Armenia plans to raise the threshold for micro-businesses
08.05.2026,
14:40
The threshold for micro-businesses will be raised in Armenia, announced Prime Minister Nikol Pashinyan.
YEREVAN, May 8. /ARKA/. The threshold for micro-businesses will be raised in Armenia, announced Prime Minister Nikol Pashinyan.
"There is an objective need to raise the threshold for micro-businesses. We will at least double it – currently 24 million drams – to 50 million drams. Thus, a significant portion of businesses will exit this segment," Pashinyan noted at a briefing on Thursday, responding to the suggestion that Armenia should abandon the turnover tax system, as the country cannot simultaneously have both a turnover tax and a general tax system.
According to him, a turnover tax does not encourage business consolidation.
"Also, there are problems in agriculture related to VAT. Under the current system, both the turnover tax and VAT fail to ensure direct supply of products from villages to stores and supermarkets. Because of this, people are forced to engage in complex transactions and often operate in the shadow economy," Pashinyan said.
Pashinyan believes that instead of a turnover tax, it is necessary to transition to a VAT system, but with differentiated rates. For example, VAT on agricultural products should be zero.
"Under this scenario, tens of thousands of small and medium-sized entrepreneurs who are still operating under the turnover tax will operate under the microbusiness model. As for those who deliberately underreport their turnover to stay within the turnover tax framework, we will strive to ensure they earn more and pay more taxes.
Through these taxes, we will be able to create higher-quality infrastructure, including educational infrastructure, so that people can earn more and pay more taxes, and the state can invest more in their success," Pashinyan emphasized. According to the amendments that came into force on January 1, 2025, SMEs with an annual turnover of less than 115 million drams are required to pay a 10% turnover tax if their goods (services) are not documented, and if they are documented, the tax rate is reduced from 1.5% to 1% of turnover.
"There is an objective need to raise the threshold for micro-businesses. We will at least double it – currently 24 million drams – to 50 million drams. Thus, a significant portion of businesses will exit this segment," Pashinyan noted at a briefing on Thursday, responding to the suggestion that Armenia should abandon the turnover tax system, as the country cannot simultaneously have both a turnover tax and a general tax system.
According to him, a turnover tax does not encourage business consolidation.
"Also, there are problems in agriculture related to VAT. Under the current system, both the turnover tax and VAT fail to ensure direct supply of products from villages to stores and supermarkets. Because of this, people are forced to engage in complex transactions and often operate in the shadow economy," Pashinyan said.
Pashinyan believes that instead of a turnover tax, it is necessary to transition to a VAT system, but with differentiated rates. For example, VAT on agricultural products should be zero.
"Under this scenario, tens of thousands of small and medium-sized entrepreneurs who are still operating under the turnover tax will operate under the microbusiness model. As for those who deliberately underreport their turnover to stay within the turnover tax framework, we will strive to ensure they earn more and pay more taxes.
Through these taxes, we will be able to create higher-quality infrastructure, including educational infrastructure, so that people can earn more and pay more taxes, and the state can invest more in their success," Pashinyan emphasized. According to the amendments that came into force on January 1, 2025, SMEs with an annual turnover of less than 115 million drams are required to pay a 10% turnover tax if their goods (services) are not documented, and if they are documented, the tax rate is reduced from 1.5% to 1% of turnover.
