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. An acquisition of stock is exempt from Armenian 20% VAT (art. 7(4) of the VAT Law). It is worth noting that corporate reorganizations (mergers and consolidations) are also exempt from VAT (art. 7(5)).
There are no stamp duties on the transfer of stock. Although dividends are not taxable in Armenia, the shareholders of the target company may have to report capital gains on the sale of stock taxable at a normal rate of 20%.
The asset acquisition is treated as if the buyer had bought all the assets separately. When a buyer purchases the assets of a target, the target will recognize any built-in gain or loss on its assets and the buyer then depreciates the newly acquired assets. The target’s prior tax liabilities remain with the target.
Sale of business assets is subject to VAT. This VAT incurred by the buyer may be recovered (refunded or offset) if the assets are used in business activities taxable with VAT. There are no stamp duties on the sale of land or real property.
Contract-based partnerships are generally treated as transparent for tax purposes.