Armenia equalizes excises for importers and local producers of tobacco and vodka

YEREVAN, October 6. /ARKA/. On Wednesday, Parliament of Armenia adopted changes and amendments in the law “On Excise Tax”, “Fixed payments for tobacco production” and a number of relevant laws by the first reading. These laws suggest to move petrol and diesel fuel from the system of fixed taxation into the ordinary tax field from January 1, 2011 and tobacco production – from 2014.

Deputy Minister of Finance of Armenia Suren Karayan said that according to the changes, the rate of excise tax on the import of petrol will make 25 thousand drams per ton from January 1, 2011 and VAT cannot exceed the size of currently paid fixed tax which will allow to avoid losses in the state budget during price fluctuations and VAT will be 20%.

Excise tax for diesel fuel will be 10% from customs cost per ton of fuel but not less than currently operating rates of 32.5 thousand drams. Importers will be also exempted from VAT.

“Taking into consideration that diesel fuel is mainly used in agriculture, VAT exemption will allow to exclude increase of expenses of the farmers. In its result, growth of prices and prices of agricultural products will go up”, said Karayan.

As for tobacco production, the rate of fixed payment will gradually increase till 2014 due to which the difference between local producer and the importer will reduce.

From January 1, 2011 it is planned also to equalize the size of excise tax for local producers and importers of vodka by 30% from customs cost per one liter but not less than 500 drams.

Today the rate for importers is 600 drams and for local producers - 380 drams. The changes define minimum quotes, according to which for import of each 250 thousand liters the importers will pay 30 million drams.

The proposed changes come from the regulations of international agreements and contracts signed by Armenia, according to which Armenia is obliged to change the system of fixed payments for tobacco products, petrol and diesel fuel into the total system of taxation.

The proposed changes caused dissatisfaction of some deputies, particularly from “Dashnaktutyun” fraction. They think that the proposed changes are not conditioned by internal demands or necessity, but are conditioned by the external pressure of foreign importers. In this regard, the fraction decided to vote against the adoption of the draft law. –0--