Tax Code Amendments on Product Returns Approved by the Government of Armenia

We are pleased to inform that the tax code issues related to product returns, mapped by the Investment Council of Armenia and discussed at the SME Development Sub-Council meeting chaired by the Minister of Economy of the Republic of Armenia, have been resolved.

The draft amendments to the Tax Code developed by the State Revenue Committee of the Republic of Armenia have been approved by the Government.

What will change in practice? Defects in supplied goods are often identified not immediately, but during consumption, operation, installation, or testing. Under the current legislation, adjustments to the settlement documents issued for supplied goods can be made only in limited cases. For example, if a company purchases equipment and a defect is discovered one year later, returning the product becomes problematic from a tax documentation perspective, as there is no provision allowing for adjustment of the original settlement document in such cases.

Similarly, if a retail outlet accepts back a defective product at the lawful request of a consumer, it is unable to adjust the relevant settlement document when returning the product to the supplier.

To document product returns, businesses are sometimes forced to conduct artificial transactions, such as resale operations, which may increase their tax burden. The resale of purchased goods is considered trading activity, which creates particular difficulties for high-tech companies, micro-entrepreneurs, and beneficiaries of state support programs.

Following the adoption of the draft amendments, it will become possible to return supplied goods and make corresponding adjustments to settlement documents in accordance with the revised provisions of the Tax Code.

The Government has approved the draft law and submitted it to the National Assembly. Once adopted by the National Assembly, the law will enter into force.