Citing trade rules set by the Eurasian Economic Union (EEU), the Armenian government moved on Thursday to abolish a 20 percent tax levied from cars imported from Russia and other EEU member states.
The decision came two weeks after a senior official from the Russian-led bloc’s executive body, the Eurasian Economic Commission, publicly said that Armenia should have abolished value-added tax (VAT) for such cars when it formally joined the EEU in January 2015. Subsequent reports in the Armenian press said that Yerevan is reluctant to scrap the tax because that would lose it millions of dollars in annual state revenue.
“The issue is not new for the EEU,” Prime Minister Hovik Abrahamian said at a weekly session of his cabinet. “Kazakhstan too had such a transitional provision.”
Abrahamian revealed that the government has had “active discussions” on the matter with the Moscow-based commission in the past year. “Having discussed it with the president of Armenia, we have decided to revise legislation regulating this area,” he said.
Accordingly, Abrahamian’s cabinet approved corresponding draft amendments to an Armenian law on VAT. The National Assembly will almost certainly pass them in the coming weeks.
Armenian companies and private individuals importing cars from EEU member states have until now been exempt only from a 10 percent import duty. The Armenian customs service has collected not only VAT but also an environmental tax from second-hand cars manufactured 5 or more years ago.
The European Union and the United States accounted for the vast majority of Armenian car imports before Armenia’s accession to the EEU.