Starting in 2025, the Republic of Armenia is implementing a new program of tax incentives aimed at supporting and stimulating the development of high-tech industries. This initiative is planned to run for seven years, until January 2032, with the possibility of extension if needed. The main objective of these new measures is to improve the conditions for IT companies, attract investment, and draw skilled professionals from abroad.
What tax incentives were available for IT companies in 2024?
Throughout 2024, Armenia’s IT sector enjoyed several tax relief measures, though they were not as comprehensive as the support entering into force in 2025. The existing tax system provided limited assistance but did not offer strong enough incentives for rapid IT industry growth.
Corporate Income Tax
Companies that held a special IT certificate were fully exempt from corporate income tax — meaning a 0% tax rate.
After the cancellation of those certificates, companies returned to the standard tax regime with an 18% corporate tax rate.
Turnover Tax
IT companies operating under the simplified tax system paid a 5% turnover tax.
This regime helped reduce the tax burden for smaller businesses with relatively modest revenues.
Personal Income Tax (PIT)
Employees of IT companies holding the IT certificate were taxed at a reduced 10% PIT rate, which is half of the standard 20% rate applied to other sectors.
Social Taxes
In 2024, employers had no special benefits regarding social tax contributions, which increased the cost of maintaining staff.
New Tax Incentives Effective from 2025
Unlike in previous years, the 2025 incentives are more extensive and better structured.
Key changes include:
- Reduction of Turnover Tax
IT companies with an annual turnover not exceeding AMD 120 million (approx. $301,000) will pay a 1% turnover tax instead of 5%. - PIT Reimbursement for Foreign IT Specialists
In 2025, employers can reclaim 60% of the PIT paid for foreign workers.
From 2026 onwards and until the end of the program, this reimbursement will be paid directly to the foreign specialists themselves — making Armenia more attractive to international IT talent. - PIT Reimbursement for Newly Employed Staff
Between 2025 and 2031, employers will be able to recover 60% of PIT paid for employees entering the IT sector for the first time.
This is aimed at encouraging companies to expand their teams and hire new specialists. - Government Subsidies for Training Expenses
IT companies that invest in the education and upskilling of their personnel will be eligible to receive a 50% PIT reimbursement on those expenses.
This measure is intended to raise the qualification level of professionals in the field. - Reduced PIT for Scientific Researchers
For employees engaged in scientific R&D, the PIT rate will be reduced from 20% to 10%.
This creates favorable conditions for innovation and technology-based projects. - Additional Corporate Income Tax Deductions
IT companies will be allowed to double-count wage expenses when calculating their taxable profit.
However, total deductions cannot exceed 50% of the company’s taxable base.
An IT specialist employed by an Armenian company automatically qualifies for a residence permit, while a freelancer or programmer who registers as an IE (sole proprietor) in Armenia can apply for a five-year residence permit.
In addition, Armenia offers the following advantages:
- Developed IT Infrastructure
Armenia is actively developing technology clusters and IT parks. One can register Individual Entrepreneur and LLC remotely
International companies like Microsoft, NVIDIA, Adobe, and EPAM have offices in the country.
Coworking spaces, accelerators, and startup investment funds are widely available. - Affordable Cost of Living
Housing and services are cheaper than in most European and Asian countries.
Low prices for food, transport, and communication ensure a comfortable life even for junior professionals. - Favorable Environment for Startups
The government supports innovation through grants and tax incentives.
Venture investment funds and startup accelerators are in place.
There are opportunities to attract foreign investment through international support programs. - Convenient Location and International Connectivity
Visa-free entry for CIS and EU citizens.
Direct flights to Russia, Europe, and the Middle East.
Ongoing improvement of transport and internet infrastructure. - High Level of Safety
Armenia is one of the safest countries in the CIS in terms of crime rates.
Local people are friendly and welcoming to foreign specialists.
Key Differences in the 2025 Tax Regime Compared to 2024
Reduced Turnover Tax Rate
In 2024, companies and individual entrepreneurs under the simplified taxation system paid a 5% turnover tax.
In 2025, this rate is reduced to 1%.
Introduction of PIT Compensations
In 2024, there were no such compensations at all.
Support for Education and Upskilling
For the first time, subsidies are introduced for employee training.
Employers can reclaim 50% of the personal income tax paid for staff who completed training.
No such support existed in 2024.
Encouragement of Scientific Research and Development
Starting in 2025, a reduced personal income tax rate of 10% is introduced for scientific researchers.
In 2024, these professionals paid the standard 20% rate.
Expanded Possibilities for Tax Deductions
Organizations are allowed to double-count labor costs when calculating taxable profit.
This measure aims to stimulate job creation.
In 2024, no such incentive was available.
IT Tax Incentives in Other Countries
Besides Armenia, other countries in the post-Soviet space also offer attractive tax regimes for IT. Let’s compare the conditions in Kyrgyzstan and Georgia.
Kyrgyzstan
Kyrgyzstan offers IT companies two main tax options: the simplified tax system and the High Technology Park (HTP) regime.
- Simplified Tax System
For software development companies, the turnover tax rate is only 2%. - High Technology Park (HTP)
HTP-registered companies enjoy exemptions from corporate tax, turnover tax, and VAT.
In addition, personal income tax for employees is reduced to 5%.
This makes HTP especially beneficial for export-oriented IT companies.
There is an option of remote company registration in Kyrgyzstan.
Georgia
Georgia is considered one of the most attractive countries for doing business due to its favorable tax regimes. IT companies can take advantage of:
- Special Tax Regime for Small Businesses
Individual entrepreneurs with annual income up to GEL 500,000 can obtain small business status, paying only 1% PIT. - Virtual Zone Status
Companies registered in the virtual zone are exempt from corporate income tax, provided their services are exported.
They are also not required to pay VAT. - International Company Status
IT companies with this status pay only 5% corporate tax, and employee PIT is also 5%.
This makes Georgia’s regime one of the most attractive for international IT businesses.
In addition, foreigner can open Sole Proprietorship or company in Georgia remotely.
Conclusion
The new tax incentives for IT in Armenia will significantly improve conditions for the growth of the high-tech sector.
Reduced tax burdens, PIT compensation, support for employee training, and R&D create a favorable environment for company expansion, attracting foreign talent, and encouraging investment.
Compared to 2024, the new program offers far more opportunities and makes Armenia a much more attractive destination for international IT professionals and investors.
