The new Tax Code of Armenia entered into force on 1 January 2018. Under the Tax Code, all separate tax laws are consolidated in the single Code alongside with major changes in tax rates, policies, and administration.
The most significant changes effective from 1 January 2018 are as follows:
- The transfer pricing regulations entered into force (see Transfer pricing in the Group taxation section).
- Fixed and intangible assets should be depreciated using the straight-line method, replacing previously applicable depreciation by pools (see Depreciation and amortisation in the Deductions section).
- Some expense deductibility limits were changed or removed (see Other significant items in the Deductions section).
- The definition of permanent establishment (PE) of a non-resident entity is introduced under the Tax Code (see Permanent establishment in the Corporate residence section). Previously, there was no specific PE definition.
- The non-resident taxpayers conducting activity in Armenia through a PE should keep separate accounting books (it is no longer allowed to use an indirect taxation method while calculating Armenian corporate income tax [CIT]).
- The submission deadline of the annual CIT return is changed to 20 April (inclusive) following the reporting period (previously 15 April).
- The income received by a non-resident entity conducting activity in Armenia through a PE is considered income received by the PE if the income-supporting documents are issued in the name of that PE.
- The registered PEs may now carry forward tax losses (previously, only residents were allowed to carry forward tax losses, unless the appropriate double tax treaty [DTT] was applied).
- The withholding tax (WHT) on the income from the alienation of securities is 0% (previously 10%).
- Taxpayers engaged in agricultural production are exempt from CIT on that income until 31 December 2024 (previously there was no exemption period defined).
- Armenian resident companies implementing a business plan approved by the government may deduct the amount of the annual salaries for the newly created jobs from the CIT liability of that year, but not greater than 30% of the actual CIT calculated. The incentive is applicable for five fiscal years, in addition to the year of the start of the business.
- Non-residents that do not have a registered PE in Armenia bear the responsibility to account and pay the value-added tax (VAT) for the transactions that result in Armenian VAT if the party to the transaction is not a VAT payer.
- Starting from 1 January 2018, all VAT payers should submit VAT returns on a monthly basis. Previously, the VAT payers should submit the VAT returns on a quarterly basis if they did not exceed the particular turnover threshold.
- The Law on Presumptive Tax is no longer in force as of 1 January 2018.
- Excise tax rates are changed for some products (i.e. whiskey, rum, and other alcoholic liquors) (see Excise tax in the Other taxes section).
- Turnover tax for income on notary activities is decreased from 20% to 10%.
- Turnover tax for income on lottery organising activities is 25% (previously lottery activities were taxed under presumptive tax with a fixed tax based on total value of lotteries sold during the month).
- Turnover tax for income on sales of newspapers by publishing companies is 1.5% (previously taxed as general trading activity at 5%).
- The customs relations in Eurasian Economic Union (EEU) member states are now regulated by The Customs Code of EEU that entered into force on 1 January 2018.