Payroll and Employment Taxes in Armenia

What You Need to Know About Payroll Taxes in Armenia

Whether you run a small startup or manage a large enterprise, understanding payroll taxes in Armenia is critical. Employers in Armenia must navigate withholding income tax, managing social (pension) contributions, and additional mandatory levies like military “stamp duty.” Missteps in payroll compliance can lead to penalties, interest, audits, or strained relationships with employees who expect transparency in their pay.

This article explains Armenia’s main payroll tax types, tips for paying employees, how to set up a compliant system, worked examples, filing procedures, and due dates. Because requirements in Armenia vary depending on employee income, sector, or whether you are an international employer, having a clear roadmap is important.

Fiscal Year in Armenia

January 1st - December 31st is the 12-month accounting period that businesses in Armenia use for financial and tax reporting purposes.

Payroll Cycle in Armenia

The payroll cycle in Armenia is usually monthly, with employees being paid on the 15th day of the following month.

Minimum Wage in Armenia

As of May 1, 2025, Armenia's minimum wage is set at AMD 75,000 per month, effective from January 1, 2025. This rate applies uniformly to all adult workers, regardless of age or experience. It is important to note that this amount represents the gross wage, excluding any additional bonuses, overtime, or other supplementary payments.

Armenia's minimum wage is among the lowest in Europe, reflecting the country's economic conditions and cost of living. The government has indicated plans to increase the minimum wage to AMD 85,000 per month by 2026, aiming to improve workers' purchasing power and align wages more closely with the cost of living.

Bonus Payments in Armenia

There is no mandatory requirement for employers to provide a 13th-month salary.

Types of Payroll Taxes in Armenia

In Armenia, payroll-related taxes and deductions fall into several categories. Employers act as tax agents, withholding amounts from gross pay and remitting them to the government. The main kinds include:

• Income tax withholding, a flat rate applied to wages
• Mandatory pension (funded pension) contributions, withheld for employees born after 1973/74
• Military “stamp duty” (defense fund contribution), a fixed levy based on salary bands
• Employer compliance obligations, reporting, and less common local levies

Income Tax Withholding

Armenia applies a flat 20% withholding rate on employment income. Employers must withhold this 20% from each employee’s gross salary and remit it to the State Revenue Committee by the 20th of the following month. Failure to comply may result in interest charges and fines.

Pension / Funded Pension Contributions

Employees born on or after 1 January 1974 are subject to mandatory funded pension contributions. Contributions are:

• 5% if the monthly salary is up to AMD 500,000
• 10% (minus AMD 25,000) for income above AMD 500,000

There is a cap on the contribution base. Employers withhold the employee’s share and remit it. Penalties apply for non-compliance.

Military “Stamp Duty” (Defense Fund Contribution)

Armenia requires a fixed monthly “stamp duty” contribution withheld from wages. The amount depends on salary bands:

• Up to AMD 100,000 → AMD 1,500
• AMD 100,001–200,000 → AMD 3,000
• AMD 200,001–500,000 → AMD 5,500
• AMD 500,001–1,000,000 → AMD 8,500
• Above 1,000,000 → AMD 15,000

This duty must be remitted monthly along with other payroll withholdings by the 20th of the following month.

How to Pay Employees in Armenia

Most businesses in Armenia pay salaries via bank transfer in Armenian dram (AMD). Payments are usually made monthly, around the 15th or 20th of the following month. Payslips are required and must show gross pay, all statutory deductions, and net pay. Foreign employers must establish a local entity or use an Employer of Record (EOR) or payroll provider.

Key points for paying employees in Armenia:

• Payment method: Bank transfer is standard; cash is rare
• Currency: Salaries must be in AMD
• Frequency: Monthly, usually by the 15th or 20th
• Foreign employers: Use a local entity, EOR, or payroll provider
• Payslips: Must show gross pay, deductions, and net pay

How To Set Up Payroll in Armenia

Setting up payroll correctly ensures compliance, avoids penalties, and builds employee trust. Employers must register with the State Revenue Committee, collect employee information, set a pay schedule, and implement a payroll system that calculates income tax, pension contributions, and stamp duty accurately. Payslips and payroll records must be maintained.

Key steps for setting up payroll in Armenia:

• Register with the tax authority
• Collect employee details and confirm pension obligations
• Define pay schedule
• Choose payroll software or provider
• Prepare payslips with full breakdown
• Remit withholdings on time

Example of Salary Tax Calculation

Example salary: AMD 600,000

• Income tax (20%): AMD 120,000
• Pension: 10% (60,000) – 25,000 = AMD 35,000
• Stamp duty (500,001–1,000,000 band): AMD 8,500
• Total deductions: AMD 163,500
• Net salary: AMD 436,500

Submitting Employee Tax in Armenia

Employers must file electronically via the State Revenue Committee’s system and remit withheld amounts by bank transfer. Common practices:

• File monthly payroll tax returns online
• Remit consolidated withholdings in AMD
• Provide salary and deduction breakdowns
• Submit separate returns if required

Payroll Tax Due Dates in Armenia

Payroll and Employee Tax Contributions in Armenia

Understanding the tax obligations for both employers and employees is crucial when operating in Armenia's business landscape. This section explains how taxes and statutory fees affect payroll and individual earnings in Armenia.

