New approaches to valuation of depreciation charges to be established in Armenia

ArmInfo. In Armenia, new approaches will be established in the estimation of depreciation expenses. Corresponding amendments to the law "On Profit Tax" were made at the extraordinary meeting of the National Assembly of the Republic of Armenia on December 14.

David Ananyan, Deputy Minister of Finance of Armenia noted in his speech that the document submitted by the government is "temporary" and is aimed at calculating profit on depreciation charges in 2017, although the new Tax Code will be applied from January 1, 2018. Thus, the deputy minister continued, the government proposes to postpone the application of income tax for a year earlier. We are talking about the possibility of returning to the so-called linear method for determining depreciation charges. At present, deductions are made exclusively by the group method (the method of pooling), in accordance with the maximum annual interest rate established by law.

According to the current legislation, among the fixed assets there is no possibility of forming subgroups. As a result, the subjects of management have problems relating to the group method for determining depreciation charges. In this regard, the bill provides for the possibility for taxpayers in 2017 to choose between the method of pooling and the linear method. At the same time, in order to streamline the group method, business entities will be given the right to form subgroups (for example, cars), and in the framework of these subgroups, calculate depreciation charges.