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The document ceased to be valid since  January 1, 2018 according to article 445 of the Tax Code of the Republic of Armenia of  November 1, 2016 No. ZR-165

LAW OF THE REPUBLIC OF ARMENIA

of May 12, 1997 No. ZR-107

About taxes

(as amended on 07-06-2016)

Accepted by National Assembly of the Republic of Armenia on April 14, 1997

Chapter 1. General provisions

Article 1. This Law establishes concept of tax and types of tax, procedure for the decision of tax disputes of the Republic of Armenia responsibility for violation of the tax legislation of the Republic of Armenia (further - the tax legislation) and other legal acts governing the tax relation, and also the principles on which the legislation on taxes of the Republic of Armenia and other legal acts governing the tax relations are based.

Article 2. The tax relations in the Republic of Armenia are governed:

a) the tax legislation consisting of this Law and the laws on separate types of tax;

b) the orders of the Government of the Republic of Armenia - in cases and limits set by the tax legislation;

c) the acts adopted by tax authority (further - tax authority, and also, in the cases established by the law, other state bodies - in cases and limits set by the tax legislation or the orders of the Government of the Republic of Armenia.

If the provisions of the tax legislation and provision established by other legal acts governing the tax relations contain contradictions, ambiguity or discrepancies in the Republic of Armenia, then these provisions for the purposes of the taxation are commented, and also applied by tax and (or) customs authorities (in case of the local taxes - as well local government bodies) for benefit of the taxpayer.

In case of contradictions, ambiguity or discrepancies in the tax legislation and other legal acts governing the tax relations in the Republic of Armenia, the taxpayer in accordance with the established procedure can address also to tax, customs authorities, and also to local government bodies for the purpose of obtaining on them official explanation.

Article 3. Tax - obligatory for all and the non-paid payment for the purpose of satisfaction of the state and social needs levied from physical persons and legal entities (including – physical persons – nonresidents, organizations of foreign legal entities, branches, representations of foreign legal entities), organizations, local government bodies, according to the procedure, the sizes provided by the tax legislation and in the terms established by it.

Article 4. The taxes established by this Law are paid in State and (or) local authority budgets of the Republic of Armenia.

Article 5. In the Republic of Armenia the single taxation system is effective. In the Republic of Armenia physical persons and legal entities (including – physical persons – nonresidents, organizations of foreign legal entities, branches, representations of foreign legal entities), organizations, local government bodies (further - taxpayers) shall pay taxes if the tax legislation does not provide other.

Article 6. In the cases established by the laws of the Republic of Armenia on separate types of tax, the obligation on the tax discharge can be assigned to the tax agent, the trustee, persons, the running business of joint activities, the broker, the agent acting from his name during implementation of the transaction and also joint liability, in execution of the tax liability can be established.

Tax agent is the legal entity (including – organization of the foreign legal entity, branch or representation of the foreign legal entity), the individual entrepreneur, the notary, the organization, local government body paying the income (allocating or providing in the natural form) to taxpayers on which according to the law, the obligation is assigned, in case of payment (allocation or provision) of the income to the taxpayer, calculation of deduction (collection) of taxes (including - indirect) from their income and payment in budgets of the Republic of Armenia and communities.

In every respect, connected with investment fund (except for the pension fund) as the taxpayer, instead of it the managing director of this investment fund acts, at the expense of this investment fund.

Article 6.1. The obligation of calculation and payment of taxes in joint activities without formation of legal entity (except for the tax on the income withheld by the tax agent, the income tax of the nonresident and the local taxes) carries out the face running business of joint activities.

If according to cooperation agreement, joint activities are conducted with the party more than one participant, then the obligation of calculation and payment of taxes in joint activities carries out face, in writing authorized from participants.

Person incurring the obligation of calculation and payment of taxes in joint activities before implementation of the first transaction within joint activities, shall provide to tax authority of the place of the stay the announcement in the form established by tax authority (with references concerning the consent of other participants of joint activities) about capture on itself obligations of calculation and payment of taxes in joint activities.

In joint activities (the transactions performed within these activities) participants of activities bear joint liability for accomplishment of the tax liabilities.

Concerning calculation of taxes in joint activities from participants the isolated account is kept.

The settlement and payment documents which are the basis for calculation of taxes as regards the transactions performed within joint activities are written out by person which assumed obligation of calculation and payment of taxes, and in the case provided by the agreement, also other participants running business on behalf of person which undertook the obligation of calculation and payment of taxes.