Employers withhold and remit income tax, pension contributions, and military stamp duty. Employees born after 1973/74 must contribute to the pension scheme. Employers act as withholding agents, ensuring compliance with deadlines and maintaining proper reporting.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 0% on top of the employee salary in Armenia.

Employee Payroll Tax Contributions

In Armenia, the typical estimation for employee payroll contributions cost is around 5% -10%.

Individual Income Tax Contributions

Armenia applies a flat tax rate of 20% for personal income tax.

Pension in Armenia

Armenia's pension system, managed by the State Social Security Service, provides retirement benefits based on contributions. Retirement age is 63 for both men and women, with various pension types available. Reforms aim to ensure system sustainability and efficacy.

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Managing Common Payroll Challenges in Armenia

Global employers operating in Armenia often encounter unique payroll challenges that can affect compliance and efficiency, like navigating evolving tax laws and managing employee data. With a need for real-time accuracy, modern organizations must develop strategies to overcome these challenges effectively. Below, we explore some of the most common payroll hurdles and provide actionable solutions to streamline payroll processes in Armenia.

Maintaining Accurate and Detailed Payroll Reports

Maintaining accurate global payroll reports is often challenging due to currency exchange complexities, data integration issues, and the need to keep employee information up-to-date – including tax information, hours worked, leave balances, and any changes in salary or job status. Generating accurate reports is easy with a comprehensive payroll automation tool that consolidates fragmented data sources, and can keep track of employee payments and deductions.

Keeping Up With Ever-Changing Tax Laws & Compliance Laws

In Armenia, tax laws and compliance regulations can change frequently, presenting a significant challenge for global employers. Monitoring updates to federal, state, and local tax codes is crucial to avoid non-compliance and costly penalties, but requires significant time and resources. Partnering with local experts or a reputable global HR platform is an effective way to maintain compliance. These services can help employers stay compliant with evolving regulations while freeing up time for more strategic work.

Consolidating Multi-Vendor Payroll Analytics

Managing payroll across multiple vendors often leads to fragmented data and inefficiencies, making it difficult to consolidate analytics. These challenges can hinder decision-making, especially when trying to gain a clear view of workforce costs and trends. To address this, organizations can invest in a centralized payroll management system that unifies data from multiple vendors. A consolidated platform simplifies payroll tracking, ensures data accuracy, and provides actionable insights into payroll expenditures.

Integrating Multiple HR & Payroll Systems

Global companies are prone to using multiple HR or payroll systems across regions, which can easily lead to fragmented payroll data, increasing the risk of delays and errors in employee compensation. To combat this, seamless integration between payroll and other systems is critical.

Payroll management systems that connect with existing HR and financial platforms can help streamline workflows by reducing manual inputs and ensuring that all departments operate with up-to-date, accurate information. In turn, this helps guarantee on-time, accurate payroll, boosting employee satisfaction.

What Does a Global Payroll Management Platform Cover?

A global payroll management platform is a software solution designed to streamline and automate the payroll processes for organizations with employees across multiple countries. It helps ensure accurate and timely payment while maintaining compliance with legal and regulatory requirements in Armenia.

Key functions of a payroll management platform can include:

• Consolidate payroll data: Streamline fragmented payroll data into one source of truth when you’re operating in multiple regions.
   
• Analytics and reporting: Advanced capabilities to analyze payroll data and generate automated reports per region.
   
• Monitor and standardize payroll: Get an accurate view of employee costs, bonuses, and taxes per region, catch variances, and standardize payroll processes across regions to minimize errors.
   
• Compliance and record-keeping: Maintains accurate payroll records and ensures adherence to labor laws and regulations, reducing the risk of legal issues.
   
• Employee self-service: Provides portals where employees can access pay stubs, update personal information, and manage benefits selections.

How Playroll Can Streamline Payroll & Taxes in Armenia

Expanding globally is an exciting milestone for any company, but it comes coupled with complex payroll challenges. It doesn’t have to be complicated. At Playroll, our easy-to-implement global payroll management software combines automation with hands-on support to make global payroll truly simple. Here's how Playroll helps:

• Multi-Vendor Integration: Our platform syncs seamlessly with your providers and in-house systems to unify global payroll services in one platform.
   
• Standardize Payroll Processes: Unify your operations in one dashboard to ensure payroll is running smoothly globally, with advanced approval flows and reports.
   
• Improve Governance & Compliance: Improve compliance by centralizing all your compliance tasks and processes. Easily track your payment obligations, with digitized audit trails.
   
• Advanced Reporting: Access and configure your data, your way, with a comprehensive suite of payroll analytics and reporting tools.