ArmInfo. Armenia's current legislation will be brought into line with the Common Reporting Standard adopted under the Protocol to the Convention on Mutual Administrative Assistance in Tax Matters. At its May 19 meeting, the National Assembly's Committee on Economic Affairs approved the amendments to the Tax Code submitted by the Armenian government for the first reading.
According to Rafael Gevorgyan, Deputy Chairman of the State Revenue Committee, the full and effective implementation of the Standard is only possible through the harmonization of national legislation and the introduction of a clear legal framework. The need for legislative amendments stems not only from the requirements of the new model legislation arising from international obligations and the compliance of existing tax legislation with the Standard's requirements, but also from the need to implement and effectively apply best international practices in tax administration. At the same time, the legislative amendments are driven by the need to regulate issues that arose in law enforcement practice after the Republic of Armenia first introduced automatic information exchange in September 2025.
According to the Convention, ratifying countries must annually automatically exchange information on financial accounts defined by the Standard. Amendments to the Tax Code of the Republic of Armenia introduced in 2024 regulated the relevant mechanisms for implementing a system for the automatic exchange of financial account information. However, significant problems arose in enforcement practice due to the incompleteness of current regulations. Several provisions of the current rules do not fully comply with the requirements of the Standard, which complicates their practical application and leads to varying interpretations and misunderstandings. Specifically, according to the current Tax Code, for current accounts subject to information exchange, a provision is established for exceeding the threshold of USD 250,000 in dram equivalent if the sum of inflows and outflows for the year, or the total amount as of the last day of the tax year, or the total account balances at the beginning or end of the tax year exceeds the established amount. This approach does not follow from the provisions of the Standard and must be brought into line with standard legislation. Furthermore, reporting financial institutions are currently required to obtain written consent from all clients prior to exchanging information. As a result, if a person opening or holding a financial account refuses to provide consent or fails to do so within 10 days, the financial institution will refuse to open a new account, and if a previously opened account is opened, it will cease all transactions on the financial account, with the exception of transfers of funds held in an account held at another institution.
In practice, this provision is difficult for financial institutions to implement, as it is not always possible to obtain written consent from non-residents, resulting in the financial institution submitting an incomplete report to the tax inspectorate. In the event of such violations, the Central Bank of the Republic of Armenia imposes fines in accordance with the procedure established by the Law "On the Central Bank of the Republic of Armenia," and the process is monitored by the Central Bank based on methodological guidelines or signals issued by the tax inspectorate. However, under the model law adopted by the OECD, as well as in almost all countries that have implemented the Standard, the exercise of control is reserved to the tax authorities, since the Standard is aimed solely at the exchange of information for tax purposes and ensuring tax transparency through tax administration.
Current legislation also lacks a set of tools to ensure proper management of account holders and their controlling persons in the event of the latter's provision of false or incomplete information to the reporting financial institution. However, the OECD model legislation stipulates that the account holder or their controlling persons should also be held liable in the event of failure to provide or incomplete provision of relevant information as required by the procedures established by the Standard.
The draft proposes a systematic and comprehensive approach, completely rewriting Chapter 80.2 of the Code, which regulates the exchange of financial account information, in line with the Standard and the model legislation. The draft contains clear definitions of key concepts derived from the Standard and used in the Code, which will ensure their uniform interpretation and consistent application in law enforcement. The document proposes reserving the verification of the accuracy of financial institutions' reporting requirements to the Armenian tax authority, as the Standard applies exclusively for tax purposes, and the tax authority is the competent authority at any stage of the process. In addition, the draft also amends the relevant provisions of Chapter 68 of the Code, which regulates tax audits, by proposing to expand the scope of thematic questions of a tax audit by adding the question of the accuracy of compliance with financial reporting requirements, as a result of which the tax authority may conduct a thematic audit solely on the issue of the accuracy of compliance with financial reporting requirements.
The bill also proposes imposing penalties on account holders and controlling persons in cases where the latter provide false or incomplete information to reporting financial institutions or fail to provide mandatory information established by appropriate audit procedures. To align with international best practices and the practical capabilities of financial institutions, the deadline for submitting information to the tax authority has been extended from the current May 10 to June 30, which will facilitate the provision of more complete and high-quality data. The bill also clarifies the provisions on the storage and accounting of documents by reporting financial institutions, requiring financial institutions to retain all documents related to financial statements, as well as information available on computer programs and electronic media, in the manner and for the timeframes established by law, but for no less than five years.
