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INDIVIDUAL TAXATION

Residence and Scope

According to the Law on Income Tax, residents of Armenia and non-residents are liable to income tax. Residents are taxed on their world-wide income and non-residents are taxed on income from Armenian sources only.
Individuals are considered to be resident in Armenia if they are physically present for 183 days or more in any consecutive twelve-month period commencing or ending in the tax year. Individuals whose vital interests' center is in Armenia, as well as those in the civil service of the Republic of Armenia outside the country are
also considered as residents. Individuals who do not meet these conditions are non-residents.

Determination of Taxable Income

The taxable income is the positive difference between the gross income and deductions allowed under the Income Tax Law.
Gross income is the total income derived by a taxpayer within the reporting year. The following are considered as different forms of income:

• salaries, wages;
• dividends, royalties, interest;0
• insurance compensations;
• monetary and non-monetary gains from lotteries;
• income derived from business activity;
• property and cash, received as inheritance; lease payments, as well as income received from other
• civil and legal contracts;
  
• revenue from the sale of property;
  
• income received from donations and assistance, etc.
  

The following are considered as deductions:

• income of military personnel;
  
• grants;
  
• property and cash, received as inheritance;
  
• dividends;
  
• income from realization of agricultural productions;
  
• insurance compensation;
  
• amount of allocations provided to religious, public and other non-profit organizations, but not more than 5%of the taxable income;
  
• scholarship and stipends paid to students;
  
• revenue from the alienation of property;
  
• monetary and non-monetary gains from lotteries;
  
• pensions, employment and social security payments, etc.
  

Rates

1. Income tax is calculated by a tax agent on a monthly basis at the following rates:

2. For annual taxable income, not taxed by a tax agent, income tax is calculated at the following rates:

3. For royalties, leasing and interest income the income tax rate is 10% without taking into account the deductions specified above.

Social Security

In addition to the contribution made by employers, every employee must make a contribution of 3% of wages or salaries. This amount is withheld at source by the employer and is deductible for employee to arrive at taxable income.

Personal Deductions from the Gross Income

20,000 AMD is deducted from the personal monthly gross income.

Returns and Payments

Where a taxpayer's only income is from employment which is subject to withholding tax at the source, or the gross income does not exceed 250, 000 AMD, or the income is received from agricultural activity, dividends, or from an activity that is taxed in the form of fixed payments, no tax returns are required. Where there is further tax liability, a return must be completed and filed by 1st March and paid by 1st May of the following year.

Exclusion of Double Taxation

The income tax paid by a resident taxpayer in the RA is reduced by the amount of tax paid by them in foreign countries, with the exception of the amount of tax paid in foreign countries that is subject to deduction from the gross income pursuant to the legislation of the RA.