Tax administration in car leasing to be regulated in Armenia 

ArmInfo. Armenia wants to regulate tax administration in the areas of leasing and car rental.  At its session on March 5, the National Assembly of the Republic of Armenia adopted in the first reading the amendments to the Tax Code proposed by the NA deputy from the ruling Civil Contract faction  Babken Tunyan.

In his speech, the deputy noted that in recent years there has been a  more than significant increase in car imports. At the same time, the  most "nimble" entrepreneurs took advantage of the tax loophole and  began to submit applications for VAT refunds. Subsequently, at the  initiative of the State Revenue Committee, amendments were made to  the current legislation and this loophole was closed. However, as a  result of the application of new regulations, companies engaged in  leasing and rental of vehicles suffered. Thus, according to the new  regulations, when buying a car for 10 million drams and its  subsequent resale, the State Revenue Committee immediately applies  VAT in the amount of 20%. Thus, the cost of the car is no longer 10,  but 12 million drams. Such a mechanism, as the deputy noted, is  designed to exclude any possible fraud, but its application affected  companies in the leasing and rental sectors. Companies in the leasing  sector often act as intermediaries between the buyer and the seller,  and in the rental sector - for renting out cars. "After two or three  years of operation, rental companies decide to sell the vehicle to  update their fleet, but new tax regulations begin to apply to them,  which negatively affects their operations. For this reason, it is  proposed to amend the Tax Code, according to which the real price of  the vehicle will be used to calculate VAT, without taking into  account the 20% tax assessed by the State Revenue Committee," said  Babken Tunyan.

In turn, Deputy Minister of Finance of the Republic of Armenia Arman  Poghosyan, speaking about the government's position, stated that the  executive body does not object to the presented document. He noted  that the bill proposes to grant companies in both sectors the force  of a retroactive law and apply it from January 1, 2023. Moreover, as  Poghosyan noted, by the second reading the bill is planned to be  extended to those owners of light vehicles who use them for personal  purposes, for example, to transport passengers by taxi or tourists. A  more comprehensive option is also being discussed, according to which  attempts will be made to find comprehensive solutions to the existing  problem.