RA State Revenue Committee specifies provisions on VAT and income tax  payments 

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.