Armenia, Hong Kong to cooperate in abolishing double taxation 

ArmInfo. Armenia and the Hong Kong Special Administrative Region of China will cooperate in matters related to the avoidance of double taxation and the prevention of tax  evasion. The Committee on Economic Affairs of the National Assembly  of the Republic of Armenia issued a positive conclusion on the draft  of the relevant agreement submitted by the Government of the Republic  of Armenia.

According to the Minister of Finance of the Republic of Armenia Vahe  Hovhannisyan, the document was signed on June 24, 2024 in Yerevan.  The agreement regulates tax issues arising in trade and economic  relations between the contracting parties. The document pursues two  main goals: eliminating double taxation of income and, thereby,  reducing the negative impact on mutual trade and investment, which  will stimulate entrepreneurial activity by creating competitive and  favorable conditions for foreign investment.  It is also envisaged to  form a predictable and stable tax system. The agreement establishes,  on the basis of reciprocity, the terms and rates of taxation of the  main types of income: dividends, interest and royalties in the  country of receipt of income. It provides for cooperation between the  tax authorities of the two countries, which includes opportunities to  resolve disputes on double taxation issues, as well as the exchange  of information to prevent tax evasion.

Ratification of the agreement will provide opportunities for the  development of turnover of goods and services, movement of capital,  technology and people between the Republic of Armenia and the Hong  Kong Special Administrative Region of the People's Republic of China,  and will promote the development of economic ties. The Chinese side  has already ratified the submitted document.

It was noted at the meeting that Armenia has concluded agreements on  the exclusion of double taxation with 51 countries. Work is currently  underway to develop a similar document with Japan, which is expected  to be submitted to the National Assembly of the Republic of Armenia  during the current year.  Thus, the total number of countries with  which the republic has signed agreements on the exclusion of double  taxation will be 53.

Earlier, ArmInfo, citing the Statistical Committee, reported that in  2024, the transfer from Armenia to Hong Kong jumped 4.2 times,  amounting to $38.3 million. At the same time, over the past year,  there was a 30% decline in the outflow - to $30.8 million. This made  it possible to improve the dynamics of the net inflow of transfers  from Hong Kong to Armenia over the year from negative $34.9 million  to positive $7.5 million, ensuring growth of 2.2 times. Moreover, the  share of non-commercial transactions in the inflow of transfers from  Hong Kong is low - 2% (annual decline in volume by 24%), and is also  negligible in the outflow - 4% (annual growth in volume by 67%). 

According to experts, such dynamics of transactions in the direction  of Hong Kong and the UAE can be due to "gray deals" with gold and  diamonds, given the fact that these countries account for the main  re- export of precious metals and stones. In particular, experts  refer to customs data, according to which the lion's share of  diamonds and gold imported from Russia are then exported to the UAE  and Hong Kong.  Thus, in the first half of 2024, the lion's share of  the total volume of diamond and gold imports came from Russia - 77%  and 99.7%, respectively, and the dominant export of these precious  metals and stones went to the markets of the UAE (77% diamonds and  64% gold) and Hong Kong (17% diamonds and 25% gold). Almost the same  picture emerged at the end of 2023, but then 46.7% of diamonds and  99.2% of gold came from Russia, which were also exported to the UAE  (84.6% diamonds and 71.4% gold) and Hong Kong (2.7% diamonds and  25.4% gold).