Armenia is set to follow the path of its near neighbour Georgia by extending the scope of its VAT rules to digital services supplied by non-resident businesses.
Armenia’s government passed a draft law on the VAT proposals on November 11, 2021, with the plans adopted on November 17. The detail of the Armenia VAT rule change mirrors many similar global rules already in place. Armenia’s neighbour, Georgia, was one of the most recent taxing jurisdictions to implement such a system with new VAT rules coming into effect on October 1, 2021.
New Armenia VAT rules for digital businesses
The rules in Armenia come into effect on January 1, 2022, and there is no threshold to registration. Therefore, all B2C sales of digital services from non-resident businesses to customers based in Armenia are in scope from the first sale on January 1, 2022. The standard rate of VAT to apply to these sales is 20%.
The non-resident digital businesses that register will be published on the official website of Armenia’s tax authority. The filing frequency will be quarterly with returns due by the 20th day after the end of each quarter.
In a press release on Armenia’s State Revenue Committee (SRC) website a spokesperson stated that "non-resident organizations will access the relevant electronic system from the official SRC website, through which they will be able to register with the tax authority thus saving time and resources. The system will be in two languages: English and Russian.”
They added that the design of the new registration system was done through engagement with large multinational digital businesses to “introduce best practices, and a convenient and simple system for fulfilling tax obligations.”
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