Legal persons and individual entrepreneurs shall be considered to be simplified taxpayers if during previous reporting year total amount of turnover of sale of goods supplied and services rendered by taxpayers (exclusive VAT) have not exceeded AMD 30 million. This restriction shall not apply to the sphere of trade and public catering activities carried out in shops and counters.

The following taxpayers shall not be considered as simplified taxpayers:
- producers of goods subject to Excise Tax;
- taxpayers owing outstanding liabilities (including fines and penalties envisaged by Tax legislation) exceeding AMD 100,000 as
of moment of submitting application;
- loan and insurance companies, investment funds, specialized parties of stock market, organisers of casinos, cash winning games or lotteries, persons carrying out audits or consulting services, etc.

For becoming a simplified taxpayer during the given year the declaration defined by the Ministry of State Revenues of the Republic of Armenia should be filed to tax entities starting from January 1 to 25 (inclusive) of the given year. For being considered as simplified taxpayer during any quarter in the sphere of trade activities carried out in shops or counters, as well as in the sphere of public catering activities, declaration shall be filed to Tax Authoroties starting from 1 to 25 (inclusive) of the 1st month of the quarter.

Taxable object
Simplified taxable object is considered to be the sale turnover of goods supplied and services rendered by taxpayers during reporting quarter.

Rates
For taxable object determined for each reporting period of current year for the part of trading activity realized by shops and counters the Simplified Tax is calculated by the rate of 4% and 7% for business activity carried out in the sphere of public catering.
For other trading activity the simplified taxpayers calculate the Simplified Tax for taxable object determined for current year by the following of turnover sale:
- 7 % for amount under AMD 30 million;
- 12 % for amount over AMD 30 million.

Reporting period
Reporting period for Simplified Tax shall be considered a quarter.

Reductions
During reporting period the calculated tax amount is reduced by:
- 2 % for trading activity realized through shops and counters;
- 4 % for other trading activity.

If after reduction the amount of Simplified Tax from the trading activity of shops and counters for the given time period is less than 2 %, and less than 3.5 % form other type of activity, then Simplified Tax shall be paid by the rates of 2 % and 3.5 % correspondingly. And the not-reduced part of the tax shall be deducted from tax amount calculated for the following reporting period.
For each following half year starting from 1 January 2001 (the first half year of 2001 included) the rates of deduction shall additionally be increased by 0.5%.

During determination of taxable objects registration of incomes and expenses shall be done by accruals method.

Simplified taxpayers shall file declarations on Simplified Tax to tax entity of their registration area by the 25th of the month following reporting period in compliance with order defined by the Ministry of State Revenues of the Republic of Armenia.

Simplified taxpayers shall pay Simplified Tax amounts to the State budget by the 25th of the month following reporting period.

The procedures of property and land tax payment, calculation, collection and payment of taxes for job as well as equal incomes (including as a tax agent), calculation and payment of VAT, excise tax charged on customs border, as well as other obligatory payments for cases defined by legislation shall be effective for simplified taxpayers.

Simplified taxpayers shall add VAT amounts paid to suppliers of goods and services (as well as to customs entities during import of goods) to procurements cost (expenses) of these goods and services.

Taxpayers, as employers, in terms of compulsory social insurance payments subject to payment shall pay for hired workers each (individual entrepreneur), as employees, fixed monthly payment in the amount equal to AMD 6.000; the latter shall substitute payments made in the order and in the amount envisaged in law on compulsory social insurance payments.