Knowledge base / IT and freelancing
IT tax benefits in Armenia in 2026: what remains after the "IT certificate"
1% turnover tax for IT
This is the most popular option for freelancers and small teams. The standard turnover tax rate for services is 10%, but for IT activities on the government list it is 1%.
- Who qualifies: sole proprietors (IE) and resident companies with previous-year turnover up to AMD 115 million.
- Which income: only income from activities on the government list, such as software development and testing. All other income is taxed at the standard rates.
- How to switch: apply within 20 days of registration, or before 20 February so the regime applies from 1 January.
- Limit: if turnover exceeds AMD 115 million, you move to the general regime with 20% VAT.
Benefits for companies under the general regime
What the law offers since 2025
- 200% payroll deduction. Taxable income is reduced by twice the amount of IT staff salaries. Salaries of foreigners without resident status in Armenia do not count.
- 10% income tax instead of 20% for employees engaged in R&D, after a positive opinion from a professional commission.
- R&D expenses are deducted in full in the same year. R&D equipment can be depreciated over as little as one year.
Note: a company under the general regime cannot deduct payments to contractors who themselves pay 1% turnover tax on IT. Keep this in mind if you work with Armenian sole proprietor developers.
How to keep the benefit
- Check your activity
The benefit depends on what you actually sell, not on your company name. "Consulting" instead of "software development" in a contract is a common reason for refusal. - Keep contracts and invoices consistent
The subject of the contract, the invoice and the payment reference must match. Both the tax authority and the bank check this. - Separate your income
If you have both IT and other services, account for them separately. The 1% rate applies only to the IT part. - Track your turnover
Keep a running total of revenue. More on the limit in our article on turnover tax.
Sole proprietor or LLC for IT
A freelancer with one or two clients is usually fine with a sole proprietorship at 1%. An LLC is worth considering if you have a team, partners or large clients who need to contract with a company. See the comparison in Sole proprietor or LLC in Armenia. For getting paid from abroad, see our article on Upwork and Deel.
Common mistakes
- Assuming the old IT certificate still works. It has been replaced by the new law.
- Applying the 1% rate to income that is not on the government list.
- Forgetting about new payments. From 2026, sole proprietors with 2025 income above AMD 2.4 million pay a health insurance contribution of AMD 129,600 a year, due by 20 April.
Frequently asked questions
Does the IT certificate still work in Armenia?
No. The old IT certificate system was replaced by a law on support for the high-tech sector, in force since 1 January 2025 and running until 31 December 2031.
Who can pay 1% turnover tax on IT income in Armenia?
Sole proprietors and resident companies with previous-year turnover up to AMD 115 million, on income from IT activities on the government list. Other income is taxed at standard rates.
What IT tax benefits do Armenian companies on the general regime get?
A 200% deduction for IT staff salaries, excluding non-resident foreigners, a 10% income tax rate for R&D employees after a commission's opinion, and full same-year deduction of R&D expenses.
Why could I lose the 1% IT tax rate in Armenia?
The benefit depends on what you actually sell. Calling the work consulting instead of software development, mismatched contracts and invoices, or applying 1% to non-IT income are common problems.
Want to pay 1% legally?
We will check your activity, prepare the application and keep your books so you do not lose the benefit. We work in English and Russian.
Sources: EY Armenia — high-tech benefits from 2025; Alpha Accounting — tax changes in 2026; State Revenue Committee — src.am; Tax Code of Armenia — arlis.am.