TRADE TAX – Trade tax is a tax replacing value added tax (VAT) and/or profit tax (income tax), which is paid to the state budget for commercial activities; moreover, Trade tax replaces VAT and/or profit tax in case of commercial organisations, and VAT and/or income tax in case of sole/private entrepreneurs.
Trade taxpayers are commercial organisations and sole proprietors engaged in trading through shops, stalls (pavilions), and warehouses. Exceptions are persons paying presumptive payment – with regard to the relevant part of their activities; persons who ceased to be deemed as such on including till 31 December of the year concerned, persons paying patent fee under the Law of the Nagorno-Karabakh Republic “On patent fees”.
Object taxable through Trade tax is the sales turnover of goods supplied and services provided by Trade taxpayers during the reporting period, including the separated VAT amounts indicated in the settlement documents invoiced by them.
Trade taxpayers shall calculate the tax at the following rate for the object to be taxed per settlement period for current year, taking into account the provisions under section 1.1, Article 8 of the Law:
1) since January 01, 2021, at 2% rate;
2) since January 01, 2022 at 3% rate.
The amount of trade tax calculated for the taxable object for the reporting period at the rate defined in part 1 of this Article shall be deducted
- from the expenses substantiated by the documents defined by the Government of the Artsakh Republic for goods purchased for direct sale during the reporting period (including VAT, excise tax). (or) the amount of the environmental fee),
- as well as the customs value reflected in the customs declarations for the goods imported to the Artsakh Republic, the calculated customs duty, VAT, excise tax (or) the sum of the environmental tax or the import tax declaration.
- Calculated VAT, excise tax and (or) environmental tax total (hereinafter referred to as the cost of purchasing goods) in the amount at 1% since January 1, 2021, and in the amount at 2% since January 1, 2022.
If, after the deductions provided for in this part, the amount of the Trade tax is less than 1% of the taxable object; the deduction for the cost of purchasing goods shall be made to the extent that the amount of the Trade tax is 1% of the taxable object. Accordingly, the non-deductible part of the cost of purchasing goods from the Trade tax amount (including in the absence of an object taxable for the reporting period) shall be deducted from the trade tax accrued on the object taxable for subsequent reporting periods in compliance with the requirements of this part.
Bookkeeping of revenues and expenses by commercial taxpayers is carried out by the accrual method; revenues and expenses are recorded upon the acquisition of the right to receive revenues or recognising those expenses with regard thereto, irrespective of the time of actual generation of revenues or performing of payments.
Procedure for invoicing settlement documents
Trade taxpayers invoice settlement documents to purchasers with regard to goods supplied and services provided. An indication on the VAT rate and amount may be contained in settlement documents (a tax account may be issued), if tax accounts (in case of importation – customs declarations) are, in accordance with the Law of the Nagorno-Karabakh Republic on Value Added Tax, submitted by suppliers for the supply of the goods and provision of services.
Moreover, the VAT amount indicated in tax accounts (in case of importation – customs declarations) invoiced by Trade tax payers may not exceed the separated VAT amount mentioned in tax accounts submitted by suppliers.
Trade tax privileges / benefits
Taxpayers subject to exclusively Trade tax are exempt from bearing obligations prescribed for tax agents under Article 11(7) (a) of the Law of the Nagorno-Karabakh Republic on Profit tax (Income tax), if documents certifying the fact of importation of the goods to the territory of the Nagorno-Karabakh Republic from Armenia (import declarations) are available.
Taxpayers subject to exclusively Trade tax are not subject to the requirements for justification of expenses made for goods obtained in regard to generation of revenue provided for by the Law of the Nagorno-Karabakh Republic on Profit tax (Income tax), if documents certifying the fact of importation of the goods to the territory of the Nagorno-Karabakh Republic from the Republic of Armenia (import declarations) are available.
Deadlines for declarations for being considered as trade taxpayers, for submission of calculations and payment of trade tax
Trade taxpayers submit declarations for being considered as trade taxpayers to the tax authority of the place of their registration, from 1 – 20 January of each year. Newly-established (state registered) commercial organisations and individual entrepreneurs submit the declaration to the tax authority of their place of registration by the 1st of the month following the month of state registration.
Calculation of trade tax under Article 8(1) of the Law for each month is submitted to the tax authority, and the amount of calculated tax under Article 8(1.1) of the Law is paid to the budget by 20th of the month following the month concerned.
Individual entrepreneurs having submitted a declaration in accordance with the procedure and within the time-limits specified in Article 201 of the Law of the Nagorno-Karabakh Republic on Taxes, submit semi-annual (on monthly basis) calculation of trade tax by 20th of the month following the reporting period, and make the payment once in a month by the 20th of the following month.