Video: Entrepreneurs in the Public Catering Sector to Benefit from New Opportunity, Tax Service

In 2020, entrepreneurs operating in the public catering sector are expected to see significant changes, according to information provided by the Public Revenue Committee of the Republic of Armenia.

Resident commercial organizations and individual entrepreneurs who meet all the conditions set forth in the RA tax code to be considered as value-added tax (VAT) payers must submit a declaration to the tax authority within the legally stipulated deadlines to operate under the VAT system, in compliance with the form approved by the order No. 191-N dated June 27, 2017, issued by the Chairman of the RA State Revenue Committee.

The VAT on income generated from their activities in the public catering sector will be calculated at a rate of 6%, with the corresponding deductions applied in accordance with the law. For income derived from other types of activities, the VAT will be calculated according to the corresponding rates specified in the first part of Article 258 of the tax code, based on the type of income.

If organizations and individual entrepreneurs do not meet the conditions for being classified as VAT payers under RA tax legislation but prefer to operate within the VAT system, they are required to submit a declaration to the tax authority regarding their status as VAT payers for activities in the public catering sector, according to the format approved by the order No. 626-N dated September 30, 2019, issued by the Chairman of the RA Public Revenue Committee. The declaration must indicate which condition they do not satisfy to be considered VAT payers.

For this group of taxpayers, the VAT on income derived from operations in the public catering sector will also be calculated at a 6% rate, with the corresponding deductions applied as per the law. Meanwhile, VAT on income from other types of activities or asset sales will be calculated at a rate of 20%.

It is essential for organizations and individual entrepreneurs operating in the public catering sector and classified as VAT payers to remain vigilant regarding any conditions that may render them ineligible during the tax year. They may continue to be considered VAT payers until the end of the respective tax year, but must submit a declaration to the tax authority within 20 days following the event affecting their eligibility. This declaration must specify from what point during the tax year they ceased to meet the requirements.

In such cases, after submitting the declaration, organizations and individual entrepreneurs will continue to operate within the special tax regime for VAT, and from that point on, the VAT on income from their activities in the public catering sector will continue to be calculated at a rate of 6%, while VAT on income from other types of activities or asset sales will be calculated at a 20% rate.

For more details, see the video.