Taxing Problem: EEU says Armenia should not impose VAT on car imports

Taxing Problem: EEU says Armenia should not impose VAT on car imports

Armenia’s authorities are not in a hurry to give explanations to a situation in which they continue to charge the value added tax on imported cars after joining the Eurasian Economic Union (EEU).

The issue was recently raised by EEU Minister of Integration and Macroeconomics Tatiana Valovaya.

She, in particular, noted that Armenia’s 20-percent VAT charged from physical persons importing cars from EEU member states is contrary to the EEU legal framework.

“There are no non-tariff barriers within the EEU de jure. The EEU treaty clearly stipulates that member states cannot apply non-tariff protection measures against each other. At the same time, we quite often find such barriers. This happens because either states do not fulfill the decisions or at some level we have a problem with practical application of laws,” said Valovaya.

Armenia joined the EEU (consisting of Russia, Kazakhstan, Belarus and later Kyrgyzstan) in January 2015. According to Valovaya, it was then that a report was prepared regarding such barriers in the Union. The report, she said, presented the measures that were to be taken to eliminate such barriers.

“Last year we eliminated 80 such barriers in the EEU and we are actively monitoring the situation in order to identify such barriers that are new or emerge again,” said Valovaya, adding that Kazakhstan also once had a barrier in the form of a VAT on individuals’ car imports, but it was eliminated.

The issue raised by the EEU official concerns the fact that despite membership in the new customs union Armenia continues to oblige citizens to pay a 20-percent VAT at the border when importing cars from EEU territory.

The Ministry of Finance has refused to comment on the situation following a request from ArmeniaNow, referring the matter to the Ministry of International Economic Integration and Reform, which said that a response would be given at the government level.

Opposition MP Hrant Bagratyan, who served as Armenia’s prime minister in 1993-1996, meanwhile, also addressed the matter.

He argued that indeed Armenia has been illegally taxing goods coming from the EEU since formally joining the organization.

“After joining the EEU we imposed sanctions on ourselves, because goods coming from the EEU are imported in the same regime as from elsewhere. For a year the Ministry of Finance has been illegally collecting taxes,” Bagratyan insisted at a press conference on Tuesday.

It appears that car importers were unaware of the new EEU regulations. Members of the Car Importers Union say while they paid the VAT for a year, they are not going to do that from now on. They demand that a solution be given to the matter, otherwise threatening to raise a wave of protests.