The calculations, declarations, data provided by the tax legislation, relating to the tax liability arising as regards the transactions performed within joint activities are represented from person which assumed obligation of calculation and payment of taxes in which are displayed directly as it, and general indicators (results) of joint activities.

Settlement payment documents of acquisition of assets (having attached the act of purchase and sale displaying quantity of assets) concerning the investments made from participants are transferred to person which assumed obligation of calculation and payment of taxes in joint activities.

Article 7. The accounting treatment for taxpayers establishes the Government of the Republic of Armenia. The taxpayer registration performs tax authority.

Article 8. The laws or provisions, similar to the laws of the Republic of Armenia, the providing tax rate increase, organization of new type of tax, can become effective since the beginning of financial year, subsequent after year of adoption of these laws, but not earlier than 1st day of the sixth month after official publication of these laws.

In that case when the Law on the government budget of the Republic of Armenia the next year is not adopted until the end of the current year, the laws or provisions, similar to the laws of the Republic of Armenia, the providing tax rate increase, organization of new type of tax, can become effective from coming into force of the Law on the government budget of the Republic of Armenia, but not earlier than 1st day of the sixth month after official publication of these laws.

Provisions of this Article concerning tax rate increase and organization of new type of tax do not extend to the local taxes.

The laws or provisions, similar to the laws of the Republic of Armenia, the providing rate reductions of tax, mitigation of conditions of activities of the taxpayer, elimination of tax, can become effective since the beginning of financial year, subsequent after year of adoption of these laws if these laws do not establish other term.

Article 9. The same taxation object for the accounting period can be imposed with the same type of tax only once.

Article 10. Taxes are paid in Armenian drams, according to the procedure, provided by the tax legislation.

The amounts paid in foreign currency - are recalculated for Armenian drams proceeding from the currency rate established on the date of payment by the Central bank of the Republic of Armenia.

Article 11. The income amount (profits) of taxpayers of the Republic of Armenia received outside the Republic of Armenia, cost of the property belonging to them on the property right outside the Republic of Armenia join in total of income (profits), total cost of property, - taxable in the Republic of Armenia, and are considered in case of determination of the amount of taxes if the tax legislation does not provide other.

The taxes levied in the Republic of Armenia from income amount (profit) of taxpayers on the cost of the property belonging to them on the property right, are reduced by the amount of the taxes levied from taxpayers of the Republic of Armenia in foreign states according to their legislation.

At the same time the size of the reduced amounts cannot exceed the tax amount which is subject to payment in the Republic of Armenia from the income (profit) gained in foreign states, from cost which is in these states of property.

Article 11.1. Voided according to the Law of the Republic of Armenia of 28.12.2012 No. ZR-237

Chapter 2. Types of tax and tax benefits

Article 12. The Republic of Armenia types of tax is:

a) national taxes,

- income tax,

- tax on the income,

- excise tax,

- value added tax.

The fixed payments, the receipts taxes or patent payments replacing the above-stated types of tax can be established by the law;

b) local taxes:

- property tax,

- land tax,

- hotel tax. 

Other local taxes can be established by other laws.

Tax administration on the national and local taxes is performed respectively by the state authorized body exercising supervision of accomplishment of the tax legislation, and tax divisions of municipality.

Tax administration on the national and local taxes is established by this Law. Features of tax administration on the national and local taxes are established by the laws on the corresponding taxes.

Article 13. The following types of tax benefits can be established by the tax legislation:

- reduction of the taxation object,

- rate reduction of tax,

- reduction in tax,

- delay of calculation of tax,

- tax deferral,

- release, lowering, payment deferral the established tax legislation of penalty fee and the penalties added for violation of the tax legislation and other legal acts governing the tax relations in the Republic of Armenia;

- delay of the obligation of payment of penalty fee and other financial sanctions for non-execution or undue execution from bank of the tax liabilities, in interval of time of freezing (moratorium) from the Central bank of the Republic of Armenia of requirements of creditors of bank.

In the cases and procedure established by the tax legislation, to taxpayers the amount of the paid (collected) tax is compensated.

Tax benefits are established by the law if the laws on separate types of tax do not provide other.

In case of the termination or change of the operating tax benefit the procedure for its application concerning the taxpayers using this privilege is established.

Chapter 2.1. Local taxes

Article 13.1. Features of the local taxes are established by the law on each type of tax. The local taxes as the income completely are assigned to the budget of that municipality in which administrative territory they are created.

Article 13.2. From the local taxes application of the land tax and property tax is obligatory in each municipality.

Application and rates of the other local taxes in each municipality establishes local government board on representation of the head of municipality.

