Introduction of the New Tax Code of the RA, provisions that come into force starting 2017

The RA parliament adopted the new Tax Code of the RA on 4 October 2016. The new Code will come into force in full starting 1 January 2018; however, there are some provisions that come into force starting 2017. Below we highlight those parts of the Code that come into force in 2017:

Corporate Income Tax

Starting 1 January 2017, resident legal entities can make current tax year quarterly advance payments of corporate income tax in the amount of 2% of revenues received from the sale of goods and rendering of services during the previous quarter (the alternative method), providing that they submit an application to the tax authorities to choose the alternative method for making advance payments of corporate income tax before 20 March of the current tax year.

Starting 1 January 2017, the right to receive dividends will be considered gained, and dividends will be considered paid, on the date of the shareholders’ decision to distribute dividends from the reporting year's net profit, but no later than 30 June of the year following the reporting year.

This provision applies to dividends paid for periods after 1 January 2017.

Starting 1 January 2017, payments received/made as a result of the netting and (or) offsetting of liabilities from derivative financial instruments registered in the united register of derivative financial instruments in accordance with the procedures and terms defined by the RA Law on “Security markets” shall be considered as taxable income/deductible expenses respectively for profit tax purposes.

Value Added Tax

Starting 1 January 2017 the importation of goods into the RA from non EEU member countries by taxpayers with the status of an authorized economic operator or a group of resident taxpayers conducting projects approved by the Government of the RA shall be exempted from VAT, provided that the goods or goods resulting from their processing are exported from the RA (including to EEU member countries) no later than 180 days after they were imported.

Starting 1 January 2017, the disposal, transfer, exchange or any other type of alienation of derivative financial instruments, as well as payments made under those instruments (except for payments made for goods whose disposal is subject to VAT) by banks, credit organizations or other taxpayers shall be exempt from VAT.

Starting 1 January 2017, the refundable VAT amount in the line of zero-rated VAT transactions during 2017 shall be returned to taxpayers under the simplified procedure and terms established by the Government of the RA on the basis of respective applications.

Personal Income Tax

Starting 1 January 2017, dividends received by foreign citizens and stateless persons shall be subject to personal income tax at the rate of 10%. The provision applies to dividends declared after 1 July 2017

Starting 1 January 2017, if dividends are invested by an individual shareholder into the share capital of the resident organization paying the dividends during the tax year when the dividends were received, the investment can be refunded from the state budget in accordance with procedures established by the RA Government, but in an amount no more than the taxes paid to the state budget from the dividends.

Excise tax

Starting 1 July 2017 excise stamps and (or) labels shall be provided within three working days of the submission of an electronic application to the tax authorities. The tax authorities shall define the form of the application as well as the filing procedures thereof.

Starting 1 January 2017, unused excise stamps and (or) labels shall be returned within six months following the month of their receipt.

The period of six months can be extended by the tax or customs authorities on the basis of an application submitted by the taxpayer, but by no more than 90 days. This provision is applicable for unused excise stamps and (or) labels received after 1 January 2017.

Starting 1 January 2017 the annual state duty for organizing lotteries and internet gambling will become AMD 500 million.