Disability Fund Payments

Disability fund payments are social security payments the purpose of which is to promote the integration of disabled people in the Armenian labor market. They are collected by the Armenian government from organizations with more than 100 employees and used specifically for addressing social and health issues faced by disabled people. The law requires such companies [...]

By | 2015-10-04T17:38:01+00:00 September 3rd, 2015|Taxation|Comments Off on Disability Fund Payments

Licensing in Armenia

In order to legally engage in certain kinds of activities, individuals (including Individual Entrepreneurs (IE)) and legal entities have to obtain a license that gives them a permission to do so. License fees replace VAT and Income tax for individuals (including IE), and VAT and Profit tax for legal entities. The rates of license fees depend [...]

By | 2017-01-30T13:26:28+00:00 July 28th, 2015|Taxation|Comments Off on Licensing in Armenia

Customs benefits for permanent residents

Individuals arriving to Armenia for permanent residence (including refugees) can import their personal property without paying customs payments (including VAT).  To be eligible for these benefits, the person has to have resided outside of Armenia for at least five consecutive years (except for refugees). This requirement will be met if the person has lived outside of Armenia for 184 and [...]

By | 2017-01-30T13:26:28+00:00 July 1st, 2015|Taxation|Comments Off on Customs benefits for permanent residents

Tax Benefits in Republic of Armenia

The Tax Legislation of Republic of Armenia offers tax benefits for many types of economic activities for both resident and non-resident taxpayers. Some of the most notable tax benefits include the benefits defined by the law on State Support of IT Sphere, the recent changes to the law on Profit tax, and the tax exemption [...]

By | 2017-01-30T13:26:28+00:00 June 15th, 2015|Corporate Law, Taxation, VAT|Comments Off on Tax Benefits in Republic of Armenia

Corporate Profit Tax in Armenia

The headline rate of corporate profit tax in Armenia is 20% for resident companies, and, depending on the type of the taxable income, 0-20% for non-residents. The law on Profit tax provides tax benefits (5% and 2%) for major exporters that deal exclusively in export, if the cost of exported goods exceeds 40 billion and [...]

By | 2015-06-10T21:16:59+00:00 June 9th, 2015|Corporate Law, Taxation|Comments Off on Corporate Profit Tax in Armenia

Thin capitalisation rules in Armenia

According to "thin capitalisation" rules in Armenia, the maximum amount of interest that may be recognised as an expense when accounting taxable income is limited to the double of the amount of company's net assets if the interest is paid to entities other than banks and credit institutions, and, ninefold of its net assets if [...]

By | 2015-05-27T00:02:36+00:00 May 27th, 2015|Taxation|Comments Off on Thin capitalisation rules in Armenia

Profit tax rates for non-residents

Dividends, royalties, interest, and property lease payments paid by a locally resident company to a non-resident are subject to a withholding tax at a rate of 10%. The local company making the payments deducts the amount of withholding tax at the source of paying income. However, if the recipient of the payment is a resident [...]

By | 2015-05-25T19:01:00+00:00 May 25th, 2015|Taxation|Comments Off on Profit tax rates for non-residents

A Q&A about transaction taxes in Republic of Armenia

Q: Are there any documentary taxes in Armenia? A: Armenia does not levy any documentary taxes on documents evidencing transactions.   Q: Is there Value Added Tax (or a similar tax)? If so, at what rate or rates? A: A person (legal entity, individual entrepreneur, etc. ) is considered a VAT payer if they carry out entrepreneurial [...]

By | 2017-01-30T13:26:28+00:00 May 20th, 2015|Taxation, VAT|Comments Off on A Q&A about transaction taxes in Republic of Armenia

A Q&A about the bilateral tax treaties of Republic of Armenia

Q: Do the double taxation avoidance treaties of Republic of Armenia follow the OECD or another model? A: While the majority of the treaties follow the OECD model, there are also exceptions, such as the one with Switzerland.   Q: Do treaties have to be incorporated into domestic law before they take effect? A: According to the [...]

