Taxation of Foreign Companies

Taxation of Foreign Companies

The following Armenian-source income earned by non-residents which have no subdivision on the Armenian territory is subject to a:

5 % withholding tax:
- insurance compensation;
- reinsurance payments;
- income received from the freight,

10 % withholding tax:
- dividends;
- royalties;
- income from the lease of property;
- capital gains;
- other income received from the Armenian sources.

Dividends derived by non-residents from Armenian sources will be withheld at the 0% rate if present all following terms:
- dividends not taxable in a non-resident country;
- non-resident is a beneficial owner of the dividends and directly holds at least 25% of the statutory capital of the company paying the dividends at least 2 years of time period.

From 1 July 2001 a withholding tax rate for interests derived by non-residents will be increased from 0% to 5% and rate will be further increased to 10% for interests received after 1 July 2002.

Such withholdings can be reduced when payments are made to a treaty country (Romania, Bulgaria, Iran, China, the Ukraine, Russia, Turkmenistan, and Lebanon).

Country	Tax on Dividends	Tax on Interests	Tax on Royalties
Romania	5 - 10 %	10 %	10 %
Bulgaria	5 - 10 %	10 %	10 %
Iran	10 - 15 %	10 %	5 %
China	5 - 10 %	10 %	10 %
Ukraine	5 - 15 %	10 %	-
Russia	5 - 10 %	-	-
Turkmenistan	5 -15 %	10 %	10 %
Lebanon	5 - 10 %	8 %	5 %

Tax treaty with France has been ratified by Parliaments of both countries.

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