24th July 2025

Several Issues Discussed During The SME Development Sub-Council Meeting Have Been Solved Through The Draft Regulations C

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We are pleased to announce that the State Revenue Committee of the Republic of Armenia has circulated several legislative drafts that resolve key issues mapped by the Investment Council of Armenia and raised during the SME Development Sub-Council meeting held under the leadership of RA Minister of Economy Gevorg Papoyan.

 

At this stage, the issues that have been resolved include:

Issue: Regulations on Product Returns in the Tax Code. This issue was discussed during the 32nd session of the SME Development Sub-Council held on April 4.

Problem: When complex or high-value equipment is supplied, defects are often discovered not immediately, but during installation, testing, or operation. Under the current legislation, there is no provision for returning goods or adjusting the transaction in such cases.

Solution: As a result of the amendments introduced to the Tax Code, it will now be possible—if agreed upon by the parties involved in the transaction—to return delivered goods and correspondingly adjust the accounting documents.

 

Issue: Simplification of VAT calculation and payment tax administration for taxpayers conducting transactions with non-resident entities that do not have a permanent establishment in Armenia. This issue was discussed during the 35th session of the SME Development Sub-Council held on June 6.

Problem: In practice, there are cases when a resident taxpayer, after conducting a transaction with a non-resident, issues a self-invoice and pays VAT, but later discovers an error in the invoice that needs correction. In such situations, the invoice must be canceled and reissued. According to the current legislation, however, a penalty is applied to the entire amount of VAT reflected in the original invoice.

Solution: As a result of the amendments made to the Tax Code, a penalty will be calculated only in cases where the newly issued invoice, replacing the canceled one, increases the VAT liability — and only in the amount of that increase.

 

 

Issue: VAT reporting challenges for non-residents providing services in Armenia.This issue was discussed during the 35th session of the SME Development Sub-Council held on June 6.

Problem: According to current legislation, non-resident companies providing services in Armenia are subject to two different VAT reporting deadlines — monthly or quarterly — depending on whether the recipient is an individual or a turnover tax payer.This dual reporting framework creates confusion in terms of compliance and is unfavorable for foreign companies providing services in Armenia.

Solution: Following the adoption of the law, there will be a single reporting period for VAT submission, which will simplify tax compliance for foreign companies operating in Armenia.

 

Issue: Problems identified and potential solutions proposed within the framework of a study on establishing a comprehensive legal framework for regulating e-commerce in Armenia. This issue was discussed during the 33rd session of the SME Development Sub-Council held on May 16.

Problem: Businesses selling goods through EAEU e-commerce platforms often face challenges in documenting income generated from sales, and consequently, in submitting reports to the tax authorities.

Solution: Following the adoption of the law, the responsibility for submitting reports containing information on sold goods to the tax authority will lie with the EAEU e-commerce platforms. At the same time, this information will be accessible to the selling businesses via the electronic system of the State Revenue Committee.