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.
