Parliament debates favorable tax regime for gold and diamond industry

A government-drafted bill proposing amendments to Armenia’s Tax Code envisages creating a favorable tax environment for two key manufacturing sectors of the economy gold and diamond manufacturing. The bill was presented for first reading in parliament by Deputy Finance Minister Arman Poghosyan. He said the bill essentially introduces systemic improvements to the tax environment in these sectors, as it proposes preferential VAT regulations that differ from those applied to other industries.

Following the law’s adoption, for producers of gold and precious stones, the VAT base will be calculated not on the full price set by the producer, but on the difference between that price and the documented costs of the gold and precious stones used to produce the item.

“In other words, it will be calculated based on the newly created value generated by the producer, excluding the cost of gold and precious stones. Under roughly the same logic, resellers will be allowed to calculate VAT not on the full sale price, but on the difference between the sale price and the price paid to the producer, reflecting only their trade margin,” the deputy minister said.

He added that, in order to simplify tax accounting and administration and to ensure predictable rules, it is proposed that if the taxable base calculated under this method is less than 10 percent of the total price, then at least 10 percent of the price will be used as the basis for taxation.