Turnover Limits for Sole Proprietors in Armenia in 2026: 24 and 115 Million Drams, What Happens if Exceeded

Thresholds Table

Turnover is revenue from the sale of goods, work, and services across all activities. VAT, excise, and environmental taxes are excluded (Art. 4 of the Code). If you operate under both regimes, turnover for microbusiness is also included in total turnover for turnover tax — and vice versa (Art. 254(2), Art. 267(3)).

These figures are confirmed by SRC pages on the state portal: microbusiness, turnover tax, VAT. Different numbers may be found online. For example, 58.35 million drams were in the first 2016 Code version, but it is no longer in force. The valid version sets 115 million drams in Art. 254(2) and Art. 59, and 24 million drams in Art. 267(3).

For detailed guidance on tax regimes and rates, see Tax Regimes.

Two Types of Threshold Checks

Do not confuse them.

1. Previous year's turnover determines eligibility for a regime. If turnover in 2026 was above 115 million drams, turnover tax is not available from 2027. If above 24 million, microbusiness is not available.
2. Turnover within the year is monitored to ensure you do not exceed the current-year limit. This is tracked cumulatively from January 1.

Deadlines

Turnover tax filing and payment deadlines are set in Art. 261 and 262 of the Tax Code. The reporting period is a quarter (Art. 259).

What Happens if You Exceed the Limit

Microbusiness, exceeding 24 million drams. Microbusiness status ends from the moment the threshold is exceeded until year-end (Art. 268(1), p.2). Then you have two options:

• If you submit an application for turnover tax within 20 days, you switch to that regime (Art. 254(1), p.3).
• If you do not file, or turnover tax is not available, you become a VAT payer as of that date (Art. 59(1), p.3). The VAT application must state grounds and the microbusiness status end date.

Turnover tax, exceeding 115 million drams. You lose turnover tax status from the moment the threshold is exceeded until the end of the year (Art. 255, p.1.2). You must file an application with grounds and date within 20 days (Art. 255(2)). You are a VAT payer from that day. If the reason is threshold excess, VAT is calculated only on the amount above 115 million drams (Art. 59(1), p.5). During the switch to the general regime, the non-deducted expense portion is subtracted from gross income using multipliers: trade 10, manufacturing 20, catering 10, other activities 15 (Art. 264(4)).

VAT. File form 264 indicating the date of exceeding the threshold. The rate is 20%, for exports 0% (SRC).

Related Parties

Turnover tax is unavailable for related parties. These are entities and sole proprietors where one side holds 20% or more in the other (Art. 30(1), Art. 254(3) p.5). Exception: related parties that filed applications to cease activities and did not operate afterwards.

A second case: the head of the tax authority can deem parties related if they act jointly for shared economic interests (Art. 30(2)). In this scenario, turnover tax is unavailable if their combined turnover for the previous or current year exceeds 115 million drams (Art. 254(3), p.6). The same principle applies to microbusiness, with a corresponding threshold of 24 million drams (Art. 267(5), p.7).

Conclusion: splitting a business across connected companies or sole proprietors to stay below thresholds is risky.

Activities not Subject to Thresholds

Not all activities are eligible regardless of turnover. Some lines of business are excluded from turnover tax and microbusiness, regardless of their size. For example, trade is excluded for microbusiness, and from July 1, 2025, legal, accounting, and management consulting activities are excluded for turnover tax (Law HO-72-N). See the full list in Tax Regimes and Microbusiness.

Examples

Example 1: Microbusiness. A sole proprietor provides services not on the exemption list, and in 2025 their turnover was 20 million drams. In 2026, they are eligible for microbusiness status, provided form 257 is filed by February 20. By September 2026, turnover from January 1 reaches 24.5 million drams. From that date, microbusiness status ends for the year. Within 20 days, the sole proprietor applies for turnover tax and switches to it from the date of status end. If the 20 days are missed or turnover tax is not an option, they become a VAT payer.

Example 2: Turnover tax. A sole proprietor under turnover tax accumulates 118 million drams turnover over 11 months of 2026. The date the cumulative total exceeded 115 million drams marks the end of turnover tax status. From then on, the sole proprietor is a VAT payer at 20%, and VAT is only calculated on the part above 115 million drams. The application with grounds and date is to be filed within 20 days. In 2027, turnover tax is not available because the previous year's turnover exceeded 115 million drams.

Example 3: Sole proprietor and LLC with the same owner. The owner holds 60% of the LLC and opens a sole proprietorship. Under Art. 30(1) of the Code, these are related parties, since one party holds 20% or more in another. Turnover tax is unavailable to this sole proprietor unless the related parties filed to cease activity and have not operated since.

How to Monitor Your Thresholds

• Track cumulative turnover from January 1 across all activities.
• Compare with the 24 million and 115 million dram thresholds every month, not just yearly.
• Calculate tax under the general VAT regime in advance. If you exceed 115 million drams, transition will be mandatory.
• Note the deadlines: 20 days after registration, February 20 every year, 20th of the month after each quarter, 20 days after exceeding a threshold.
• If you have an LLC or a family member with another sole proprietorship, check for related party status under Art. 30.