|
|
|
|
| The main taxes in the Republic
of Armenia are Profit Tax (Corporate Income Tax), Income Tax
(Personal Income Tax), Value-Added Tax and Excise Tax. |
The taxation system is based mainly on the
legislation of European countries, designed to assist the development
of the market economy.
According to the óProfit Tax LawÇ, treatment of resident and
non-resident companies is identical, with a single rate of Profit
Tax. The same applies for Income tax, with a series of progressive
rates of tax applying to both resident and non-resident individuals. |
| The Armenian legislation does not use the
concept of binding precedents and there are no published judgments
on which to base with certitude the interpretation of tax legislation.
Armenian tax legislation consists of óLaw Of the Republic of
Armenia On TaxesÇ and Laws on different types of taxes. |
| The Armenian tax legislation includes anti-avoidance
rule. The arm´s length principle generally applies to transaction
related parties. Such transactions shall be performed at market
value. |
The owners of real estate and vehicle are
subject to an annual Property tax based accordingly on the value
of buildings and the power of a traction engine. The landowners,
permanent and temporary users of the state property land are
subjects to an Annual Land Tax based on the cadastral value
of land.
There is no other tax on capital or net worth of companies in
the Republic of Armenia. There is no Individual Wealth Tax in
the Republic of Armenia. |
| All new legal entities and subdivisions
of non-resident companies must be registered with the Tax Authorities
within 30 days of registration in the State Register. |
All companies and subdivisions must file
an annual tax return in a form defined by the Ministry of State
Revenues by:
25 February (VAT and Property
tax)
15 April (Profit tax)
following the end of the calendar year.
Tax return of Land Tax must be filed by companies by 1st of
September of the calendar year.
Individuals must file Income Tax return in a form defined by
the Ministry of State Revenues by 1st of March. |
The Tax Authorities will assess the amount
of Profit Tax, on an annual basis following the receipt of the
annual tax return.
Additional assessments can also be raised if it is believed
that the amount of tax originally assessed is too low.
The same rule applies for individuals. |
Taxpayers whose prior-year Profit Tax has
exceeded 500,000 AMD must pay their annual Profit Tax liability
monthly, in advance, equal to the 1/16 of the actual amount
of the Profit Tax for the previous year (prior to the calculation
of the actual amount of the Profit Tax for the previous year,
taxpayer shall make monthly advance payments in the amount constituting
not less then the last advance payments of the previous year).
Each advance payment of Profit Tax is to be paid on the 25th
day of the current month. The final annual liability must be
settled by the 25th of April following the end of the calendar
year.
Taxpayers whose prior-year Profit tax did not exceed 500,000
AMD or they did not have taxable profit in the previous year
exempted from the liability to pay monthly advance payments
to Profit tax. Newly established taxpayers may not make advance
payments till the 25th of April of the following year.
Subdivisions of non-resident companies are required to make
advance payment of Profit Tax every 6 month, if the amount of
the Profit Tax of the previous year has exceeded 2 million AMD.
Advance payment is payable by 1 July and 31 December of the
reporting year, equal to the È of the actual amount of Profit
Tax for the previous year. The final annual liability must be
settled within 10 days after submitting the tax return. |
The tax agent (income payer) is obliged
to withhold tax on the day the payment is made or transferred
to non-resident.
The tax agent is obliged to pay the withholding tax to the State
budget within 3 banking days after the day of withholding. |
| Returns made by the entities may be subject
to inspections at the discretion of the Tax Authorities. |
| The basic penalty is 0.2% per day on the
tax outstanding, from the day it is due until it is paid. This
applies to the 365 days of delay. |
| Tax can be assessed in respect of a fiscal
year for up to three years following the end of the year during
which the liability arose. |
Foreign investment companies are subject
to the same tax regime as Armenian companies. Specific privileges
apply to corporate taxation if foreign investment in a company
exceeds AMD 500 million (approx. US$ 920,000). These are: exemption
from profit tax in the next two years after the investment is
made; and a 50 per cent profit tax reduction from the third
to the eighth year. The 50 per cent profit tax reduction period
is set to decrease over time (and to be eliminated by 2003).
For example, investments made in the coming year may benefit
from the 50 per cent deduction only for four subsequent years.
There are also some profit tax concessions for tax payers who
specialize in agricultural production. A full tax guide is available
from the Armenian Development Agency.