By | 2017-01-30T13:26:28+00:00 May 19th, 2015|Taxation|Comments Off on A Q&A about the bilateral tax treaties of Republic of Armenia

Double Tax Avoidance Agreements

The Republic of Armenia has 41 income tax treaties and agreements currently in force. The list of treaties is available below: Austria (EN) Belarus (RU) Belgium (EN) Bulgaria (EN) Canada (EN) China (EN) Croatia (EN) Cyprus (EN) Czech Republic (EN) Estonia (EN) Finland (EN) France (EN) Georgia (RU) Germany (EN, DE) Greece (EN) Hungary (EN) [...]

By | 2015-05-15T19:24:48+00:00 May 15th, 2015|Taxation|Comments Off on Double Tax Avoidance Agreements

Tax Benefits for IT Start-ups

According to tax legislation, for taxpayers certified and operating under the law on State Support of IT Sphere, the income obtained from the realization of the IT products is considered deductible income (law on Income tax), and, at the same time, from the standpoint of the law on Profit tax, it is not a part [...]

By | 2017-01-30T13:26:28+00:00 May 12th, 2015|Taxation|Comments Off on Tax Benefits for IT Start-ups

Moment of Creation of VAT Liability

For purposes of VAT the moment of supply of goods (provision of services) is the moment when the goods were delivered or transferred to the buyers or when the services were provided to the customers. Art. 31 of the Law on VAT. The Court of Cassation held that VAT liability is created at the moment when the [...]

By | 2014-11-01T14:06:43+00:00 November 1st, 2014|Taxation, VAT|Comments Off on Moment of Creation of VAT Liability

Taxpayers’ Rights Cannot Be Restricted by Secondary Legislation

In Armenia only the legislative acts of the Parliament may restrict the rights and freedoms of individuals and legal entities, impose obligations, define penalties, impose taxes, including the rate and the order of payment. Art. 9 of the Law on Legal Acts. Legal acts of lower force, including instructions of the tax authorities, may not [...]

By | 2014-10-31T08:29:53+00:00 October 31st, 2014|Taxation, VAT|Comments Off on Taxpayers’ Rights Cannot Be Restricted by Secondary Legislation

Zero Rate VAT for Processing Services

In Armenia zero rate VAT applies, among other things, to re-exported goods and to processing, assembly, renovation, modernization and similar services performed on goods to be exported from Armenia. Article 16(7) of the Law on VAT. The Court of Cassation held that this provision does not apply to services for sorting diamonds, i.e. sorting them in accordance with [...]

By | 2014-10-29T08:48:08+00:00 October 29th, 2014|Taxation, VAT|Comments Off on Zero Rate VAT for Processing Services

Taxation of Expropriation

According to the Armenian Law on Alienation of Property for Public and State Needs, financial obligations arising from the transfer of property, in particular tax liabilities, shall be compensated by the acquirer. Furthermore, alienation of property in the interest of the public shall not cause unreasonable harm to the owner. Based on the foregoing, the Court [...]

By | 2014-10-28T08:29:52+00:00 October 28th, 2014|Taxation, VAT|Comments Off on Taxation of Expropriation

Deduction of input VAT and VAT refund

Taxpayers deduct from the VAT imposed on the taxable turnover (output VAT) the VAT which was paid to the suppliers for acquired  goods and services (input VAT). Art. 23 of the Law on VAT. The deduction is allowed if: The goods (services) were acquired for manufacturing or other commercial purposes, The amount of VAT is [...]

By | 2017-01-30T13:26:29+00:00 October 27th, 2014|VAT|Comments Off on Deduction of input VAT and VAT refund

VAT on Gifts, Discounts and Deals

Gratuitous or partially compensated transactions in Armenia are subject to full VAT taxation based on the real (market) value of the goods and services provided. Article 6(3) of the Law on VAT. If the goods (services) are sold at a price which is substantially lower than the normal price, the transaction shall be treated as a partially compensated (or [...]

