Armenia should eliminate Harmful Tax Regimes

On December, 5th 2017 Council of the European Union adopted the conclusions on the EU list of non-cooperative jurisdictions for tax purposes.

Among the conclusions, the Council of the EU reiterated the importance of providing efficient protection mechanisms to fight against the erosion of Member States’ tax bases through tax fraud, evasion and avoidance.

In addition it called upon the Code of Conduct Group on Business Taxation (“Code of Conduct Group”), supported by the General Secretariat of the Council and the High-Level Working Party on Tax Questions (“the HLWP”), to monitor and continue the dialogue with relevant jurisdictions to promote tax transparency, fair taxation and implementation of anti-BEPS standards[1].

Despite the large majority of jurisdictions have decided to introduce the relevant changes in their tax legislation in order to comply with the EU screening criteria, already 17 jurisdictions were included in the list. The Council expects that this measure will have a dissuasive effect that will encourage jurisdictions to comply with the Criteria adopted.

As a matter of fact Armenia has committed to sign and ratify the MAC (Multilateral Convention on Mutual Administrative Assistance) or to have in place a network of agreements covering all EU Member States by 2019. In addition, Armenia has also committed to amend or abolish the existents harmful tax regimes by 2018 and finally, Armenia has committed to become member of the Inclusive Framework or implement BEPS minimum standard by 2019.

The Code of Conduct Group will monitor that these commitments are implemented in practice according to the agreed timeline and will therefore continue the constructive dialogue established with Armenia and the other jurisdictions.

Despite all the steps done, the Council of the European Union keep encouraging further commitments to Armenia that still did not commit to implement the automatic exchange of information by signing the Multilateral Competent Authority Agreement and also still did not commit to become member of the Global Forum on Transparency and Exchange of        Information for Tax Purposes by 2019.

[1] Base erosion and profit shifting (BEPS) refers to tax avoidance strategies that exploit gaps and mismatches in tax rules to artificially shift profits to low or no-tax locations.

José Nicolas Dominguez Mendoza
EVS Volunteer at the Armenian Lawyers’ Association


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