Article 13.3. The laws on types of the local taxes (except for the land tax and the property tax) set the minimum and maximum limits of rates of the local taxes. The local government board on representation of the head of municipality claims in the procedure for rate of the local taxes established by the law.

Article 13.4. Establishment of types and rates of the local taxes, accounting of the income controlled by local government bodies, acceptance of payments (including collection of overdue obligations), and supervision of their payment, and also tax administration belong to obligatory powers of local government bodies.

Article 13.5. Local government bodies can make assessment and revaluation of the base of the taxable object which is real estate subject to taxation in the procedure established by the law, and in case of availability of discrepancy to represent results to the authorized body performing assessment and revaluation or to challenge them judicially.

Article 13.6. The rights, obligations and responsibility of payers of the local taxes are established by this Law, and their features - the law on each type of tax. The disputes following from violations of the tax legislation are permitted judicially.

Chapter 2.2. Taxation of family entrepreneurship

Article 13.7. Family entrepreneurship and subjects of family entrepreneurship

1. In sense of application of the tax legislation:

1) family entrepreneurship the business activity jointly performed more than one family member for the purpose of income acquisition (profit) is considered;

2) the parent, the spouse, the child, the brother, the sister are considered as family members.

2. The commercial organizations and individual entrepreneurs (further in sense of application of this Chapter – also persons) meeting the requirement established by part 3 of this Article, including newly created (who received state registration or considered) the organizations and individual entrepreneurs can be considered as subjects of family entrepreneurship. And:

1) the individual entrepreneur can be considered as the subject of family entrepreneurship if the last performs the activities only by means of members of the family (including - as hired employees);

2) the commercial organization can be considered as the subject of family entrepreneurship if the authorized (share) capital of the commercial organization completely belongs to one or several family members and if the organization performs the activities only by means of shareholders of the organization, or members of families of shareholders (including - as hired employees).

3. Those persons from whom the income within last calendar year as regards all types of activity from realization of the provided goods and the rendered services (the performed works) excluding VAT (further – realization turnover) did not exceed 18.0 million dramas are considered as subjects of family entrepreneurship. In sense of application of this part turnover of realization includes also realization turnover in the activities assessed by fixed payments and (or) licensed payments (the income from realization).

4. As subjects of family entrepreneurship cannot be considered:

1) persons who are engaged trade (purchase and sale) activities, and also persons performing the types of activity provided by the Laws of the Republic of Armenia "About fixed payments" and (or) "About licensed payments" (except for the individual entrepreneurs performing type of activity, stipulated in Item the 13th list approved by Appendix of 1 Law of the Republic of Armenia "About licensed payments"), as regards these types of activity;

2) producers and (or) importers of goods, taxable excise tax;

3) the audit companies, the organizations and individual entrepreneurs rendering services of financial accounting;

4) the performing activities of purchase and sale of currency, dealer and broker purchase and sale of currency;

5) organizers of casino and games with prize;

6) commercial organizations and individual entrepreneurs, if:

and. the commercial organization or the individual entrepreneur possesses 20 percent and more share (shares, share) the authorized (share) capital of the commercial organization which is considered by other resident

. the family member who is the owner of any part of the authorized (share) capital of the commercial organization possesses 20 percent and more share (shares, share) the authorized (share) capital of the commercial organization which is considered by other resident.

5. In sense of application of this Chapter by the organizations – the organizations created (which received state registration, considered) in the Republic of Armenia are considered as residents of the Republic of Armenia.

Article 13.8. Recognition by the subject of family entrepreneurship

1. Person meeting the requirement of recognition by the subject of family entrepreneurship provided by part 3 of article 13.7 of this Law is considered the subject of family entrepreneurship:

1) since January 1 every year until the end of this year (except for the cases of recognition by the taxpayer provided by the law from turnover or the VAT) if till February 20 of this year provided to tax authority of the place of the registration the announcement concerning recognition by the subject of family entrepreneurship in the form approved by the head of higher tax authority and the relevant documents proving stay by members of the family of persons involved in family company;

2) from the date of state registration or day of accounting as the individual entrepreneur until the end of this year (except for the cases of recognition by the taxpayer provided by the law from turnover or the VAT) if newly created (received state registration or considered as the individual entrepreneur) person from the date from the date of state registration or day of accounting as the individual entrepreneur till 20th day, subsequent to this day, provided to tax authority of the place of the registration the announcement concerning recognition by the subject of family entrepreneurship in the form approved by the head of higher tax authority and the relevant documents proving stay by members of the family of persons involved in family company;

Article 13.9. Derecognition subject of family entrepreneurship

1. Person stops to be recognized the subject of family entrepreneurship if:

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