Tax Benefits for IT Companies in Armenia in 2026: 1% Tax, Income Tax Refund, Certificate

Overview of Benefits

There is no separate “IT company license” in Armenia. Benefits depend on two things: the activity code and an application for support. All of them are available for a limited period:

• 1% turnover tax under the Tax Code: until December 31, 2031;
• income tax refund under HO-498-N: from January 1, 2025 to December 31, 2031 (Art. 5 sec. 9).

The high-tech support law was adopted on 04.12.2024 and came into force on 01.01.2025. On 07.05.2026 it was amended by Law HO-221-N, which applies to reporting periods from January 1, 2026. The description below reflects the current version.

Certificate: Is It Required?

The words “certificate” or “attestation” do not appear in Law HO-498-N. Instead, the law sets out two requirements:

1. Type of activity from the list. The list was approved by Government Resolution No. 142-N of 13.02.2025. It includes, for example, J62.01.0 “Software development”, J62.02.1 and J62.02.9 (IT design, testing, and consulting), J62.03.0 (management of computer systems), J62.09.0 (other IT activities), J63.11.1 (databases), J63.12.0 (web portals), J58.21.0 and J58.29.0 (computer games and programs), along with certain codes for electronics manufacturing and scientific research. Classification: Order No. 874-N of the Minister of Economy, 19.09.2013.
2. Turnover share. A hi-tech organization is a resident (LLC, sole proprietor, or branch of a foreign company registered in Armenia) where at least 90% of turnover in tax reports for the period is generated by activities from the approved list (Art. 3 sec. 5 of the law).

Check which codes you indicated during registration and in reports. The tax authorities and Ministry check the classification codes in your tax documentation.

1% Benefit: Turnover Tax

For activities from the list, the turnover tax rate is 1% (Art. 258 sec. 1, row 8). By comparison, other services are taxed at 10% with deduction of expenses. For more details on rates, see the article Tax Regimes.

Conditions:

• Turnover for the previous year must not exceed 115 million drams (Art. 254 sec. 2). If you exceed 115 million drams in a year, you switch to VAT and the 1% benefit does not apply for the rest of the year. See Sole Proprietor Turnover Limits.
• The regime is chosen by submitting a Form 201 application within 20 days after registration or by February 20.
• Expense deductions do not apply to the 1% rate: the tax is 1% of turnover.
• This provision is valid until December 31, 2031 (Law HO-500-N of 04.12.2024).
• Sole proprietors on the turnover tax also pay an additional 5,000 drams corporate income tax per month (Art. 125 sec. 3).

Example. A sole proprietor develops software (code J62.01.0). Turnover for the quarter is 12 million drams. The turnover tax at 1% is 120,000 drams.

The microbusiness regime is not available to IT sole proprietors: software development and data processing are included in the restricted list, Art. 267 sec. 5. Only turnover tax and the general regime remain available.

Downside: Clients on the General Regime

According to Art. 113 sec. 1 p. 10 of the Code, expenses for goods and services purchased from a turnover tax payer engaged in hi-tech activities cannot be deducted from gross income when calculating profit tax. Therefore, a client-LLC on the general regime finds your services more expensive than a VAT supplier. Keep this in mind in contracts if your clients are on the general tax regime.

Salary Income Tax Refund

Support is available to the employer organization or sole proprietor. The law refers to the recipient as a hi-tech organization: at least 90% of its turnover in tax reports must come from listed activities (Art. 3 sec. 5). The applicant’s field must match or include the approved list (Art. 6 sec. 2). The support applies to both turnover tax and the general regime (Art. 5 sec. 9).

From January 1, 2026, funds for a foreign specialist are transferred to the employer as intermediary. The employer is required to pass the sum to the employee within 5 business days (Art. 5 sec. 5 of the law). The risk of miscalculation of salary and income tax is borne by the employer (Art. 5 sec. 6).

The list of professions is set out in Government Resolution No. 353-N of 27.03.2025. It includes, for example, systems analysts, software developers and architects, web and mobile developers, database administrators, testers, cybersecurity professionals.

Example. A new developer pays 200,000 drams per month in salary income tax. The refund will be 60%, i.e., 120,000 drams per month.

How to Apply

1. Log in to the Ministry’s platform through the “Yes Em” national identification system.
2. Submit your application for the previous quarter. Period: after the final deadline for tax submissions for the last month of the quarter and up to and including the 20th of the following month.
3. The platform automatically approves or rejects the application.

Applications will be rejected if at the time of submission the applicant’s tax debt exceeds 100,000 drams, information is incomplete, or the applicant does not meet the legal requirements (Art. 7). If false information is provided, support is terminated and funds must be returned within 10 days (Art. 8).

A list of recipients and those denied support is published on the Ministry’s website (Art. 9 of the law).

Profit Tax: 200% Payroll Deduction

If your LLC is on the general regime, when calculating profit tax, you can deduct 200% of the payroll of relevant staff from gross income (Art. 123 sec. 2 p. 2 of the Tax Code). Conditions:

• The LLC operates only in the listed activities or other income does not exceed 10% of annual gross income;
• Employees work in professions from list No. 353-N;
• Foreign nationals without residence in Armenia are not counted;
• The deduction is no more than 50% of the taxable base (before deduction).

For R&D with a positive conclusion from the professional commission, salary income tax for such employees is 10% (Art. 150 sec. 1.1).

Which to Choose

You should verify your tax burden based on your figures: the rules depend on your code, turnover, and cost structure.

Steps for IT Sole Proprietors and IT LLCs

1. Check your business activity codes in registration and reports: they must be on the list in Resolution No. 142-N.
2. Choose your regime: 1% turnover tax (Form 201 by February 20 or within 20 days after registration) or the general regime.
3. If hiring employees, check their professions against those in Resolution No. 353-N and confirm they are new to hi-tech.
4. Submit your application quarterly on the platform during the window until the 20th of the following month.
5. Track your tax debts: debts above 100,000 drams block your application.
6. Monitor your turnover: if you exceed 115 million drams, the 1% benefit ends.

What’s Not Covered

We do not cover tax treaties between countries, social contributions, or rules for foreign employees outside hi-tech. We also do not discuss the “free economic zone resident” status.