Note․ This material is for general informational purposes only and does not constitute individual tax or legal advice. In specific situations, a professional assessment based on the particular facts and documents is required.

This article outlines the overall structure of the changes effective from 2025: who may apply the turnover tax regime, who may no longer do so, how the rates have changed, and why classification, accounting, and documentation have become more important. The calculation logic, the practical application of cost-based reductions, the minimum documentation package, and examples are presented in Part 2.

The Nature of Turnover Tax

Turnover tax is a special tax system that replaces value added tax and/or profit tax for resident commercial organizations, and only value added tax for individual entrepreneurs. For that reason, choosing or losing this regime is not merely a rate issue; it also changes the business’s overall tax structure.

Brief Summary

• The main threshold for remaining in the turnover tax regime is AMD 115 million in sales turnover across all types of activities during the previous tax year (Tax Code of the Republic of Armenia, Article 254(2)).
• If this threshold is exceeded, turnover taxpayer status generally terminates from the moment of exceedance until the end of the year; however, in the public catering sector, special exceptions related to the filing of a specific declaration may apply (Tax Code of the Republic of Armenia, Article 254(6)-(7), Article 255).
• From 2025, the rates are no longer uniform. Different activities are subject to different rates, and some groups are also subject to cost-based reductions and minimum thresholds (Tax Code of the Republic of Armenia, Article 258(1)-(5)).
• A number of activities may no longer apply this regime, including certain financial, professional, consulting, and labor-supply activities (Tax Code of the Republic of Armenia, Article 254(3)).
• For turnover taxpayers that have submitted the special declaration required to operate in the public catering sector, the 20% rate applies only to income derived from (a) the disposal of other assets and (b) other activities not included in the “Public Catering Organization” section of the economic activity classifier (Tax Code of the Republic of Armenia, Article 258(1), item 7 of the table).
• From 2025, accounting and documentation requirements have also become more sensitive, including issues related to the movement of goods and accompanying documents.

What Has Changed 

From 2025, the turnover tax regime requires businesses to do more than simply check the threshold. It also requires more precise classification and more disciplined accounting. If many companies previously approached the issue primarily through a single criterion—total turnover—that is no longer sufficient. Different streams of income of the same taxpayer may now be subject to different rates, different deduction rules, and different risks.

In practical terms, this means that, for the regime to be applied correctly, a business must check at the same time:

• whether it is eligible to apply the regime,
• what activities and income streams exist within the same taxpayer,
• whether cost-based reduction is available,
• and whether any special exceptions or additional declaration requirements apply.

For that reason, the first question a business must answer is whether it can operate under this regime at all.