s salary and equivalent payments.
Under the conditions prescribed by law, an employee’s status as a new employee may be retained for up to three years.
This support is available both to companies operating under the turnover tax regime and to VAT-paying companies operating under the general taxation system.
Legal basis: Law of the Republic of Armenia “On State Support for the High-Tech Sector,” Article 5, Part 4, Point 1.
- 50% Support for Specialist Retraining
State support is also available for the training and retraining of specialists needed in the high-tech sector.
Subject to compliance with the statutory conditions, a company may receive state support in an amount equal to 50% of the personal income tax calculated on the salary and equivalent payments of an employee who has completed retraining.
This mechanism also applies to eligible companies operating under either the turnover tax regime or the general taxation system.
Legal basis: Law of the Republic of Armenia “On State Support for the High-Tech Sector,” Article 5, Part 4, Point 2.
- 60% State Support for Migrant Workers
Armenia also encourages the recruitment of foreign specialists in the high-tech sector.
A migrant worker employed by a business entity carrying out qualifying activities may receive state support in an amount equal to 60% of the personal income tax calculated on their salary and equivalent payments.
This support may also be available where the employer operates under the general taxation system and is a VAT payer.
Legal basis: Law of the Republic of Armenia “On State Support for the High-Tech Sector,” Article 5, Part 5.
- Support Also Available to VAT-Paying Companies
One of the key advantages of state support for the high-tech sector is that it is not limited to small businesses or companies operating under the turnover tax regime.
Subject to compliance with the statutory conditions, VAT-paying companies operating under the general taxation system may also benefit from state support measures relating to the hiring of new employees, specialist retraining, and migrant workers.
Accordingly, even technology companies whose annual turnover exceeds the threshold established for the turnover tax regime and which operate under the general taxation system may benefit from the main workforce-related state support programmes.
These support mechanisms are in effect from 1 January 2025 to 31 December 2031.
Legal basis: Law of the Republic of Armenia “On State Support for the High-Tech Sector,” Article 5, Part 9.
Why Choose Armenia?
The framework established in Armenia for high-tech businesses makes it possible to choose a tax structure that suits the company’s size and business model.
The 1% turnover tax rate may be available to small and growing companies, while larger companies operating under the general taxation system and paying VAT may benefit from the 10% personal income tax rate for R&D specialists, as well as:
- 60% state support for new employees;
- 50% support for employee retraining;
- 60% support for migrant workers.
Thus, the state support system is designed not only for start-ups but also for companies conducting larger-scale operations in Armenia or international technology companies.
Support from LSA Law Firm
LSA Law Firm can assist with the legal aspects of establishing or relocating an IT or high-tech business in Armenia, including company registration, selection of an appropriate tax regime, assessment of applicable tax incentives and state support programmes, and legal assistance with employment and immigration matters.
The applicability of each tax incentive and state support mechanism must be assessed individually, taking into account the company’s type of activity, tax status, and the relevant statutory requirements.
