Individuals are classified into two categories for personal income tax purposes:
- Residents are liable for tax on their worldwide income.
- Non-residents are liable for tax only on their Armenian-source income.
Unified Income Tax rates
Income from royalties and interest (if not exempt) is subject to 10% tax. If paid by a tax agent (i.e. legal entity, individual entrepreneur), tax should be withheld at source.
Income from lease of property is subject to 10% tax. Starting from 1 January 2020, if the income from lease exceeds AMD 60 million during the tax year, the individual should pay 10% income tax in addition to the tax withheld by the tax agent.
The income from the sale of property is taxed at 10% or 20% (depending on the type of property and whether sold to a tax agent or individual). The sale of non-entrepreneurial property to individuals is exempt from tax. Starting from 1 January 2020 dividends received by foreigners are subject to 5% income tax (from dividends on the income generated after 1 January 2020), and dividends received by Armenian citizens are subject to 5% income tax (from dividends on the income generated after 1 January 2018).
The tax withheld from the dividends is subject to refund if the dividend received from a resident entity is invested in the capital of the same resident entity during the same tax year.
Other income paid by a tax agent is subject to final withholding on a monthly basis. The taxable base is the gross income minus deductible income. Other income will be withheld with a flat rate of 23% and be gradually lowered to 20% as presents below:
- starting from 1 January 2020 – 23%,
- starting from 1 January 2021 – 22%,
- starting from 1 January 2022 – 21%,
- starting from 1 January 2023 – 20%.