ArmInfo. The State Revenue Committee (SRC) of Armenia is proposing amendments to the Tax Code that will address issues facing businesses regarding value-added tax (VAT) and income tax payments.
As SRC Chairman Eduard Hakobyan stated, the bill is aimed at making life easier for businesses. Many outstanding issues will be addressed by this initiative, while others will be resolved within the framework of the new tax concept currently being developed, the chief tax official clarified.
Specifically, regarding VAT, the agency is proposing to regulate issues related to transaction adjustments in the event of product returns. "Currently, only goods with an expiration date are subject to adjustment, and we are creating in the Tax Code the ability for individuals to make adjustments to transactions for all types of goods if they deem a return necessary," Hakobyan said. The State Revenue Committee also regulates issues related to the reflection of information on VAT and excise tax liabilities in the relevant reporting period in the event of adjustments to transactions related to the return of purchases using payment documents other than tax invoices (including cash receipts), by establishing that adjustments to VAT and excise taxes are reflected in a single calculation submitted for the adjustment period, except in cases of an increase in the amounts of VAT and excise taxes, which must be reflected in a single calculation for the reporting period, including the delivery date.
It is proposed to apply the statute of limitations (3 years from the year the transaction was concluded) to the cancellation of written-off payment documents (currently, it is defined and applied to the write-off of payment documents, as well as to adjustments), and to clarify issues related to the fulfillment of VAT obligations for transactions (supply of goods, provision of services, performance of work) considered subject to VAT, carried out by taxpayers engaged in the production of agricultural products up to the VAT threshold (115 million drams).
The Tax and Customs Committee is clarifying provisions regarding the fulfillment of VAT calculation and payment obligations for transactions and operations subject to VAT carried out in the Republic of Armenia by a non-resident organization that does not have a permanent establishment in the Republic of Armenia. The proposed amendment provides that the given organization is obliged to calculate and pay VAT on transactions subject to VAT carried out in the RA if the party to the transaction is an organization that is not considered a VAT payer (except for the state and municipality) and an individual entrepreneur, and also to apply the same rules to the calculation of VAT tax liabilities in cases specified in the Code by the same organization, in terms of reporting deadlines, tax payments and filing tax returns.
The draft clarifies the cases and timeframes under which organizations and individual entrepreneurs engaged in agricultural production and operating in the catering industry are considered VAT payers, by removing provisions from Article 59 of the Code that are essentially inapplicable; it also addresses the rules for determining the VAT tax base and VAT exemptions.
The State Revenue Committee also proposes revising:
- the rule for offsetting the VAT amount by the purchaser in the event that the supplier cancels a tax invoice issued in accordance with the established procedure and issues a new tax invoice in its place, stipulating that it is subject to offset in the reporting period, including the day of the transaction, in the amount of the amount for which the offset was made in accordance with the procedure and in the amount stipulated by the Code prior to the cancellation of the accounting document;
- a provision regarding the payment of excise taxes to customs authorities for goods imported into the Republic of Armenia from EAEU member states that are subject to excise stamps, are subject to excise tax, and have the status of EAEU goods, and stipulate that excise taxes for the import of these goods must also be paid to the state budget of the Republic of Armenia by the 20th day of the month following the day of import of the goods into the territory of the Republic of Armenia (crossing the state border of the Republic of Armenia), inclusive, as amounts paid to the tax authority;
- clarify tax provisions regarding the registration of taxpayers. as VAT payers, as well as the deregistration of non-resident organizations registered with the tax authority and not having a permanent establishment in the Republic of Armenia,
- the provision established by Article 108, Part 1, Clause 3 of the Code, stipulating that in the event of not only the placement (which applies to joint-stock companies) but also the alienation (which applies, in particular, to LLCs) of shares, stakes, or units by a profit taxpayer, the positive difference between the placement (alienation) price and the par value is not considered income,
- provisions on the accrual of interest income, establishing discretion in the accrual of interest income, stipulating that the right to receive interest income is considered to be acquired either on each interest calculation date or upon the expiration of the debt term;
- a provision limiting the deduction of expenses related to the production of electricity used for internal economic development purposes by autonomous energy producers, allowing autonomous energy producers to deduct expenses related to the production of electricity used for internal economic development purposes from gross income. It is also established that the initial cost of electricity received in the form of equal mutual flows in exchange for electricity supplied to an entity holding an electricity distribution license is determined by the amount of expenses incurred for the production of electricity supplied by the autonomous energy producer;
- provisions on the accounting of income and expenses arising from the application of an exchange rate different from the average exchange rate formed in the foreign exchange markets and published by the Central Bank of the Republic of Armenia on the date of sale or purchase of foreign currency in foreign exchange transactions;
- provisions concerning the reduction of entertainment expenses;
- provisions regarding the accounting of income of non-resident organizations, as well as individuals, using the cash method established by the Code;
- the standard for deducting quality losses from gross income for dairy products subject to labeling, establishing that such losses are deductible from gross income in an amount not exceeding 2% of gross income.
