Income tax, stamp duty, and mandatory pension contribution rates in the Republic of Armenia starting from January 2021

General overview

Starting from the year 2021, employees in Armenia will be subject to a lower income tax. Still, at the same time, mandatory pension contributions and stamp duty (contributions allocated to the Insurance Foundation for Servicemen) will increase.

 

Income tax

If earlier the progressive taxation system has been in place, and employees in Armenia were taxed according to the amount of their income (the higher the income, the higher income tax rate), then, after the amendments in the Tax Code of RA adopted in 2019, the income tax from salaries and other equivalent fees, as well as from the incomes received under a civil (services provision) contract, shall have been calculated at a flat rate of 23%. Such rate will be gradually lowered to 20% as presented 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%.

The income tax shall be calculated at a rate of 22% for 2021 (1% less than last year).

 

Mandatory pension contributions

All employees born on or after 1 January 1974 contributed 2.5% of monthly gross income (up to a maximum monthly base of AMD 500,000) to the pension fund. An additional 7.5% have been contributed to the pension fund by the government, not exceeding AMD 37,500 monthly. Starting from 1 July 2020, the maximum threshold for calculating the pension contribution has been amended. Instead of AMD 500,000, it is now AMD 1,020,000 (15 times of minimum monthly salary of AMD 68,000).   In parallel with the decrease of income tax rates, the mandatory pension contributions will be increased to equalize the government’s and employee’s participation (5% each).

Additionally, from 1 January 2021 to 31 January 2021, the pension contribution payment will be calculated as follows:

  • 3,5% of the monthly gross salary, if it is less than AMD 500,000.
  • 10% of the maximum threshold minus AMD 32,500, if the monthly gross salary is more than AMD 500,000.

From 1 January 2022 to 31 January 2022, the pension contribution payment will be calculated as follows:

  • 4,5% of the monthly gross salary, if it is less than AMD 500,000.
  • 10% of the maximum threshold minus AMD 27,500, if the monthly gross salary is more than AMD 500,000.

Starting from 1 January 2023, the pension contribution payment rate will be calculated at a rate of  5%.

 

Stamp duty (contributions allocated to the Insurance Foundation for Servicemen)

If earlier all employees were subject to pay a stamp duty of AMD 1,000 monthly, starting from 1 January 2021, progressive method of calculation of relevant fees will apply becoming from AMD 1,500 to AMD 15,000. The rates will be calculated as presented below:

  • < AMD 100,000 calculation base - the stamp duty will be AMD 1,500,
  • From AMD 100,001 to AMD 200,000 calculation base – the stamp duty will be AMD 3,000,
  • From AMD 200,001 to AMD 500,000 calculation base – the stamp duty will be AMD 5,500,
  • From AMD 500,001 to AMD 100,000,000 calculation base – the stamp duty will be AMD 8,500,
  • AMD 1,000,001 < calculation base – the stamp duty will be AMD 15,000.