Tuesday, February 2 2021 12:50

ArmInfo.The main purpose of the signed by the State Revenue Committee of Armenia with the company of "Veolia Jur" memorandum is to identify transfer pricing  risks. Deputy Chairman of the State Reform Commission Ashot Muradyan  announced this on February 2 at a press conference.

According to him, we are talking, first of all, about interconnected  persons, transactions between which can lead to capital outflow.  Often companies with subsidiaries in other countries or holding  shares of companies abroad, carry out transactions between  themselves, which are aimed at reducing the real volumes of profits,  which are transferred to other countries with a more preferential tax  system. Similar actions can be applied in relation to VAT, especially  regarding its return. In order to study such risks, together with  Italian partners, research will be carried out at Veolia Jur.   Earlier, ArmInfo reported that transfer pricing will be checked for  the first time in Armenia. At the State Revenue Committee of Armenia  with representatives of "Veolia Jur" CJSC was signed the relevant  memorandum. The staff of the SRC and the Italian Tax Service will  conduct a joint pilot audit, which will not entail any tax  consequences for the organization. The pilot audit, envisaged under  the Organization for Economic Cooperation and Development (OECD) "Tax  Inspectors Without Borders" program, will allow the Armenian tax  authorities to increase the capacity to conduct transfer pricing  inspections with the support of Italian partners. At the same time,  it will be instructive for CJSC "Veolia Jur" in terms of submitting  notifications to the tax authority about transactions and  familiarization with other regulations. Companies were selected from  15 pre-selected organizations based on risk analysis. The pilot test  will be carried out in accordance with applicable inspection rules.  The relevant documents will be studied and as a result of the  analysis, risks will be identified, which will be discussed with the  taxpayer.  Note that the transfer price is the price set in business  transactions between different divisions of a single company or  between members of a single group of companies. The activity of  setting prices between such companies is called transfer pricing.  Transfer prices make it possible to redistribute the total profit of  a group of persons in favor of persons who are in countries with  lower taxes. This is the simplest and most common scheme for  minimizing taxes paid.

Recall that the French company Veolia Generale des Eaux has been the  single operator of the drinking water supply system in Armenia since  2017 for a period of 15 years. The new operator took over the  management of the property of five operating operators: "Yerevan -  Jur" (Yerevan WS), "Arm WS", "Shirak WSl", "Lori WS" and "Nor Akunk".  The single operator was selected on the basis of a tender announced  on January 15, 2016. Veolia will pay about $ 189 million for the  15-year concession. Veolia is the largest provider of water services  in the world, operates in 66 countries and has extensive experience  in providing water supply and wastewater services.