According to the previous regulation of the Tax Code of Armenia, both a resident profit taxpayer and non-resident profit taxpayer operating in the Republic of Armenia through a permanent establishment had two alternative options to make profit tax prepayments:
- 20% of the profit tax amount of the previous tax year for each quarter, or
- in the amount of 2.0 percent of the whole turnover of the previous quarter, for each quarter.
According to the previous regulation, the taxpayer had to submit an application to the tax authorities in order to select the 2nd alternative method of profit tax prepayment if the taxpayer did not envisage making much profit or any profit at all.
Recently, on 16 June 2020, major amendments took place in the tax legislation of the Armenia Tax Code. According to the law on amending the Tax Code, it will no longer be necessary to submit an application by March 20 of each tax year for the selection of an alternative method of making profit tax prepayments.
Moreover, pursuant to these amendments on the two options mentioned above, the taxpayer should pay the one which forms the less amount of tax.
In addition, under these changes, taxpayers are exempted from the obligation to make advance payments of profit tax for the second quarter of 2020.
This amendment was a big step to support businesses and relieve from additional paperwork of submitting the application, as well as offering an option to pay the lower amount of tax.
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