Armenia armaments import tax exempted

ArmInfo. On November 28,  Armenian President Serzh Sargsyan signed the law "On the exemption  from VAT of imports of exclusively defense products for the Armed  Forces of the Republic of Armenia within the framework of interstate  (intergovernmental) agreements signed between the Republic of Armenia  and other countries." This was reported by the press service of the  RA President.

The National Assembly of Armenia at the meeting on November 17  approved in the second and final reading the bill "On the exemption  from VAT of imports of products exclusively for defense purposes  within the framework of interstate agreements." Presenting the bill,  the Minister of Finance of the Republic Vardan Aramyan recalled that  the agreement was formerly called "On the exemption from VAT of  imports of products exclusively for defense purposes within the  framework of interstate agreements between the Republic of Armenia  and the Russian Federation." "At present, we import military  equipment and weapons mainly from Russia, the bill exempted from VAT  the supply of weapons only from this country. However, we do not rule  out the possibility that in the future Armenia will supply weapons  from other countries, and in connection with that they suggested  removing the geographical limitation from the draft laws, "Aramyan  said. The minister noted that the government considers it inexpedient  to tax the VAT of this type of product, since it will not have the  possibility of selling both on the domestic market and subsequent  exports to third countries. 

"In fact, we get rid of unnecessary actions in the budget, since the  tax paid for supplies, according to the law on VAT refund, was still  deducted from the budget," Aramyan said. On November 16, the  Government of Armenia approved the draft law on ratification of the  "Agreement between the Government of the Republic of Armenia and the  Government of the Russian Federation on granting the government of  the Republic of Armenia a state export credit", and it was considered  urgent to ratify it. The legislative initiative will be submitted to  the National Assembly of Armenia in the prescribed manner.

According to the draft agreement, Russia will provide the Armenian  side with a state export credit of $ 100mln. to finance the supply of  military products of Russian production. The Armenian side uses the  loan to finance up to 90% of the cost of each contract for the supply  of products calculated in dollars.  Prepayment will be at least 10%  of the contract value and be implemented by the Armenian side in  favor of authorized Russian organizations. The draft agreement states  that the loan is issued with a maturity of 15 years at 3% per annum.  Repayment of the principal amount of the loan is scheduled to begin  on May 15, 2023 and be completed on May 15, 2037. In the first six  years, Armenia will annually repay a loan of $ 1.5 million, after  which the amount of allocations will increase to $ 3.6- $ 3.8  million. Armenia should use credit funds in 2018-2022. Based on the  loan agreement, separate agreements will be concluded between the  Armenian Ministry of Defense and Rosoboronexport OJSC on the order  and timing of deliveries of arms and military equipment.

Early, Moscow has already provided Armenia with a loan of $ 200  million for a period of 10 years.  Yerevan uses these means to  purchase launchers of the Smerch multiple rocket launcher and its  ammunition, the Igla-S missile system and its missiles, the Avtobaz-M  ground reconnaissance systems, the TOS-1A heavy flamethrower systems  Solntsepek "with transport-loading machines TZM-T, guided missiles  9M113M, RPG-26 grenade launchers, B-429E fuses, Dragunov sniper  rifles (SVD), armored vehicles, Tiger armored vehicles, engineering  equipment and communications equipment. In addition, Russia supplied  Armenia with the Iskander missile system. According to the  intermediate program of expenditure for 2018-2020. Armenia plans to  increase military spending by $ 60 million annually. The aim of  Yerevan is to increase the level of military spending by 4% of GDP.  At present, Armenia's military expenditures amount to about 3.6% of  GDP - about $ 450 million