At present, common and special taxation systems are applicable in the Republic of Armenia. Special taxation systems are the corporate tax from turnover of a company and tax for micro businesses (microenterprise).
Under the common taxation system, both Value Added Tax (at a rate of 20%) and corporate tax (at a rate of 18% of annual profit) has to be paid. Economic entities with annual turnover exceeding AMD 115 million, as well as entities engaged in certain types of activities under the RA tax legislation, irrespective of the volume of turnover, e.g. those operating in the financial sector (banks, credit organizations, etc.), gambling industry, audit service providers, etc. operate under this system. Aside the legislative restrictions, one may file an application to the tax authorities and operate in the above mentioned taxation system, even if its annual turnover is less than AMD 115 million.
The turnover tax system is a special (preferential) tax system and is used for economic entities with an annual turnover of up to AMD 115 million. Under this system, the taxes are calculated and paid depending on the turnover amount. The tax rates fluctuate between 1.5% - 20% depending on the type of activity, e.g. it is 3.5% for the manufacturing, 5% for trade and retail with the possibility of deduction by 4% (if purchases and acquisitions are documented) and 6% in catering industry with the possibility of further deduction to 3% (if purchases and acquisitions are documented), etc.
Microenterprise is another special (preferential) tax system, under which economic entities with an annual turnover of up to AMD 24 million may operate. In this case, no taxes from turnover are paid, and the economic entity as a tax agent is only required to pay income taxes and compulsory fees, with a lighter burden on income taxes.
There are also some limitations under the microenterprise taxation system, the list of which is set forth in the RA Tax Code. For instance, those engaged in trade, providers of consulting, legal, accounting, auditing, engineering, advertising, design, marketing, translation, medical, dental technology, information processing and other services operating in Yerevan may not be included in the microenterprise taxation system.