On April 29, 2021, during the RA Government session, the Executive approved the RA draft laws on “Making Addenda to the RA Tax Code”, “Making Addendum to the RA Law on Licensing”, and “Making Addendum to the RA Law on State Duties”. The purpose of these legal acts is to create the necessary tax environment for introduction of the Trade-in system in the car market in Armenia. According to the justification document, at present, in the event when within the Trade-in system the official representatives of car manufacturers purchase cars from individuals who are not sole proprietors, the official representatives of car manufacturers are deprived of the opportunity to make VAT offsets when selling those cars to other individuals in future, whereas the VAT taxation base for that transaction is calculated of the total cost of the car sold. On the other hand, these business entities incur, as a tax agent, an obligation to calculate and pay to the state budget the income tax from the income paid to individuals, which directly affects the car’s future selling price, thus hindering the development of the system. Accordingly, it is envisaged to define the specifics of calculating the tax bases for income tax and VAT, which are formed during the purchase and sale of a transport vehicle by the official representative of car manufacturers within the Trade-in system. Particularly, in case of further alienation of a transport vehicle purchased by VAT paying entity or sole proprietor, which is considered to be the official representative of the car manufacturer and have relevant license, the VAT taxation base is considered to be the positive difference between the VAT taxation base calculated in compliance with the RA Tax Code during the future alienation of the given transport vehicle and the purchasing price of the transport vehicle in compliance with Article 55, Part 13 of the same RA Tax Code. Revenues generated from alienation of a transport vehicle owned on the basis of the ownership right by an entity, which is considered to be the official representative of the car manufacturer, to have relevant license, to be a VAT-paying company or sole proprietor, are considered as deductible income for the purposes of taxation by income tax. The activity of the official representative of car manufacturers engaged in trade of cars within the Trade-in system is considered to be subject to licensing in order to prevent the possibility of unnecessary use of the above-mentioned preferential tax regulations. As a result, it is expected to eliminate the tax regulations hindering the development of the Trade-in system.
The Executive also approved the package of the RA draft laws on “Making Amendments and Addenda to the RA Law on Narcotics and Psychotropic (Psychoactive) Substances”, “Making Addenda to the RA Law on Licensing”, and “Making Addenda to the RA Law on State Duties”. As a result of adoption of these legal acts, it is expected to introduce the possibility of realizing cannabis production activities in the Republic of Armenia for industrial and agricultural purposes, the specifics of licensing, the quota requirement, and the legislative regulation of the state control. The bills propose to allow by law the activities of production, export, import, or wholesale trade of industrial cannabis, define the specifics and mandatory requirements of licensing. In particular, the draft proposes to establish that production, export, import, or wholesale trade of industrial cannabis is allowed in the Republic of Armenia, provided a relevant license is available. The draft clarifies what is included in the concept of industrial cannabis production. The specifics of licensing are defined, clearly regulating the mandatory criteria a person must meet to obtain a license, as well as setting some other criteria in case the Government considers regulation by licensing. The quota requirement for licensed activities is clearly defined. The draft defines legislative regulations for exercising control over the activities of licensees.
The Executive made an addendum to one of the previously adopted decisions to offer an opportunity of hail protection nets installation to the beneficiaries who received loans to establish gardens without hail protection nets within the framework of the state assistance program for establishment of vineyards, intensive fruit gardens and berry orchards cultivated with modern technologies in Armenia. According to the justification document, within the program framework of 2020 only 46 loan units in the amount of around 5.4 billion Armenian drams were provided for establishment of 494.4 hectares of gardens. The amount of subsidy equals 187.3 million Armenian drams. Under the compensation component 7 compensation units were provided in the amount of 104.7 million Armenian drams for establishment of 24․2 hectares of gardens. During the program implementation certain problems arose due to the amount of money required for establishment of a garden, the amount of collateral required for establishment of a garden with hail protection nets, and the lack of the beneficiaries’ finances to provide the collateral. In particular, due to the lack of collateral, business entities obtain loans without the component of hail protection nets installation. In this case, the process of establishing a garden remains unfinished for the business entity, for finances are not accessible to install hail protection nets to protect the garden from natural disasters. Accordingly, it is proposed to offer the opportunity to the beneficiaries, who receive loans for establishment of gardens with hail protection nets, to apply to financial institutions within one year after the contract concluded between the beneficiary and the financial institution enters into force and receive loans within the same program for installation of hail protection nets. In this case, the additional lending for installation of hail protection nets is carried out by the financial institution by recalculating the loan amount within the framework of the contract concluded between the beneficiary and the financial institution, as well as the limits stipulated by the program. This arrangement will allow to alleviate the problem of collateral requirements for beneficiaries to establish gardens. In particular, those beneficiaries who wish to establish a garden with a hail protection net, which is envisaged by the program, but due to insufficient finances for the collateral requirement have taken a loan to establish a garden without a hail protection net, within one year after establishing the garden will have the opportunity to pledge the garden established within the same program and receive an additional loan to install a hail protection net.
By another Decree of the RA Government, “Erebuni Connect” CJSC will be included in the “Ecos” register of free economic zone operators for activities to be performed in the field of high and information technologies. The investments to be made by the company in 2021-2025 will amount to around 118,820,000 Armenian drams. During the program nine new jobs will be created with an average monthly salary of about 250,000 Armenian drams.
The following drafts submitted by the RA Ministry of Economy were also adopted at the Government session: