Legislative amendments in capital market development
On 24th of January new draft of legislative amendments was adopted on the second readings at the National Assembly of RA. It is aimed on capital market development, liquidation of the barriers and creation of more favourable conditions for investors. According to the amendments, several changes in RA Tax Code should be made since 2020 March 1, particularly:
1. Amendments will be made in Article 64(2) of RA Tax Code which lists the transactions not subject to VAT. The investment services and market creation in capital market will also be added to this list. This amendment will also result in deduction of the costs of such services as the investment companies will not have to pay the tax
2. According to article 126 (5) RA Tax Code, the profit gained from the foreign currency bonds and the transactions concluded with such bonds are not subject to profit tax for non -resident corporations. According to the amendments, the transactions with national currency bonds listed in the stock exchange and the profit gained from them will also not be subject to profit tax. The amendments also concern the dividends received from the securities listed in the stock exchange which will also not be taxed.
3. According to Article 149 RA Tax Code the income received from the treasury bonds, governmental securities, bonds issued by Panarmenian bank, is considered deductible. However, the interest received from the bonds which were issued by private companies was subject to income tax. This provision will also be changed and the income received from that bonds listed in securities exchange will also be considered deductible and will not be subject to income tax and profit tax for non- residents. If the issuer of the bonds is a bank, the interest will not be taxed in case the bond is issued for 2 and more years.
4. In case the corporation issues euro bonds, the payments made for loan will not be subject to profit tax.
Those amendments will be a big step towards further development of capital market and will result to maximizing foreign and national investments in RA.