The report provides a comprehensive analytical foundation to inform the design and implementation of a carbon tax in Armenia. It begins by outlining the country’s economic and climate context, followed by a diagnostic review that examines Armenia’s GHG emissions profile, taxation system, and energy sector. A benchmarking analysis presents international case studies to contextualize global best practices. Building on these insights, the report offers detailed recommendations for the design of a carbon tax, including proposed coverage scenarios, tax rates, revenue recycling strategies, and offset mechanisms. Finally, the report presents the results of economic modeling, simulating potential environmental, social, and economic impacts under various carbon tax scenarios. Together, these components aim to support evidence-based decision-making and tailored policy design suited to Armenia’s national circumstances.