Expatriate tax ebook - Armenia

Facts and figures
Pre arrival procedures
Employment visas
Tax year
Tax returns and compliance
Income tax rates
Sample income tax calculation

Pre arrival procedures
As a general rule, the expatriates, wishing to work in the Republic of Armenia (RA), are required to obtain a visa and work permit. Nationals of certain countries e.g. Belarus, Russian Federation, Ukraine, other CIS (the Commonwealth of Independent States) countries, Georgia, Argentina, etc., can visit the Republic of Armenia for up to three months without a visa, but will need to be granted a work permit to take up employment. Holders of all other passports and travel documents are required to obtain an entry visa or must present document confirming their residence status. Work permit is not required: for people having permanent or special status of residence, for the spouses and relatives of Armenian nationals or legally staying expatriates having temporary status of residence (during the term of the given status), for refugees, etc. Entry visa, residency status or working permit seekers must pay an appropriate state duty. Some exemptions are envisaged by the RA legislation, e.g. relatives of refugees, RA nationals and minors are exempted from paying the duty foreseen for visas and residency status.

Employment visas
All expatriates seeking employment in the Republic of Armenia must first obtain a visitor visa and then apply for work permit.

Visitor visa (V) entitles a foreigner to enter the Republic of Armenia and stay in the country for up to 120 days. Prolongation is possible up to 60 days. A visitor visa may be issued for single or multiple entries (within up to a year period). No sponsor is required for obtaining visas. Normally entry visas are granted to individuals and if so required may be also provided to groups (for implementation of joint activity).

The work permit obtaining procedure is as follows.

Any expatriate, having the same labour legal capacity as citizens of the Republic of Armenia, which is guaranteed by the RA legislation, may conclude an employment (labour) contract with an Armenian employer based on the work permit granted by appropriate authorised authorities. Work Permits apply to all non-Armenian guest workers, regardless of rank or seniority or professional or other qualification, when approved after due consideration by the RA Employment Authorities and their respective employers. While granting a work permit to expatriates, the RA Employment Authorities thoroughly consider and assess the needs and development of the labour market of Armenia. Armenian employers are required to file an application for filling a vacancy from within the resident labour force during the time frame specified under the RA Government Resolution, which is aimed at assessing the needs of the local labour market. Should the employer and the RA Employment Authorities fail during the established time frame to fill a gap from within the resident labour force meeting the employer’s requirements, the given employer may find an expatriate who meets the set forth requirements and file an application to the RA Employment Authorities to provide this expatriate with work permit by submitting all documents required under the above mentioned RA Government Resolution.

Work permit is issued for a certain period of time based on the terms of the Labour contract to be concluded and against a state duty levied from the employer in accordance with the RA Law “On State Duty”.

Work permit can be denied if: (i) the condition of the local labour market based on the results of the assessment thereof is unfavourable for such work; (ii) the work should be performed by an Armenian national as required by the RA legislation; (iii) the required documents or information are falsified; (iv) the employer employing the expatriate has previously violated the requirements for the expatriate employment; (v) there are certain threats to national security; and (vi) the employer lacks a license to perform the activity which is subject to licensing.

Tax returns and compliance
When paying income to foreign citizens and stateless persons, tax shall be withheld (imposed) by a tax agent (employer) at the source of payment of the income. When tax is withheld by a tax agent at the source of payment of the income, expatriate has no filing obligations and the amount of tax withheld at the below rates shall be considered as the final amount of the Income Tax, with the exception of cases when the non-citizen is a resident or conducts entrepreneurial activity in the territory of the Republic of Armenia. In this case the expatriate must submit the tax returns on his/her annual income within the tax year, but no later than the 15th of April of the following year to ensure recalculation. Late filing of the tax returns entails respective penalties.

Tax year
The tax year in the Republic of Armenia is a calendar year.

Income Tax Rates
When paying income to expatriates, tax shall be withheld (imposed) by a tax agent at the source of payment of the income at the following rates:

• Salaries, wages and other payments deemed equal thereto:

• Insurance benefits received from insurance and income received from freight : 5%
• Royalties, interests, lease payments, increase in the value of property and other passive income (with the exception of income received from freight) as well as other passive income received from other sources in Armenia: 10%.

Information about Armenia:

• introduction
• facts and figures
• basis of taxation
• what taxes?
• tax planning opportunities