Armenia's complex tax system was revised in 1997 and again in 2001. The top corporate profit tax rate was lowered from 30% to 20%. As of 1 July 2001 a single rate was applied to all taxable profits, defined as the difference between revenues and the sum of wages, amortization payments, raw and intermediate purchases, social security contributions, insurance fees, and interest expenses. Newly formed enterprises are exempt from taxes for the first two years, but there is no provision for carrying forward losses.
Individual income taxes are withheld by enterprises and are paid to the Ministry of Finance monthly. The personal income tax has been reduced from three bands to two: 10% for monthly taxable income up to D 80,000 ($144) and 20% plus a payment of D 8,000 ($14.40) for taxable income between D 120,000 and D 320,000 ($1,892) for monthly taxable income above D 80,000. Armenians also pay taxes to social security and pension funds. In 1992, Armenia introduced a value-added tax which stood at 20% in 2003. Excise taxes are applied to diesel fuel, oil, spirits, wine and beer at various rates. There are also land taxes and a property taxes. Achieving a higher level of tax collection has been an important part of Armenia's economic reform programs. The fiscal deficit was projected at 2.4% of GDP for 2003.