EY Armenia: Recent Tax Changes will Significantly Affect Businesses in Armenia

Armenia has introduced a broad package of tax legislative changes that will affect businesses across multiple industries, including e-commerce, retail, manufacturing, tourism, jewelry production, and cross-border operations. 

While some amendments are already in force, others will take effect from 1 January 2027 and may require companies to review their tax reporting, compliance processes, and accounting methodologies.

“The recent amendments represent one of the most extensive packages of tax changes adopted during the year. Companies should carefully assess how the new rules may affect their tax compliance, reporting processes and business operations, particularly in areas such as e-commerce, tax administration and foreign currency transactions accounting,” said Kamo Karapetyan, Partner and Head of Tax Practice at EY Armenia.

What's new?

New VAT framework for EAEU e-commerce marketplaces

One of the most notable changes concerns the taxation of cross-border electronic commerce within the Eurasian Economic Union (EAEU).

Under the new rules, electronic marketplace operators may become responsible for calculating, reporting, and remitting Armenian VAT on certain cross-border B2C sales to consumers in Armenia, regardless of VAT registration thresholds. The new rules will enter into force on 1 January 2027 and are expected to impact online platforms and businesses engaged in cross-border e-commerce.

Special VAT regime for gold and jewelry industry

Armenia has introduced a new VAT mechanism for manufacturers and traders of gold and jewelry. 

Instead of taxing the entire sales value, VAT will generally be calculated based on the value added during production or resale, bringing taxation more closely in line with the economic substance of these transactions.

Expanded Powers for Tax Authorities

Businesses may also face increased scrutiny from tax authorities.

Tax authorities now have broader powers during thematic reviews and may initiate up to three reviews per year in certain circumstances. The changes are designed to strengthen tax compliance oversight and expand the authority's ability to verify taxpayer positions.

Tax professionals note that companies should ensure their internal records, supporting documentation and tax reporting procedures are sufficiently robust to withstand increased review activity.

Higher criminal liability thresholds for tax offences

Another important development concerns tax-related criminal liability.

The monetary thresholds triggering criminal liability for tax violations have been significantly increased. As a result, many lower-value tax disputes may be addressed primarily through tax administration measures, including additional assessments, penalties, and fines.

Foreign currency accounting reform and other amendments

The reform package extends beyond VAT and tax administration matters.

Among other changes, the legislative package revises the tax accounting rules for foreign currency transactions, expands opportunities for transaction adjustments and goods returns, introduces new VAT exemptions, and includes various changes affecting profit tax, VAT administration, and non-resident taxation.

Businesses engaged in international transactions and foreign currency operations may be particularly affected by the updated accounting methodology and exchange rate application rules.

Why it matters for businesses

According to EY Armenia, the reforms could require companies to:

• Review existing tax accounting methodologies and exchange rate application rules;

•Adapt to new VAT requirements applicable to certain industries and transactions;

• Strengthen focus on tax compliance and tax reviews;

• Update internal controls, tax reporting, and documentation processes; and

• Reassess existing tax positions and compliance risks

A detailed overview of the legislative changes and their potential implications for businesses is available in EY Armenia's latest Tax Alert: 

https://www.ey.com/en_am/technical/tax-and-law-alerts/major-tax-and-vat-changes-affecting-businesses-in-armenia