Today, by a vote of 67 to 42 a draft bill to make amendments to Armenia’s Law on Profit Tax was approved by the National Assembly.

The bill passed on the second hearing.

It was Deputy Finance Minister Souren Karanyan who took the podium in the parliament and spoke out in favor of the bill that would free non residents from paying profit tax in a number of instances.

Non residents would be exempt from the tax on interest accrued from government foreign currency bonds or from the sale of such bonds, from the exchange of other securities, and from the revenues accrued from similar transactions.

For legal purposes organizations established in foreign countries are considered non-resident, as well as international organizations and any subsequent organizations they establish outside Armenia.

Deputy Minister Karanyan stated that resident organizations of other countries with which Armenia has signed a double taxation treaty will not be doubly taxed. Those organizations, resident in countries with which Armenia has no double taxation treaty, will be doubly taxed when investing in foreign currency bonds issued by Armenia.

Karanyan argus that the latter case decreases interest in investing in Armenia.

ARF MP Artzvik Minasyan noted that non-registry is mostly dependent not on a person’s citizenship but on the center of their activity or economic interest.

Minasyan asked the official what guarantees were there that Armenian capital wouldn’t be sent abroad, say to an offshore company, and then come back to Armenia, to be invested in Armenian-issues securities and not get taxed?

Deputy Minister Minasyan retorted that he didn’t find it realistic that Armenian companies would go offshore to register and then evade being taxed as non-resident companies.

Minasyan argued that one of the reasons is that an Armenian company can amass a greater profit domestically, rather than by operating as a non-resident operation.

Armenian National Congress (HAK) MP Hrand Bagratyan took the floor and declared that he was categorically opposed to the bill, arguing that by giving allowances to the wealthy, the country would be turned into an off-shore zone.

“Are you creating an off-shore zone, or is it just because you like the word offshore,” chided Bagratyan.

Those voting against the bill were the parliamentary opposition and the Prosperous Armenia Party.

Voting in favor of the bill, besides   ruling coalition member the Republican Party and Rule of Law, was independent MPs Khachatur Kokobelyan,

Those abstaining were Edmon Maroukyan, Levon Zurabyan, Stepan Demirtchyan.