By | 2017-01-30T13:26:29+00:00 October 23rd, 2014|VAT|Comments Off on VAT on Gifts, Discounts and Deals

New tax credit for mortgage interest

During a meeting on business environment improvement on September 3, 2014, the Prime Minister approved a proposal to amend the Law on Income Tax to allow for a refund of income taxes paid by taxpayers who take a mortgage loan. Income tax paid by individual taxpayers (including through withholding agents) will be refunded to the [...]

By | 2014-10-14T16:36:29+00:00 October 14th, 2014|Taxation|Comments Off on New tax credit for mortgage interest

Amendments to the Law on VAT

The Ministry of Finance initiated amendments to the Law on VAT to allow taxpayers to deduct the input VAT even if the payment for goods or services is deferred, provided that other conditions of deductibility are met. This amendment is expected to become effective on January 1, 2015 and its application will first extend to [...]

By | 2014-10-14T16:31:05+00:00 October 14th, 2014|Taxation|Comments Off on Amendments to the Law on VAT

Tax Liens

On August 28, 2014, the Government approved amendments to the Law on Taxes introducing the concept of tax lien (restriction). The priority of the tax lien vis-à-vis the secured interests of other creditors will be determined by the time of its filing with the registry of movable property and may extend to bank accounts and [...]

By | 2014-10-14T16:26:27+00:00 October 14th, 2014|Taxation|Comments Off on Tax Liens

Elimination of Excise Tax on Imported Cars

The Government of Armenia approved amendments to the law on excise tax, which exempt the import of luxury cars from 20% excise tax. Luxury cars are defined as those with customs value exceeding AMD 25 million or those aged 2 years and less with engine capacity exceeding 4,500 cc.

By | 2014-08-23T11:51:03+00:00 June 16th, 2014|Taxation|Comments Off on Elimination of Excise Tax on Imported Cars

Use of Fiscal Stamps in Armenia will be Extended

The National Assembly of Armenia passed a law extending the list of goods the sale or import of which require the use of fiscal stamps. In particular, fiscal stamps will be mandatory for the  following packaged or bottled goods: milk; cream; yogurt; ice cream; coffee; tea; vegetable oil; canned meat, fish, fruits and vegetables; vinegar; [...]

By | 2017-01-30T13:26:30+00:00 June 16th, 2014|Taxation|Comments Off on Use of Fiscal Stamps in Armenia will be Extended

Attachment of bank accounts will be streamlined

On February 20th the Government approved a draft amendment to the Law on Taxes regarding attachment of bank accounts by tax authorities. The amendment clarifies that funds on a bank account shall be blocked only to the extent of assessed tax liabilities. It also prevents unnecessary attachment of multiple accounts held by the taxpayer in [...]

By | 2014-08-23T11:50:49+00:00 April 14th, 2014|Taxation|Comments Off on Attachment of bank accounts will be streamlined

Law on Funded Pensions held unconstitutional

On April 2, 2014, the Constitutional Court of Armenia held unconstitutional a number of provisions of the Law on Funded Pensions. It was established, in particular, that the Law violates the right to freely own, use and dispose of the property. The Court did not invalidate the Law immediately but set a deadline of September [...]

By | 2017-01-30T13:26:30+00:00 April 14th, 2014|Taxation|Comments Off on Law on Funded Pensions held unconstitutional

Tax treatment of stock and asset acquisitions

Armenian companies are subject to income (profit) tax and value added tax (VAT). Companies possess a fiscal identity separate from that of shareholders. In case of stock acquisition the book value of the assets and liabilities of the target company remains unchanged. The acquirer will inherit all historic tax liabilities but also tax loss carryovers. [...]

By | 2014-08-23T11:50:37+00:00 January 22nd, 2014|Taxation|Comments Off on Tax treatment of stock and asset acquisitions