ArmInfo.The turnover tax system does not contribute to the scaling or success of businesses, as stated by Armenian Prime Minister Nikol Pashinyan during a briefing on May 7.
The Prime Minister noted that structural issues persist in the agricultural sector regarding the application of Value Added Tax (VAT). According to him, under current conditions—within the VAT and turnover tax systems—agricultural producers are not always able to ensure direct deliveries to retail chains. "To do this, they are forced to either undergo complex administrative procedures or operate in the shadow economy," the Prime Minister emphasized.
In this regard, Pashinyan stated the need for greater flexibility in the state's tax policy. "Instead of the turnover tax, we must gradually transition to a VAT system. However, it must be differentiated. For example, in agriculture, the VAT rate could be set at 0%," he noted.
The Prime Minister added that the government is considering other tax regulation options that would simultaneously avoid increasing the tax burden on businesses and discourage the growth of the shadow economy.
"Tens of thousands of SMEs (Small and Medium Enterprises) that have operated for years under the turnover tax system will operate under the logic of micro-businesses. As for those who artificially reduce their turnover to remain within the turnover tax system, we will help them earn more and, consequently, pay more in taxes," the head of government said.
It should be noted that the Statistical Committee of Armenia provides data on SMEs in Armenia with a year's delay. According to the Statistical Committee's report "Small and Medium Enterprises of Armenia" (published December 2025), the share of MSMEs (micro, small, and medium enterprises) in Armenia's GDP increased from 31% to 34% in 2024. However, excluding microenterprises, the share of SMEs is only 19% of GDP (compared to 18% in 2023).