Corporate profit tax
| Annual taxable
profits, AMD |
Tax rate |
| under 7 million |
15% |
| over 7 million |
Flat fee of AMD
1.05 million plus 25% on amount over AMD 7 million |
Personal income tax*
| Annual taxable
income , AMD |
Tax rate |
| 0-120,000 |
15% |
| 120,000-320,000 |
25% of income exceeding
AMD 120,000,plus AMD 18,000 |
| 320,000 or more |
30% of income exceeding
AMD 320,000, plus AMD 68,000 |
* A standard deduction of AMD 28,000 per month is allowed
Value added tax
| Basic rate
20% |
Taxation of foreign corporations
The following Armenian-source income earned by non-resident
which have no subdivision on the Armenian territory is
subject to a:
5% withholding tax:
- insurance compensation;
- reinsurance payments;
- income received from the freight;
15% withholding tax:
- dividends;
- royalties;
- income from the lease of property;
- increase in the value of property;
- other income received from Armenian sources, unless
the double taxation treaties provide otherwise.
|
The Armenian tax system is mostly
an imputation system.
Dividends
Dividends paid from profit which has been subject to Armenian
Profit Tax are not taxable from domestic corporations
and individuals.
Capital gains
There is no Capital Gains Tax in the Republic of Armenia.
Capital gains on shares held by corporate shareholders
are included in their taxable income.
Capital gains on private property of individuals are not
taxable. Gains received from the entrepreneurial activity
are taxed.
Foreign subsidiaries
Dividends paid by a resident are subject to withholding
at the 15% rate, reduced under all the double taxation
treaties that the Republic of Armenia has negotiated.
Capital gains are taxed as business income (profit).
Reorganizations
The current tax system does not include specific provisions
in respect of reorganizations.
Profit arising from the liquidations are reduced in the
amount of the positive difference between the amount of
residual property received from the shares of the taxpayers
and balance sheet value of the shares.
Acquisition
A foreign investor can acquire an interest in a domestic
company or business through the acquisition of shares
or assets as part of privatization process of the domestic
enterprise or by purchasing from the owners after privatization.Ð |
| Supply of goods and services rendered
by taxable persons, whose turnover exceed 3 million
AMD during four quarters directly preceding current
quarter are generally taxed at 20%. Import of goods
are generally taxed by VAT on the border of the
Republic of Armenia (VAT calculated and imposed by the
customs bodies) at 20% too.
VAT shall be recognized at the time the supply takes
place i.e.
- goods: the day stated in the sales contract and
in other cases, the delivery date or payment date,
- services: the day they have been rendered or paid
for.
Taxable turnover of:
- delivery of goods and services is a monetary equivalent
of the value of goods and services (including all
fees and payments made) without VAT, paid by the purchaser
to the seller as an indemnity;
- imported goods is the custom value and excise tax;
- imported goods, which have been earlier exported
for the purposes of processing, or repair, is the
price of processing, or repair due to foreign enterprises
as indemnity;
- mediation services is the amount of fee, paid for
these services on VAT exclusive basis;
- provisions of goods and services on free or partially
free consumption basis is their current reliable market
value (price) on VAT exclusive basis; etc.
In case if Armenian VAT payers participate in delivery
of goods and services performed by foreign companies
or individuals, that are not registered in the Republic
of Armenia, and in case of acting on behalf of or at
the expanse of foreigners, the mentioned VAT payers
are considered suppliers of these goods and services
and therefore, payers of the tax.
VAT is payable on a quarterly basis by the 25th
of the following month. Payments for a fiscal year will
be made prior to the 25th of February of
the following year. VAT on imported goods must be paid
within 10 days from the date of importation.
Export of goods and services is zero-rated.
Export of services means export of services directly
related with:
- export of goods
- transportation of passengers, baggage, loads and
post, implemented outside the territory of the Republic
of Armenia,
- processing and assembly of products from raw material
and materials of foreign entities on the territory
of the Republic of Armenia exported outside the territory
of the Republic of Armenia etc.
|
| Excise Tax is charged on the import
of petrol (35%), diesel fuel (10%), spirits (125%),
beer (50%), wine (50%), tobacco-based products (100%),
jewelry (15%), etc. Import excise tax is charged on
a custom value, without VAT and customs duties.
Excise Tax of the imported goods will be collected
within 10 days from the date of import.
Imported goods are exempted from excise tax if they
are imported by diplomatic representation, for temporary
circulation, humanitarian aid and for transit.
Main exemptions from tax liability are:
- financial and insurance services,
- training and education,
- scientific and research works,
- radio and television broadcasting,
- postal services,
- sales of newspapers and magazines,
- sales of agricultural products produced in the Republic
of Armenia,
- insurance and social insurance services.
|
|
|
|
|
|
|
|
