Wednesday, September 13 2017 14:57
Naira Badalian

Richard Mills: US expects from Armenian government to justify necessity of new agreement on avoidance of double taxation

Richard Mills: US expects from Armenian government to justify  necessity of new agreement on avoidance of double taxation

ArmInfo. The United States is  satisfied with the current agreement on avoidance of double taxation  with Armenia, however, at the same time, the US is ready to listen to  the Armenian Government's arguments about the need for a new  Agreement. Answering the question of ArmInfo, the US Ambassador to  Armenia Richard Mills stated on September 13 in Yerevan.

As the American diplomat noted, the issue of double taxation was  raised by the Armenian government.  "We repeatedly noted that the  signing of the Agreement will be considered if such a need arises to  stimulate trade," Mills said. According to him, the current document  on avoidance of double taxation, adopted in the 1970s between the US  and the USSR, is quite sufficient for conducting trade between the  two countries.  "We are waiting for the Armenian government to submit  arguments to justify the necessity of concluding a new agreement,"  the head of the US Diplomacy in Armenia concluded. 

The issue of canceling double taxation with the US has been on the  agenda of Armenian-American relations for a long time. Earlier,  ArmInfo informed that in October Armenia will again propose the US to  conclude a new agreement on this matter. As the Minister of Finance  of Armenia Vardan Aramyan stated on July 27, during the last 10 years  this issue was ranked among the priority ones in the Armenian  Ministry of Finance. The Minister recalled that in June 2017,  Armenia, along with other 68 countries of the world, joined the 15th  Action Plan of the Organization for Economic Cooperation Development  to combat the erosion of the taxable base and the removal of profits  from taxation (English Base Erosion and Profit Shifting , BEPS) .

After becoming a party to the agreement, clear rules of the game are  established in the country in the tax field and the reliability of  the country from the investors' point of view is being raised. the  current agreement concluded between the Soviet Union and the United  States is overdue and irrelevant, only for the simple reason that the  Republic of Armenia is not the legal successor of the USSR It is  noteworthy that the internationally recognized successor of the USSR,  its "legitimate heiress", the Russian Federation in June 1992 signed  an agreement with the US "On the avoidance of double taxation and the  prevention of tax evasion with respect to taxes on income and  capital," thus recognizing the old Agreement as null and void.   Meanwhile, business representatives, knowing about the absence of an  agreement excluding the double taxation between Armenia and the US,  are quite reasonable in their own development of other schemes for  doing business through their branches in countries that already have  an appropriate agreement with the United States. In addition,  according to the Ministry of Finance, the presence of a double  taxation may be a barrier to attracting mutual investments, since the  prospect of paying taxes can scare off potential investors twice.

To note,  Armenia has similar agreements with 47 countries, the last  agreement was recently signed with Israel. The purpose of these  agreements is to eliminate double taxation in foreign trade between  two states, to avoid tax discrimination with respect to economic  entities of the parties, to exclude double taxation on property and  income, and to create a predictable and stable tax environment for  business. The issue of exclusion of double taxation between Armenia  and the US has been discussed for over 20 years - since 1994 the  Armenian government has raised this issue. In 2000, during the  Armenian-American intergovernmental meeting, this issue was raised  again and since then preparatory work has been carried out, and  negotiations have not started.

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